Investment is a mix of art and science. It demands a ‘presence of mind’ and also the knowledge of all the technicalities. The capacity to detect the risk and efficiency to take calculative decisions are the two pillars that are necessary to win a good return.
A wise investment is – little input and big output
The smartest investor is the one who can know the ways to invest the smallest possible amount of money. Also, a surety of return is there.
Here are ways that suggest you make smart investments with a small amount of money.
An Early Riser Always Finds The Day Positive
Small money investment demands an early start
If you want to start with a small amount, it is essential to start investing early. As the limit is small, it will take time to give desirable returns, and this is the reason that you should start soon. The starting of your 20’s, is the best time to start the journey. In 3 to 5 years, you will be able to see a positive change.
Investment Options For Varied Limits
You can consider the alternatives according to the figure of funds you can invest.
£10 per month
Few building societies and banks have savings plans. Fixed-rate saving accounts are more promising. However, some have set the limit to a minimum of £25. But you can certainly get the options.
Fact – With this amount saving accounts is the only promising option available. The other ones have a higher limit on investment.
£50 per month
• You can choose from the savings account.
• Try the stock market through unit trusts
• Explore the online fund platforms
Fact – With a little amount, the risk is less, but the return is also slow. However, a long-term journey of 20 to 30 years brings promising results.
£100 per month
• Financial Times Stock Exchange (FTSE) that may give 5% to 7% return in a year.
• For tax-efficient investment put money
in a pension plan or an ISA, i.e. Individual Savings Account. ISA makes money tax free while pension plans are subject to tax relief of 20%, 40% or 45%
Fact – It is a small but reasonable amount to start with. The returns can be pleasant, but the concern of consistency still exists.
£250 per month
This amount widens opportunities with several options.
You may invest in –
• FTSE (low cost)
• Fund investment in Europe, however, consider the changes that have occurred after Brexit.
• Try any new market fund
• Corporate bond
• Commercial property fund
Fact – With the increased amount number of options increase. But before investment, you should check the choices on the risk front.
£500 per month
Premium bonds(tax-free returns)
Fact – Do not invest in one option only, spread the risk in several investment products.
An amount more than this can open doors to new choices which can be explored according to your risk capacity.
Let The Financial Advisor Help You
Professional support and advice is significant, especially for newcomers. Besides, if the amount is small, the investment decisions should be careful.
Hire a financial advisor for a month or two and gain all the possible knowledge of the money world. You have to learn the skills of smart use of money.
By the way, if you are a tech-savvy person, you can also explore the robo advisors. They manage your portfolio online on la low fees.
Invest 1% of Monthly Salary Through Your Employer
It could be the safest way to make your money earn a secure future for you. The employees usually do this for the retirement plan.
You can start with an amount as small as 1% of your income. Here is an example –
Your monthly income – £12000
1% of monthly income – £12000 x 1/100 = £120
It is not a huge contribution to your tomorrow, and it can be managed easily. At least start, and with time, if you are fine with the conditions, you can increase the percentage limit.
If you are not investing with a tiny amount, mutual funds can also work well. They allow you to invest in a collection of stocks and bonds.
They are less risky than individual stocks and provide better returns. The best part about mutual funds is the flexibility of the amount.
The different products give liberty a varied amount of investment. You can choose that one that is most affordable for you.
You may be investing a savings account today with a teeny-weeny amount, but tomorrow you should explore the significant investments even in real estate.
One last important tip is – never take decisions without professional advice because investment should be according to your financial condition. Suppose you have a bad credit situation and you want to invest in a property. Then from an online investment broker to a bad credit mortgage broker, you should always take expert advice.