Ways to Invest With your Spare Cash

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If you only have a small amount to invest, it doesn't have to mean that you have less likelihood of a good financial return. There are plenty of excellent ways to save for the future and watch your money grow even by just investing some of your spare cash. Here are a few ideas to get you started.

Start Young and be Consistent

One of the best ways to make money when investing with a smaller amount is to take advantage of compound interest. Compound interest is basically the accumulation of interest over time, so if you are looking to maximise your small amount of spare cash, a high rate savings account can be a good place to start. For example, say you deposited an amount of £5,000 into a savings account with an interest rate of 5 percent. Over 10 years, that would make your original investment jump to £8,235.05 which is not bad considering you have done nothing to earn that and simply left your money doing all the work for you. The younger you start, the less you need to save every month in order to still see a good return. As high rate savings account can be in short supply, another great way to see the best return on a small investment is by investing in stocks and shares.

Although the stock market can be volatile and your investments may fluctuate, this should not deter you from consistently investing. Most brokers will offer an option to regularly invest the same amount every month, so you can watch your portfolio grow with other money you might of just spent without thinking. While many buy and sell shares in order to make a profit, one of the best ways to utilise a small investment is to buy shares with companies that have a high dividend yield. Dividend amounts are usually paid out to shareholder bi-annually and once again create a fantastic way for your money to earn you more just by leaving it alone. The price of the stock may rise and fall, but dividend pay-outs usually remain much more consistent.

Don't be Afraid to Trade Online

Trading online is the easiest way to take control of your investments. Many platforms offer great features to help you interact on a daily basis with your portfolio and adjust it as required. Dividend reinvestment is a great tool most platforms like Hargreaves Lansdown and A J Bell offer, meaning every time you receive a dividend payment, this is automatically used by your account to buy more shares in that company. As your amount of shares increases, so does your level of dividends until it gets to the point that your account is pretty much sustaining and growing by itself. If you prefer not to reinvest, you can enjoy your dividends as passive income - not a bad days work for again letting your money work for you. If you are still wondering if the stock market is for you, there are plenty of other low investment business ideas here which can give you an indication of where else may be good to invest your money, even for those with just a small amount of capital to start with.

By Larisa Wong

© 2020 Copyright Larisa Wong - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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