5 Brilliant Investments You Can Make With $500 or Less
Want to invest and grow your money but can’t figure out how to get started? Here’s a simple tip: Start small. When an extra $500 comes your way, what do you do with it? Do you put it toward debt? Head out for a good old-fashioned shopping spree?
If you don’t have an investment portfolio or enough spare cash to create one, you can still start making even small sums of money work for you. On the other hand, if you do have a portfolio or 401(k) that’s invested in mutual funds or being managed for you, investing a small sum on your own can give you a taste for managing your own money.
Check out the 5 investing ideas below and see if you can, instead of spending that extra cash, turn that money into $1,000… or even more.
1. Buy ETFs.
An ETF, or Exchange Traded Fund, is, in essence, a combination of an index mutual fund and a stock fund. Whereas with mutual funds, you can only trade at the end of the day, ETF’s allow you to buy and sell whenever the market is open. You get the diversification of a mutual fund while making a very small investment. GOBankingRates notes that one share of Vanguard’s most successful ETF costs just $129.
2. Invest in peer-to-peer lending.
Another great way to invest $500 is to invest it in peer-to-peer lending. Companies such as Prosper and Lending Club lend money – money that they receive from investors – to clients. They do this at an interest rate which is based on their credit score as well as other factors. The clients then pay back that money with interest – interest that is then shared with investorsDepending on the riskiness of the loan, you can earn well over 5 percent and you can reduce your risk by spreading even a small investment over multiple loans. Even so, investing in peer-to-peer lending is much riskier than putting your money into a highly-rated bond, CD, or blue-chip stock. Borrowers do sometimes default, and in an economic downturn a lot of them could default all at once. Keep this in mind when deciding whether and how much to invest, and which loans to invest in.
3. Invest in dividend paying stocks.
Dividend reinvestment plans, called DRPs or DRiPs are a great way to make a small amount of money go far. Investing in dividend paying stocks – whether by buying individual dividend paying stocks or by investing in an index or mutual fund that consists of dividend paying stocks – is a great way to provide a passive income source for yourself. Time-honored dividend-paying companies have done well at building wealth and providing an income for many passive income investors.
4.Flip furniture on Craigslist.
There’s no shortage of furniture available for sale on sites such as Craigslist. And there’s no shortage of great deals to be found when someone prices furniture at a low price simply to get it off of their hands. Take advantage of these great deals by scooping up low-priced furniture gems and re-selling them for a profit. Antique furniture is especially valuable and many people who sell it in the first place simply see it as “grandma’s old couch.” They don’t realize the intrinsic value in the piece. The trick to making money in investing this way is to be able to see through the over-priced junk and find the gems that are ready to re-sell or have potential hidden in them via refurnishing.
5.Start a business.
What’s your life’s passion? Is it animals? Start a pet-sitting or pet-washing business. Is it writing? Start a blog. Are you a talented crafter and good at marketing? Start making a highly coveted craft, such as wedding jewelry, and sell it on Etsy. There are a thousand and one business ideas out there: one of them is bound to fit your passion and your lifestyle. Find one that you can start for less than $500, educate yourself on how to run a successful business and see how quickly you can turn that $500 into a steady monthly income. It’s amazing to see a passion or interest turn into a money making venture.