Saturday, 23 February 2019

How To Start Investment With Little Income

How To Start Investment With Little Income

You want to start investing but you don't really have a lot of money to invest, what do you do? Now, you're not out of options and here's why. First, 

What Exactly Is Investing? 

Investing is when you take your money and you put it to work or as we say you go out and buy seeds so that it will make you more money over-time

A lot of people solution to investing when you have no money is "o" no cash no credit no problem let me loan you some money so you can start investing and then they'll charge you this crazy interest rate and they'll show you this part of the world performer that says, if you can average a return of about 30%  a year you won't even have to worry about this loan and you'll be rich in no time and if you miss a payment we're going to take everything you have. 

That doesn't really work for me because when I invest my money I want to buy cash flow, not a headache. The second thing you have to know is that there are two types of investing

Passive Investing

You have passive investing where you do the work and research to find the investment seeds and then you put your money in and then it should continue to pay you whether you work or not. That would be like investing in the stock market or in real estate, 

Read: Should You Invest In Stock Market or Real Estate - Get The Answer

Of course, you are never guaranteed to make money when you invest. you might even lose money when you invest, so you should always speak to an attorney and an accounting in your area so you understand all of the local laws and regulations that govern investment

Active Investing

You have active investing which is where you invest your money and your time. This would be like starting a business because you can't just start a business by throwing money at it, you got to put in your time and effort to grow it. 

Why would anybody want to do an active investment if they can make money without working, well, because of the amount of money you can make, when you invest your money in a passive investment you tend to get a smaller return because it is your money working for you

The historical average stock market return is about 7% a year and the historical average real estate return is about 10% a year, sure you could make more you could also make less it's just the average

If you invest $1,000 in a passive investment and you got a 7% return on your money, that would mean you make $70 after one year without working, not bad

This passive investment becomes very powerful when you add in compound interest but you have to earn the money first. If you actively invest you need to put your time and your money to work so you can earn more quicker

HP started off with $538 and now they have a market cap of over 5 billion dollars but MATTEL toy company started off with essentially nothing they would just go out and buy wooden scraps so they can convert them into dollhouses and now they have a market cap of around 5.1 billion dollars

Read: The Simple Strategy To Come Up With A Good Business Idea

There's really no limit to what you can do with an active investment because you're doing the work to grow your money but that also means you have to be doing the work, you can't physically work 24 hours a day every single day but your money can

That's why you need to blend in the passive investment with the active investments, that way your money is growing even when you're not working for it

First, you got to work on earning the money and then you can work on getting that money working for you with passive investment.

How Much Money You Need Before You Start Passive Investing

If you have consistent money coming in you can start allocating a portion of that towards the investments. If you don't have consistent income then you should probably wait until you have a couple thousand dollars save up before you start passive investing

If you don't have a couple thousand dollars saved up how do you invest? well, just like I was saying, you just start by actively investing your money and actively your time. That means to invest your money in business books or classes so you start a full-time business or side business

We have so many opportunities literally on your fingertips, you can get paid to speak with a podcast you can get paid to post pictures with Instagram, you can get paid to make videos with youtube but it's not what you know that matters it's what you do with what you know.

The problem with most traditional jobs is that you're limit to how much money you can make and if you made $100,000 from a job you'll be paying more money in taxes than somebody who made $100,000 in the business because that's just the way the tax laws work in America 
It's a double whammy which is why even if you have a job you should still invest some of your money into a second or third stream of income

First, you have to get the money, once you got the money then you have to make it work for you and once the action money working for you now you have to understand how to keep that money so you don't lose it.

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