To ensure future financial stability, the best thing for you to do right now is to intelligently invest your money into profitable avenues.
Contrary to popular belief, you do not need to have thousands of dollars at your disposal to begin investing. With just $500, you can start investing and accumulating real, long-term wealth.
Keep reading to know how you can effectively invest your $500.
1. Purchase a Certificate of Deposit
If you want to save for a short-term goal, certificates of deposit are a great way to invest your money. They’re safe to invest in as you get a guaranteed return on your investment, irrespective of the economy’s status. Interest paid on your certificate of deposit will be based on the initial deposit agreement you made and not market conditions.
2. Start a Side Business
If your day job isn’t too demanding or you’d like to do something productive on the weekends, you could start a side business. Doing so will not only give you extra income but can also help you hone any other skills you have. You can buy items for cheap and flip them for profit, freelance as a content writer or graphic designer, sell second-hand goods on eBay or Craigslist, or open an e-commerce store.
3. Pay Down Your Debt
With $500, you can pay down your debt and save thousands of dollars in interest. Getting rid of your debt as quickly as possible means that you won’t have to pay exorbitant interests to your creditors.
4. Equity Crowdfunding
Crowdfunding refers to raising money from the public to finance a new business venture. In equity crowdfunding, public investors get a proportionate slice of equity in the business in exchange for their investment. Do some research and invest your $500 in a business that you think will provide lucrative returns.
5. Set Up a Dividend Reinvestment Plan (DRIP)
Purchase dividend-paying stocks and invest them into buying more stocks. Over time, you will begin to accumulate more money through these reinvestments. Your stock can also increase in value over time and boost your overall net worth.
6. Use Robo-Advisors
Robo-advisors are automated investing platforms that manage your investments. Many financial institutions let you invest through Robo-advisors. When you sign up for one, you will have to answer questions regarding your finances. Based on your answers, the platform creates an investment portfolio tailored to your needs. When you don’t have too much money, Robo-advisors are a great way to get started on investing.
7. Contribute to a 401(k) or IRA
Contribute your $500 to an employer-sponsored retirement plan, like a 401(k). Make it your goal to maximize your employer’s match to accumulate more money. Talk to the HR personnel in your company to see if you can make a one-time deposit of $500.
You can also invest your money by opening a Roth IRA (Individual Retirement Account), a retirement savings plan that allows you to contribute after-tax money to your investment account.
8. Buy Savings Bonds
If you’re a prudent investor, purchasing savings bonds is a great way to invest your $500. Bonds are low-risk investments, which means that the return on investment you receive from them will be lesser than your returns on stocks. Usually, you purchase a bond at face value and receive the principal amount plus interest at the time of its redemption.
Investing isn’t as confusing or overwhelming as it seems on the outside. It doesn’t always take too much time, effort, and money. If you still have misgivings about investing your money, talk to a financial expert and ask them for professional guidance.
***Important: Please do as much research as you can beforehand before making any investments.***