Getting into Investment with a Low Income

man inserting coin in a piggy bank

By day, you’re working as a sales representative for a company providing concrete floor repair services. Three nights a week you’re moonlighting as a bartender. You plan to go back to your community college and finish business school. The pay is okay with your current company, but you feel compelled to earn extra for the future, that’s why you must take on nighttime jobs. If there’s work on the weekend—mowing the lawn, cleaning the roof, etc., you take those, too.

There’s a small amount saved up in your bank account. But now you’re looking into ways how you can invest some of the money you’ve stowed away. Your income is small, but you’ve heard that that shouldn’t deter anyone from investing to help grow their wealth. You want to find out more about investing.

Here are a few things that you might learn:

Investment: The Low-income Perspective

The rich get richer, and the poor get poorer. While America is a prosperous nation, many Americans can relate to this factual observation. To illustrate this point with some data, one report suggests that a mere 6.7% of the 80% least wealthy Americans own stocks. By contrast, 84% of the top 10% of wealthy Americans own shares. Simply put, most Americans do not typically directly play in the stock market.

This view, however, will change a little if one considers an individual’s indirect access to stock investment. Your 401(k), the report also mentioned, belongs to a collective fund that is also invested in the market.

Growing Your Money

money growth conceptYou might be able to leverage your earnings from your nighttime gig and your bank savings into a small investment. Here are a few ideas for you to consider:

  1. Try Robo-advisor. This is an online financial advisor. Instead of dealing with an actual broker or a financial advisor, the online platform relies on algorithms to track and monitor what’s going on in the market and gives you advice on how to invest. Examples of Robo-advisor services are Betterment, Wealthfront, and M1 Finance.
  2. Keeping it simple. “How?” and “Where?” are the typical questions asked about investing. You don’t need to carry the burden of Bobby Axelrod from the TV series “Billions.” You need to keep the investment simple. There are plenty of ready-made products in the market today, which will allow you to put your funds on a) mutual funds, b) bonds, and c) retirement accounts like the 401(k). You can, of course, with the help of a financial advisor, distribute your funds within this mix by yourself.
  3. Real estate. No. You don’t have to buy a piece of land or an apartment in a building to invest in real estate. Another online platform allows you and others like you, to buy “a piece” or a share of real estate properties. This is called a REIT or Real Estate Investment Trust. Just like any shares of stock, you can buy or sell REIT as you see fit. With only $500, you can already invest in REIT through online platforms, like Fundraise.

These are key ideas to consider. Once you consult a professional financial advisor, you will be able to make a more informed decision. But these points cover the basics.

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