5 smart ways to invest and build long-term wealth
What's the story
Investing small amounts of money regularly can make you financially independent. Yes, even if you don't have much money, there are several tricks that can help you build wealth in the long term. All you need to do is start early, stay consistent, and pick the right investment avenues. Here are the five best ways to invest small amounts for long-term benefits.
Savings account
Start with a high-interest savings account
A high-interest savings account is one of the best ways to start investing small amounts. These accounts provide better interest rates than regular savings accounts, enabling your money to grow steadily over time. By depositing a fixed amount regularly, you can reap the benefits of compound interest and gradually grow your savings without exposing yourself to much risk.
Mutual funds
Explore mutual funds for diversification
Mutual funds combine money from several investors to buy a diversified basket of stocks and bonds. By diversifying, they minimize risk while offering potential returns greater than standard savings accounts. Many mutual funds also let you start investing with just ₹500 a month, making them affordable for people with limited cash.
ETFs
Consider Exchange-Traded Funds (ETFs)
Exchange-Traded Funds (ETFs) are similar to mutual funds, only, they trade like stocks on an exchange. They provide diversification across various sectors and asset classes, at a much lower cost than many mutual funds. With ETFs, you can easily invest small amounts periodically with the help of fractional shares or dollar-cost averaging strategies.
Micro-investing apps
Utilize micro-investing apps for convenience
Micro-investing apps have also made it easier than ever to invest small sums regularly. These platforms let users round up everyday purchases and invest the spare change into diversified portfolios automatically. This way, you can build an investment habit without having to put in large upfront capital or extensive financial knowledge.
Government bonds
Invest in government bonds for stability
Government bonds offer a stable investment option with low risk as compared to stocks or other securities. By buying government bonds in small denominations, investors get periodic interest payments till maturity, when they get back their principal amount too. This makes it perfect for the conservative investor looking for steady income streams over time without much volatility risks involved elsewhere within markets today.