5 small-budget portfolio ideas for beginners to grow wealth
What's the story
Building a portfolio on a small budget can be the best way for beginners to kick-start their wealth enhancement journey. With some smart planning and nifty moves, even small investments can grow with time. In this story, we take a look at five small-budget portfolios that beginners can consider to up their financial game. Each option offers an ideal risk-reward balance, making them perfect for newbies.
Portfolio #1
Diversified index funds
Diversified index funds provide an opportunity for beginners to invest in the entire market with minimal capital. These funds replicate major indices such, providing exposure across different sectors. They are accompanied by low expense ratios and minimal charges, making them affordable for the budget-conscious. Regular investment over time can bring about significant compounding, even with small amounts.
Portfolio #2
Government bonds
Government bonds are one of the safest investment options out there. They give fixed interest payments at periodic intervals and return the principal amount on maturity. For beginners with a low-risk appetite, government bonds provide stability and predictable returns. You need minimal capital to invest in these bonds, which makes them a good choice if you are starting with a smaller budget.
Portfolio #3
Real Estate Investment Trusts (REITs)
Real Estate Investment Trusts (REITs) let you invest in real estate without having to own a property directly. REITs combine money from several investors to buy income-generating real estate assets, such as commercial buildings, apartments, etc. They usually pay dividends on a regular basis, providing you with both income and appreciation benefits over time. For beginners considering property investments but not having deep pockets, REITs make for a lucrative alternative.
Portfolio #4
Peer-to-peer lending platforms
Peer-to-peer lending platforms directly connect borrowers with lenders via online platforms, avoiding the involvement of traditional banks altogether, while providing higher interest rates than savings accounts or CDs (Certificates of Deposit). As a beginner, you can start by lending small amounts across various loans, minimizing the risks of individual defaults, while earning attractive returns as compared to conventional savings methods.
Portfolio #5
Mutual Funds with low minimum investments
Mutual Funds pool money from several investors into professionally-managed portfolios, concentrating on stocks or bonds depending on the fund's objectives. This ensures diversification with lower minimum investments than other asset classes, allowing for wider market exposure. Over the years, with patience, this can result in the best outcomes and wealth creation.