Now let’s take a look at investment idea on how we can invest small amounts, e.g. every month. We chose a few standard ones and some quite unusual ones. An important selection criterion was the possibility of allocating a small amount of money at a time so that you could buy another investment brick every month.
Savings Accounts And Deposits Dynamically
Of course, the simplest form of investing is putting money on an interest-bearing account or a term deposit. This is a very good investment idea to accumulate cash for larger investments. We set aside a small amount every month and only when we have accumulated more capital, we continue to invest.
It is also one of the most convenient ways to invest as it requires almost no knowledge. Deposits are easy to compare with each other, and setting up a deposit is simple. It is also known in advance when its term ends, so we can invest in this way any, even temporary, financial surplus.
If we decide on this form of investment, we should do it wisely. Let’s look at the conditions and check the period for which the preferential interest rate is. Every month, let’s check whether it pays off to change your deposit or bank. This will allow us to maximize profits.
Investing In Bonds That Will Last For Years
The second, widely known Investment Idea is bonded. It is worth taking an interest in, first of all, government bonds. They are a relatively very safe form of investing capital and protect us against inflation. You can also buy them every month for a small amount of money. You can also consider buying bonds from developed countries. Warren Buffett says that buying “a piece of America” is never a bad idea.
If, on the other hand, we can accept a slightly higher risk for a higher rate of return, it is worth considering investing in corporate bonds. The largest companies issue bonds quite often, and the profit from them is decent. Unfortunately, exiting an investment may prove to be more difficult than with government bonds.
Even if we prefer to invest in instruments with a higher rate of return, it is worth keeping a certain percentage of the investment in bonds for safety. Especially if our investment horizon is very distant.
A good investment idea for small amounts on a regular basis is to buy mutual fund units. Many banks allow you to buy them on-line – just log in to your personal account and then submit an appropriate instruction. We can buy additional units every month, and exit from the investment is just as easy.
The great advantage of funds is their diversity and diversified portfolio. We don’t need to know about stocks or know how to buy raw materials or foreign bonds. We simply choose the right fund and we can already have a portfolio of securities from every region of the world and of any type. We can also choose funds representing investment strategies appropriate to our level of risk acceptance (bond, hybrid or equity).
Of course, investment by funds in different types of assets carries a similar risk. Just like investing yourself in these assets. However, funds protect us by averaging the risk – we invest indirectly in dozens of different securities, not in several.
The key issue that is worth paying attention to when investing in mutual funds is fees. The rule is simple, the more fees the worse. Here, the rule that funds with a higher management fee are better than those with a lower one does not work. We always choose the cheapest fund, then the chances of profit increase.