How to Invest as a Beginner with Little Money

Want to hop on the investment train and get your money working for you?

Want to start investing as a beginner right from where you are and with what you have?

Want to start investing from scratch with little money and then grow up from there?

Well, there is nothing like “little money” in investing. Every coin counts and every single dime you invest becomes an employee working hard to bring you even more money.

A mentor used to tell me that investment is not an exclusive exercise.

Anyone could invest as long as they have income flowing into their account. No matter how small.

The truth is that our expenses are investments too, but we often do not realize that because our expenses are mostly bad investments.

We often prioritize spending on things that do not bring us any return instead of things that do.

But the key to investing the smart way as a beginner is to realize that investing and making expenses are not mutually exclusive.

While you are making your expenses, you should be making some investments too. If possible, automate the process to help you keep at it.

Here are some ways to start investing right away even if you are a green horn at managing money.

Identify a Fixed Income Opportunity or Stable Asset

The first step to investing as a beginner is to find a fixed income opportunity or stable Asset that offers a guaranteed return.

Don’t try to be creative or extravagant in your choice.

Find an investment opportunity that has shown enough traction as a trusted investment vehicle, and backed by reputable people and the right regulations.

You don’t have to be lazy about it. Take your time to scrutinize the company you are about to invest in, and make your choice based on sound knowledge and not deceptive commercials or emotional acquaintances.

If you make the wrong choice here, you’ll be throwing your money to the wind and could be building your financial future with a company that could easily pull the rug beneath you.

Start Investing as Small as Possible 

I’m a big advocate for investing what you can afford to lose.

Investing doesn’t have to be exhaustive. You don’t have to invest a big chunk of your earnings before you know you are doing the right thing.

Invest small. Invest what you can forget, and have fun doing so.

I recently started an experiment where I’d invest my snack money anytime I feel like snacking.

I love snacking a lot but I know it isn’t good for my health in the long-term. So, I devised a plan to put an end to that bad habit.

Everytime I feel like snacking, I simply take that snack money and invest it in an index portfolio.

So, I was putting 1k here, 2k there, and in over 6 months we have a portfolio with a total investment of 43k that has grown by over 10% so far.

That was me investing money I could have lost by snacking and eating out, but as it turns out, we have an interesting portfolio that is bringing me some passive income.

So, what am I saying?

Investing doesn’t have to be all serious and tedious. Heck, you don’t even have to think too much about how much you are investing. Make it so small that it is negligible.

If you make 100k per month, invest 500 Naira or 1k. That’s money you could easily give to a beggar or use for offering in church. 

You wouldn’t cry if you lost that money. Would you?

The issue is not about how much you are able to invest but how much you are able to invest consistently without worrying about your finances.

Create Consistency 

The goal of investing as a beginner is to create consistency. You want to do it so much that it becomes one of your financial habits.

When I started learning to invest, a mentor drastically changed my mindset about investing by asking me a simple question.

He said, “if your monthly earning is 100k and you decide to invest 30% of your monthly income, how long will you be able to sustain that? Can you do it consistently for the next 10 years?”

In my head that was somewhat impossible. Life could happen and I may need the money to solve other issues.

Then he asked again, ” if your monthly earning is 100k and you decide to invest 0.5% of your monthly income, how long will you be able to sustain that? Can you do it consistently for the next 10 years?

In my head, that instantly became very possible. I could invest 500 Naira monthly for the rest of my life. Easy.

This should be fun, I thought.

Now, that is how to create consistency in investing. Find a way to do it with the least effort and you’ll easily create a solid financial habit.

It is better to have a small but growing portfolio than to have a large one that you’re always tempted to liquidate to solve emergencies.

Reinvest in Better Opportunities

Once you have built the habit of investing consistently, the plan is to keep reinvesting your money.

You don’t have to stay where you started, and you don’t have to hold and die with one portfolio.

Find better performing assets and reinvest some of your holdings.

The better you get at finding better investment opportunities, the better you can grow your investment and increase the cash flow from your portfolio.

Avoid Being too Greedy

I always say that in investing, greed is good.

But you don’t have to get too greedy that you neglect common sense or sound financial practice.

When looking for investment assets or vehicles to reinvest your money, revert back to the first point in this article and do your due diligence before putting your money anywhere.

There are many scam investment companies that are scheming to steal money from gullible investors.

If you get too greedy, you’ll likely fall into the hands of these fly-by-night companies.

Greed can be good, but like any other area of life, too much of it is detrimental. 

So, use your greed strategically. When investing, lead your greed and never let it lead you.