At some point we all get tired of binge-watching shows or swiping through endless social feeds in your free time. Then it’s important to remember that at any given time you could turn your downtime into potential money-making moments. We are talking about investing as a hobby.
And no, you don’t have to be Warren Buffet to get started. So in this article let’s dive into how you can begin your investment journey with just a dash of curiosity and a sprinkle of spare change.
Let’s get started!
Basic investment types –stocks, bonds and more
When most people think of investing, the stock market immediately comes to mind. But did you know there are many other ways you can invest your money? It’s all about figuring out your risk tolerance and financial goals.
So here are 5 options how your new everyday life addition can be investing as a hobby.
1. Stocks – you can own a slice of a company
When you buy a stock, you’re essentially buying a small piece of a company. If the company does well, your stock’s value generally increases. On the flip side, if the company tanks, your stock value will likely drop. It’s high-risk but can also be high-reward.
If you’re into the idea of riding the rollercoaster of a company’s ups and downs, and you have a good understanding of the market or a particular industry, stocks could be for you.
For example, Tesla’s stock has been known to swing wildly, offering opportunities for high returns (but also risks for significant losses).
2. Bonds – let’s you be the lender, not the borrower
The next choice is bonds which are more like an IOU. You lend money to the government or a company, and they pay you back with interest over a fixed period.
If the idea of less risk appeals to you and you don’t need immediate access to your cash, bonds are a safer bet.
3. Mutual funds – a way to let the pros do the work
A mutual fund pools money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other assets, managed by professionals.
If you want to diversify your investments but don’t want the hassle of picking and managing individual stocks and bonds, a mutual fund could be for you.
For example, Vanguard’s S&P 500 index fund is a popular mutual fund choice.
4. Real estate – get some bricks and mortar bucks
Another great way of investing as a hobby is to invest in real estate. That way you’re buying physical property – whether that’s a home, an apartment building, or commercial real estate. With the expectation that it will increase in value or generate rental income.
If you’re interested in a tangible asset and have the cash to make a down payment, real estate can provide long-term returns and passive income.
For example – websites like Zillow can help you research property values and market trends.
5. Cryptocurrencies – invest money the modern way
Cryptocurrencies like Bitcoin and Ethereum are digital or virtual currencies that operate independently from a central bank. They can be super volatile but offer the allure of massive returns.
If you’re open to high-risk, high-reward scenarios and are interested in emerging technology, cryptocurrencies could be your cup of tea.
Platforms like Coinbase make it relatively easy to start trading cryptocurrencies.
So there you go! Each of these investment types comes with its own set of risks and rewards. Depending on your financial goals, time horizon, and risk tolerance, you might find one or more of these options appealing.
Happy investing! 📈
Always set achievable goals
You wouldn’t embark on a road trip without a destination in mind, right? The same applies to investing.
Setting achievable goals gives you a clear direction and helps you choose the right investment types for you.
So take care of:
- Short-term goals – perhaps you’re looking to take a vacation next year. In that case, a low-risk investment like a bond or a Certificate of Deposit (CD) could be ideal.
- Long-term goals – saving for retirement or your kid’s education? Stocks or mutual funds may provide the higher returns you’re looking for, given a longer time horizon.
Investing as a hobby isn’t a guaranteed way of getting a lot of money fast. It requires some knowledge that will take some time too.
What you really need to start
So you’re pumped about diving into the world of investments, but there’s this nagging question: “How much money do I actually need to start?”
Look, there’s this myth floating around that you need to be rolling in dough to get started with investing. Spoiler alert – it’s just that, a myth.
In today’s digital age, the barriers to entry have never been lower. You can kickstart your investing journey with a surprisingly small amount of cash. We’re talking about enough money to buy a fancy cup of coffee or a couple of movie tickets. No need to break the bank or dip into your life savings.
The key here is to start where you are with what you have. Because the most important investment you can make is taking that first step.
Here are the starters to consider:
- Time – you can spend as little as an hour a week to start. The key is consistent, informed decision-making.
- Money – start small. Really, even $20 can get you going on some platforms.
Apps like Acorns or Stash allow you to start investing with just spare change. And if you’re worried about the time commitment, robo-advisors like Betterment take care of the investment decisions for you.
Tech tools for the modern investor
Being a hobbyist investor in the tech age has its perks.
Here are some tech tools to consider using:
- Investment apps – user-friendly platforms like Robinhood or E*TRADE makes stock trading a breeze.
- Analytical tools – websites like Seeking Alpha or tools within your trading app can provide invaluable market insights.
- Automated advisors – robo-advisors like Wealthfront can manage your portfolio using algorithms, saving you time.
The abundance of tech tools available can make your investment journey smoother and more informed.
In conclusion – your money should work for you
There you have it, folks. Investing as a hobby is not just possible – it’s also incredibly exciting and potentially rewarding. The key is to start small, educate yourself, and enjoy the process.
And remember that you’re not just investing your money – you’re also investing in a skill that can pay lifelong dividends. So go ahead, give it a try, and who knows? Your new hobby could be your ticket to a future of financial freedom.
Check out our other articles such as Practical gadgets to make everyday life easier.
Happy investing! 🚀💰