When people think of the term “investor,” they usually call to mind images of people who are notorious for having a lot of money. Every day, they capitalize on deals that see them gain (and lose) more money than many of us make in a year. It takes a speciaf person to achieve that status – you need resources that you essentially must have been born with, right?
Thankfully, the reality could not be farther away from that impression. Not only can anyone become an investor with the right approach, but you don’t need to have the world’s largest budget to do it. A smaller and decidedly more limited budget will still serve you well, provided you can keep some basic advice in mind.
Start With Low-Cost-of-Entry Investments
Especially at the beginning of your career, you’ll want to prioritize those investments that have an inherently low startup cost. Yes, on the one hand, the old saying “low risk, low reward” applies very much. But on the other hand, you’re still trying to get your footing. You always want to proceed with caution until you build a bit more of a financial foundation and can begin spreading your proverbial wings.
Case in point: wholesale real estate. Here, there isn’t a cost of entry because you don’t require any capital to get started. With wholesale real estate, you’re simply trying to find a property that would be an ideal investment for your strategy and a seller willing to accept your offer. You enter into a contract, at which point find a buyer willing to agree to a higher price. Then, you sign the contract with the buyer. The difference between the two values is what you can keep as a profit. You’re not actually putting money into the property – the buyer is. You’re simply facilitating the deal. All parties walk away happy, and the transaction is successful. You also have the experience to start building your investment career there.
Cultivate Financial Literacy
During this period, you’ll want to ensure that you build up your financial literacy as much as possible. Investing is deceptively straightforward in that it appears that all you need to concern yourself with is putting one amount of money into a transaction and getting a higher amount back in return. But it’s also so much more than that.
You need to concern yourself with interest rates, market activity, and even what is happening worldwide. This will all take time to wrap your head around. You’ll also need to be proactive about staying up-to-date with any changes that are happening moving forward.
Embrace the Power of Technology
Another major step to take to become an investor on a small budget involves taking advantage of any technological advancement you can. Low-cost investment platforms are designed for the type of person in your situation. You can even use robo-advisors and other forms of automation to help quickly build your most diversified portfolio.
Just because you’re starting out using these platforms does not mean you have to stay with them indefinitely. Remember that in those early days, you’re trying to build a solid foundation for yourself. Once you do that, you’ll have more money to work with and can move up to more extensive and lucrative investment opportunities from there.
Start Small and Build From There
Speaking of starting small, this is the type of mentality that you want to maintain throughout the early period of your investment career. You need to get comfortable with the idea of “slow and steady wins the race.” You’re in it for the long game – you won’t become a massively successful investor with your own TV show overnight.
Take advantage of any small (but still lucrative) investment opportunities you can in the early days. As your financial capacity grows, so will your ability to move up to bigger and better deals. Take each successful transaction for what it is – a win that deserves to be celebrated. Soon, your success will start to compound, building its own momentum. Provided that you stay committed to your long-term goals, you’ll always be headed in the right direction. Exactly how long it takes to get there is largely irrelevant.
Strategic Budgeting (and Expense Cutting)
As you continue your investment career, your needs will naturally change. There are expenses you’ll have in the beginning that you can cut later on, so long as you’re continually reassessing your situation. Don’t necessarily look at that as money saved – look at it as funds you’re freeing up that can be better used elsewhere.
The same is true of budgeting in general. Always try to create unique budgets for yourself that maximize how far every last dollar can go.
Micro-Investing May Be Right For You
Finally, consider micro-investing applications to make incremental contributions toward your long-term strategy. Some platforms will give you a point of entry for fractions of what it would have cost even as recently as a decade ago. This can be yet another way to start small but to take those successes and slowly build them into something legitimately meaningful.
Ultimately, these are just a few of the many pieces of advice you can take on your path to becoming an investor on a smaller budget. Maybe the most crucial element of all can be summed up in a single word: “discipline.”
You need to think things through when it comes to not just the plans you’re making but how you’re executing them. You need to emphasize resourceful choices that will help you get the most “bang for your buck,” so to speak. Will things be a bit harder for you than they would be for someone with a seemingly unlimited budget? Perhaps – but the one thing they won’t be is impossible.
Not only is becoming an investor on a small budget an achievable financial journey, but it can also be empowering. Never allow yourself to lose sight of the narrative, and never assume that a lack of resources is anything other than an opportunity to get creative. “Necessity is the mother of invention,” after all. If you can’t outspend your competitors, you’ll just have to outthink them.
