Do you feel like you don’t have enough money to start investing? I have been reading The 4-Hour Workweek by Timothy Ferriss, which goes though his path to working less and spending more time enjoying life. One recommendation he makes is for you to list all of your expenses on a single sheet of paper. Go through your expenses line by line and ask yourself, “Does this contribute to my happiness?” It is actually a really powerful exercise because it forces you to reevaluate and get rid of unnecessary expenses. I recommend you give it a try, and see if you can create some wiggle room in your budget so you can start investing!
Let’s assume you come up with $50 per month of spending cuts. This could be from getting rid of premium cable channels, or dropping magazine subscriptions you don’t read any more. Where should you invest the money? Roth IRA’s may have minimum deposits that are more than $50 and, assuming you have your emergency fund fully funded, putting it into a savings account earning almost no interest can be hard to stomach. I recently spoke with Aaron Crowe, a writer for WiseBread, about places you can invest your $50 a month. One idea was to use LendingClub…
"Instead of putting your money in some big bank or company and not knowing where your money is going, loan money to your peers through Lending Club and avoid putting your money in a nameless, faceless bank. Alan Moore, a financial planner in Shorewood, Wis., recommends it as a great way to start investing partly because the initial investment can be made for $25. Loan returns range from 5.73% to 9.90%, which is much better than a savings bond, CD, or other savings account method. The loans can be risky, so it’s a good idea to diversify with small loans to a variety of borrowers instead of loaning most of your investment with one person."
Aaron presented several other unique ways to invest for $50 a month or less. You can read the rest of the article here.
Alan Moore is a fee-only financial planner and founder of Serenity Financial Consulting in Shorewood WI. Follow him on Twitter @R_Alan_Moore. You can contact him at firstname.lastname@example.org, 414-455-5313, or visit his website at www.SerenityFC.com. Want more education? Download your free guide to the “10 Easy Steps To Securing Your Financial Future Today.”