“Investment is only for the rich”. This phrase, spread like a mantra, certainly made – and still makes today – many peoples not invest. But the fact is that little money is no excuse, after all, investing has never been as democratic as it is today.
When there were only banks to manage your money, financial applications were very limited and only people with a higher capital had access to better opportunities. However, today this no longer applies.
Knowing how to invest limited money is one of the main issues to be solved for those who want to start catching up in life.
There is a shelf of investments, of the most varied classes, available for all profiles and all pockets. The question is: are you in the habit of saving, even if it is only a little? This is the first question to ask yourself.
Do you know those plans that you are always putting off? How about putting them into practice so that you can reach your goals as soon as possible? When you get organized and learn how to invest limited money, your dreams become closer and closer.
In this article, we bring you everything you need to know to start investing profitably and safely:
Table of Contents
Why should you invest your money?
You know that dream you have, but don't know how to make come true? In many cases, to achieve your goals, money ends up being necessary. Be it a car, a house, or even a peaceful retirement.
Whatever your dream, investing your money profitably and safely is crucial. When you just save and keep your money “under the mattress,” you miss opportunities to make it profitable.
This means that there are several opportunities to make it grow faster and steadily. And more than that, since money loses value over time, you need to make good use of it.
If you leave it in savings or your bank checking account, it will tend to take longer to realize your goals. So the important thing is to understand how to invest limited money and start investing. The sooner your money starts working for you, the better for your wealth.
This first step is the most fundamental in making your dreams come true.
What is the minimum to start investing?
Nowadays it is possible to invest lower amounts, like US$1,00 to US$100,00, so we immediately demystify the myth that you need a lot of money to start investing. Yes, it is possible to invest with little money, and we will show you how.
In fact, one of the main factors to make money profitable is frequency. In other words: there is no point in investing once and then never again. So in addition to how to invest limited money, you need to understand when and how much!
We will even show that there are investments for all investor profiles, from beginners to the most experienced, and for all of them, here's an important tip:
“It doesn't matter how much you have and how much you know about investments.
You can start right now to achieve your goals.”
How to invest limited money?
Now that you know the importance of investing your money, it's time to understand how. Even with little money, it is possible to start investing and get good returns.
Just choose the right asset and know that saving is not an option. You are losing money if you invest in savings. Many people even complain that there is no money left to invest.
If in your case it is possible to save a little more, with $1000 you can invest in fixed-income alternatives. LCI, LCA, and CDB are some options for bank issues.
So, if you are just starting and want to understand how to invest limited money properly, the first thing is to start little by little. Make your first investment, by investing only a portion of your money. Less than 5% is fine.
Over time, you will gain experience and be able to safely increase your exposure to other assets.
5 steps to invest your money now
You already understand how to invest limited money in general, but you need to follow these steps to get cracking!
Below we list 5 steps to invest your money right now. Learn how to start growing your assets and getting closer to your dreams.
Step 1: Pay yourself every month
Get this idea in your head: the important thing to invest is not how much you earn, but how much you can save.
You can earn minimum wage and still be able to invest, you know? But how is this possible? The answer is simple: by saving.
Yes, you may have bills to pay, a market to go to, children to support, and expenses that “consume” a good part of your income and then you think that with the little you have left, you can't invest it.
But if you have some leftovers, even if it is very little, and you have paid your bills, guaranteed food, and all the essentials for living, it is possible, yes, to put that money aside to invest.
Let's suppose you receive a fixed monthly salary and that every month approximately $100 remains in your account. With this money, “pay yourself” as if it were your account and had a bar code.
In other words, set aside this money or part of it for investments only.
Step 2: Set goals
Before you get your hands dirty, you need to stop and think about how to invest limited money with the amount you have, what your goals are, and for what reasons you want to make the money grow.
It could be buying a car, starting a business, or achieving financial independence…
It is crucial here to keep in mind how much you want to have in the future and why you will save and invest your money.
The tip is to separate by time frame, from the shortest to the longest. After estimating the time frames, you need to determine the amount you want for each goal.
Step 3: Know your investor profile
To invest in the way that best suits your goals, you need to know what your investor profile is.
Also known as Suitability, it is a simple and practical test to identify your risk tolerance. There are 3 investor profiles:
- Conservative;
- Moderate;
- Aggressive;
To find out what your profile is, answer the questionnaire within your account at your chosen brokerage firm. We will talk about this later.
Step 4: Know the types of investments
There are two types of investments: fixed income and variable income. There are options for each of the profiles mentioned above.
Fixed Income
In the case of fixed income, these are either government or private securities. They are loans to institutions in both sectors. In return, you receive a yield that can be pre-fixed or post-fixed and is fixed at the time of purchase.
- In the case of fixed-rate bonds, you know exactly how much you will receive at maturity.
- In post-fixed rate bonds, the rate is linked to an economic index, such as the CDI. In these cases, the yields can vary.
Fixed-income investments can also be subdivided into bank issues, private credit, and direct treasury. Below we list the main fixed-income assets:
- CDB
- LCI
- LCA
- CRI
- CRA
- LC
- Debentures
Variable Income
In this case, we are talking about investments traded on the stock exchange. In variable income, there is no provision for fixed income. Therefore, past income is no guarantee of future income.
Company shares and the stock market itself vary according to various factors. Political news, company results, and the external scenario can influence them. Therefore, to make money with stocks you need to know how to invest limited money in good choices.
In variable income we have:
- Stocks
- Futures contracts
- Commodities
- Options
- Real Estate Funds
- ETF
- COE
Step 5: Open an account on an investment platform
This last step is also very important for those entering the world of investments. After all, when you choose a brokerage firm with good fees and product diversity, your income will be positively affected.
But why a brokerage firm and not a bank? It's simple.
At banks, you will find only the bank's investments. At brokerage firms, on the other hand, the available investments are from several different institutions.
Quick guide: Where to invest with little money
Have you all understood how to invest limited money? Then see below for some options to get started, even with a small amount of money:
Bank issues (CBDs/LCIs/LCAs)
If you can save at least $1000, you can already invest in so-called bank issues, which offer a return in exchange for financing the issuer's activities.
CBDs are a way for banks to raise funds, and LCIs and LCAs finance the real estate and agricultural sectors, respectively.
Investment Funds
With $500 you can delegate your money to managers to take care of your investments. This happens through investment funds.
There are several options, such as fixed-income funds, multimarket, stocks, etc. Before investing, check if the application is compatible with your investor profile.
Stocks
Although many people think that the stock market is only for experienced investors or those who have a lot of money, the stock market can be accessible to individuals.
Depending on the company chosen, it is possible to invest around $1000 via standard lot (minimum 100 units) or buy from 1 to 99 units in the fractional market, which is cheaper but often not recommended due to low liquidity.
Private Credit
Private credit assets also have options for at least $1000. In this case, they are debentures, corporate bonds, and CRIs and CRAs, which are the credit certificates of the real estate and agro-industrial sectors.
Common investor mistakes to avoid
Having reached this point, you are now prepared to save and invest your money safely to achieve your goals. Now it is important to know the most common investor mistakes.
If you are just starting, one tip is to prioritize fixed-income assets that have liquidity and profitability to build up an emergency reserve.
With time and learning, it will become easier to experiment with other types of assets to build a diversified portfolio.
Below we list everything you need to AVOID when investing:
- Applying unevenly
- Investing everything in one type of investment
- Following trendy recommendations without understanding the investment
- Failing to evaluate the risks of the applications
- Disregarding investment costs and fees
- Borrowing to invest
- Being in a hurry to reach your goals
- Leaving money in savings accounts
Conclusion
Starting to invest is about making money work for you and bringing you closer and closer to your goals and dreams. By making good investment choices, the path to achieving your goals can be faster and more profitable.
In the beginning, even with little money, you need to follow the tips presented above. Not forgetting, of course, that you need to keep a regularity in your investments.
Now that you know how to invest limited money, the next step is to start by choosing fixed-income investments to build your emergency reserve. Then diversify your portfolio and get closer to your dreams.
Do you have questions or suggestions? You can leave them in the comments!
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