There are so many reasons why we put off investing for ourselves. It is not just the tedium of our daily lives but also the inhibiting thought that perhaps huge sums of money are required to make an investment that puts us off from investing. However, nothing could be further from the truth than these discouraging thoughts. The reality is that with a little amount of money you can start investing and get sufficient gains from that investment. The optimal situation is for you to start early when you are young and start smart, even with a small budget.
The question is how to start and how much to start investing with. There are three simple ways where you can invest and get sufficient returns.
- Invest in Securities on the Stock Exchange: There are several types of securities to invest in the Stock Exchange. There are equities, mutual funds, bonds, and more recently, Exchange Traded Funds (ETFs) amongst other securities to invest in Pakistan Stock Exchange. The earlier you start investing, the more returns you can earn. You can invest in equities, mutual funds or ETFs with as little as Rs 10,000/- per month and, by way of compounding, you can earn substantial returns. For example, if you have Rs 10,000/-, you can buy a few units of mutual funds, ETFs or some stocks available on the stock market. The returns and dividends earned from these investments can be reinvested to generate additional earnings over time; thereby, you will be earning compounded returns. You can have a diversified portfolio of stocks, mutual funds and ETFs with the passage of time. With the fall in the market movement, these securities can be averaged out at a lower cost and sold off when the market is high, thus resulting in substantial capital gains for you. On the other hand, you can keep stocks or units of mutual funds etc which have sufficient dividend yields to allow for a steady stream of income from your investment.It may be mentioned that the ETF is a new type of security for the local market which offers the diversification of mutual funds with the kind of liquidity available in stocks. It is a cost-effective source of investment with characteristics of mutual funds, thereby requiring less financial knowledge or know-how on part of the investor for investing in ETFs. ETFs are a popular source of investment internationally and they are an ideal investment instrument for both, the savvy investor as well as the novice investor.
- Invest in a Small Property: You can invest in a property which can appreciate in value over time. This property may not be very expensive and may be relatively small in space, for example an apartment in a building, so that you can pay for it through a small budget. If it is located in a good area, then it can be expected to have fair capital appreciation over a period of time. So it would be ideal to look for a small property like an apartment in a good area/ zone of your city. Now the question arises, how to pay for such an investment. The optimal way would be to finance that property through a low-interest competitive package secured from a bank against a collateral while renting out the said property to a third party. This way, the rental income that you may get from the property may well be used to pay off the financing secured from the bank. If your rental payments are short of paying off the loan repayments to the bank, then you may add some funds from your own pocket in paying off the said installments. After all, this is money being invested by you for your future. Needless to say, at the end of the financing period, you will become a proud owner of that dwelling. All this, for no or little extra cost to your pocket.Herein, the challenge, however, is two-fold. First is to find such a property which suits the depth of your pocket and second is to secure a loan or financing at competitive rates. However, this can all be achieved with a little bit of effort on your part in searching for the right property and looking for the most competitive interest rates on offer. Once you have addressed these factors, you have sailed through to a reasonably priced source of investment which will serve you well in the long run and even after your retirement.
- Start a Side Business: You can start a side business with as little capital as possible and earn a fair income from it. Ofcourse, the biggest question is what kind of business or work should it be. There are numerous options to choose from. From tutoring to freelance writing, internet marketing, editing & proofreading, sewing or tailoring, and interior decorating etc., there are many choices of work that you can start on your own part-time and earn some side income from. However, you have to assess what is the job of your suiting and stick to it after your regular office hours or on weekends. The kind of businesses or work mentioned above entails small investment and can be started off through personal contacts or through online/ social media marketing.
So these are the three ways you can earn some income while not having to invest a great amount of money. Best of luck to your efforts and future endeavors while you earn your income on a small budget!