What do you do with the money if you have at least $200 left at the end of the month?
And if it’s $2000? There are many suitors for free money: banks, shopping malls, and that “super-profitable Internet business.
It’s more interesting to spend money in a way that gives a lot of money back later. Here’s what financial experts advise people with different amounts: from $200 to $500.
There is not necessary $ 200 monthly
Situation. A woman wants to open a brokerage account and buy securities. She’s willing to invest $200 each month – but she doesn’t know where to start.
What to do. It’s too early to invest. But it’s time to start putting money aside for a deposit, plan a budget, and figure out why we need investments in the first place.
Why this is the case. It is not profitable to start with $200: securities are often more expensive, and another part of this amount is eaten up by broker’s commission. Even if you manage to invest it, you won’t be able to put together a complete portfolio with various instruments to reduce risk. That is why it is better to put away money on a deposit or on a card with an interest on the balance every month, and open a brokerage account when you have accumulated $5000-6000.
Investing in the stock market is always a risk. But there are several ways to minimize it:
- Determine your investment objective, that is, understand how much money you want to get and by when. The choice of investment instruments depends on the goal. For example, the prices of stocks and ETFs fluctuate widely, so investing in them for the short term is undesirable.
- Create a diversified portfolio: if some securities fall in price, others will help the investor stay in the black.
- Create a safety cushion. If an investor suddenly loses their main source of income, it’s better to have a stash on their card than to sell stocks in an emergency.
Invest regularly.
Have $2,000 each month.
Situation. A man used to support his family on his $5,000 salary. But now he has an extra $2,000 a month in income. He does not know what to do with it: repay the loan, put it aside or just spend it on whatever he wants, like playing Goodwin casino Armenia-ի.
What to do. First of all it’s a loan and a safety cushion, and then you can start spending it on yourself.
Why this is the case. The family relies on only one source of income – the man’s salary. This is risky: in the case of illness or dismissal will have to go into debt and lose insurance. Back up in this situation can only supply, and the money should be enough for a few months of normal life. If a man were to set aside all his extra income, it would take him six months to save for 2.5 months of normal life – $12,000.
Another way to make good use of the money is to pay off the loan and save on interest. If the rate of the loan, for example, 12%, the benefit will be the same as if a man invested the money at 12% – and to find such an income is not so easy.
You can not give the bank the entire balance of the debt: it is worthwhile to simply pay more than necessary, while reducing the amount of the mandatory payment. This will help pay off the loan faster, and reduce the financial burden of the future if money problems arise.
You have $5000.
Situation. A woman has $5,000. She wants the money to work, but doesn’t know anything about the stock market, and doesn’t know how else to use it profitably.
What to do. It all depends on the woman’s financial situation and her goals. You can close a debt if you have one, or you can put the money in a bank or pay for courses if they will help you earn more. Investing is also possible, but without risk.
What are the options. There is no single correct answer to the question “how to spend money”. But there are several options, one of which may be appropriate in a particular situation.
To benefit right now, a woman can close loans early, if there are any, and save on interest. Or learn something new and increase her salary.
If the prospect is long-term, the money can be put on deposit. It won’t add much money, but it won’t lead to losses: the interest on the deposit is usually enough to cover inflation.
But to make a profit, you still have to invest. There is no need to be thorough in this process: you can use the services of a management company and invest in one or more mutual funds. But this is not as profitable as independent investments, and more risky than keeping money on deposit.
An amount of $5,000 is enough to build a diversified portfolio. It’s more reliable to invest in federal loan bonds, but their yield is slightly higher than a deposit. Stocks and ETFs on stock indices can bring more money, but the risks are higher: to increase the chance of making money, keep the papers for at least 2-3 years.
Another option is to invest in a secure future: take out life and property insurance, or invest in your own health. It is worth once again to be examined, to go to a sanatorium, have a massage, cure your teeth and remember about an active lifestyle, so that you do not spend huge sums on treatment.
