How to find initial capital to start investing or build passive income stream
“If I were rich, I could be an investor”, “I need to earn more money, than I can start investing” … Have you ever thought something like this? This way of thinking about investment is very dangerous, indeed. “One day I will start investing and build passive income ”… A lot of people tend to postpone investments until better times, only to postpone it again later. This article will show you how to start investing with 100, 500 or 1000 dollars plus how to build initial capital for investment if you don’t have any money in your pockets.
How to find money to invest online
Taking a first step in investment is probably the most important thing you can do for your future wealth. It doesn’t matter if you have to start investing with just a $100 dollars or even $10 dollars or you have $1000 to experiment. After all if you can’t manage $100 today, how are you going to manage $10000 tomorrow? Today one can find a trading platform to invest money online with a minimum deposit of $1 dollar. If $1 is all you have, you can still benefit from using it to learn trading principles and get acquainted with investment basics. For an investor who is just starting knowledge is way more important than exact profit. It’s a good idea to focus on percentage instead of the actual profit. Which return on investment do you get? Why did that trade fail? How other traders did with the same asset? By the way, you can use MyDigiTrade data to monitor behaviour of other forex traders and compare your results with theirs.
How to increase initial capital for investing
While you are learning to make money online with a very small amount money, you can start accumulating larger capital at the same time. In fact, your ability to save money depends on your psycho-type a lot more than on the amount of money you make. Robert Kiyosaki advises people to save 10% of their income, invest 10% and donate 10%. Whether this formula makes sense for you or not, living on less than you earn is a matter of habit. Below are some simple tricks that can help you save more money to invest more:
Start with tracking expenses – Tracking expenses is the easiest way to realise how much money you actually spend and how much money you actually need. Don’t set budgets just yet, simply keep writing down everything you have bought for a month of two. A lot of people have reported that they managed to save more money only by doing so. There are plenty of apps for managing personal finance available for iOS and Android, but a good plain Excel Sheet will also work.
Find out where you overspend – Once you start with tip number one you will see for yourself on which expense categories you are spending too much. Set weekly or monthly budget for those categories and stick to it.
Pay yourself first – When you have a clear picture of your spendings you can decide how much you want to save each month for your initial capital to start investing. Now is a good time to create a separate investment account. Make sure to transfer money onto it every time as soon as you get paid. If you don’t have investment money on the checking account or in your wallet, it will be harder for you to get back to your old spending habits.
Since our expenses tend to increase along with our salaries, most people will be able to save only very small amount of money at first. This is absolutely ok. Start with what you can and stick to it. It is important step that will help you refine the way you think about money. Once you get used to it you will be able to save more.
Start investing with 100
Despite what you may have heard about investing, when you start investing with $100, your choices are relatively wide. When the initial investment capital is limited, it is extremely important to take into account all brokerage commissions and spreads. Set your eyes on discount brokers or penny stocks. Alternatively you may opt for putting the money into investment fund, but make sure to check their fees first – quite often they will eat most of your profit. For those, trying to save on commission and still create passive income instead of actively trading, Index ETFs may be more suitable option. When you invest $100 you have very low risk margin and must adjust your strategy for that. Try to keep leverage to a minimum. Buying first class stocks or putting money to hedge funds is not an option when starting investing with $100.
Start investing with 500
When you have a $500 initial capital to invest, you can afford a more balanced portfolio. For example, you can still stick to discounted assets but diversify them properly by buying currencies, futures and CFDs, or start gradually adding premium stocks (or CFDs) such as Apple or Dunkin Donuts to create some backup. Many people prefer to put a part of their investment capital under management to have passive income stream while they still learn how to make money online themselves. A qualified money manager will most likely cost more than you can afford when start investing with $500 and that’s where copy trading platforms fill the gap. For example, MyDigiTrade trading signals are provided at no cost to the user.
Start investing with 1000
Choices for a trader who start investing with 1000 are very similar to choices of a trader investing $200 or $500. It’s your knowledge and experience that make the key difference, not the size of your starting capital. If you are just learning to make money online, it is important to stick to low-risk strategies and do a lot of research before making a decision. Some suitable options for investing $1000 are stocks, currencies, investment funds, etc. Don’t rely on your own predictions and intuition too much, make sure you are building a balanced portfolio instead. The golden rule of investment is not to put all eggs in one basket. With larger initial capital it is easier to diversify your assets and protect your initial capital from unexpected market changes.
There are two major ways to earn money online that deserve consideration. Based on your personal situation you may opt to learn how to create profit by investing or trading yourself or how to create passive income online, or combine both approaches. Dividends from stocks you own, income from renting real estate, profit from investment fund or profit from coming other traders can all be considered passive income. Ways to start investing and earn money online by actively investing include forex trading, frequent stocks trading, futures trading, etc.
How to make money online
Disregarding the size of your capital, learning how to invest money online takes time. If you are trading yourself, make sure to do plenty of research and consider both technical and fundamental factors. Start small and gradually increase your positions when you get better understanding of the market behavior. Most brokers offer leverage, which can significantly increase profit, but it also increases risks proportionally. It is wise to refrain from using high leverage before you find your own profitable strategy. Once you have developed one, put your investment strategy in writing and have it in front of you when you trade. It is easy to get too emotional when trading on real money accounts: fear and greed are the main enemies that influence the behaviour of experienced traders too. Having a written plan in front of you may help gain better control over your emotions and avoid costly mistakes.
How to create passive income
If your goal is to create passive income and get maximum profit while investing minimum time, make sure you choose reliable partners. Past results of an investment fund, a money manager or a signal provider are a good indicator, but they don’t guarantee the same performance in the future. Getting the most relevant information, such as a list of currently open trades, can help make better decision. Some important factors to consider are the volatility and risk/reward ratio – make sure the size of your capital and your personal investment style match the strategy you invest money in. And passive income from investment doesn’t mean you can buy an asset and forget about it. Before signing up for any system or investing into a fund, make sure you know how to exit and protect your capital should the results not meet your expectations. It is good to have some automated Stop Loss or other custom settings in place. When used properly they will guard your initial capital for investment from unexpected losses and will save your time. If your goal is to create passive income, you most likely don’t want to be stuck monitoring the progress 24 hours 7 days per week.
Lack of initial capital for investment is often used as an excuse. The main problem for most aspiring investors is not to find the money, but to overcome the fear and start actually investing instead of thinking of it. Remember that there is no better time to enter the market then today, start with baby steps and be prepared to lose some money to you learn how to make a lot and become free.