You’ve probably heard wealthy individuals say you don’t need any money to start investing. This usually sounds too good to be true, but it’s true to some extent. Investing is about creativity. In fact, your ideas are more valuable than money. Here’s how to invest with no money down.
1. Consider a trade
You can generate money for investing by trading in something valuable like; your house, car, boat, land, expensive artwork, furniture, etc. Many possessions can be turned into money for investing. You can also trade in a specialized skill. For instance, you can offer a property developer labour in exchange for down payment on the property you want to buy. This applies if you have a tradable skill that the developer is interested in. A trade can help you take on investments that would take you months if you wait to accumulate money. However, you should ensure you have a legal agreement in place prepared by a reputable lawyer.
You can also find a partner who will provide funding if you don’t have any money. To succeed using this option, you need to offer an attractive proposal. For instance, you can take a management role in the investment project. This option also requires a sound legal agreement stating how profits will be shared and the responsibilities of each party. If your partner’s role is offering financial support only, ensure you have control over every other aspect.
3. Adjust your budget
There is always room to save in your budget. If you want to invest, but you have no money, consider rearranging your budget. Assess your monthly expenditure to identify unnecessary expenses or areas where you can spend less. If you think the investment is life-changing, a complete budget overhaul is recommendable. You can always move to a cheaper home or make other drastic changes to your lifestyle if the investment is worthwhile.
4. Increase payroll deductions
Most people have their salaries deposited into a current account, however, your salary can be deposited in any account. This can allow you to direct some money to a money market for future investments. This option is viable if your net salary allows further deductions. A new deduction can help you secure a facility that can enable you take on new investments. You can take on retirement investments using this tip. Remember, increasing the amount of money that goes to your retirement account is still investing.
5. Take a home equity loan
Loans are good if you use them for investment purposes. Short terms loans like payday loans are supposed to be taken sparingly because they cater for emergency expenses. A home equity loan enables home owners to borrow on the appreciated value of your home. The loans open a new line of credit that is easy to get even when you have an existing mortgage. This option applies when your home has appreciated in value. You should also shop for a good rate otherwise it won’t make sense to invest when the ROR is lower than the cost of the loan. You should also understand the risks surrounding home equity loans i.e. you can lose your house if you don’t pay back the loan.
6. Borrow from family and friends
This is a less risky option that is open to everyone when you want to invest with no money. Instead of going for bank loans, you can borrow from friends and family members. This may not be the best way of getting a significant amount of investment money; however, you can get money in a short time. It is advisable to borrow officially using a promissory note specifying interest rate, due dates among other important info to secure funds. Most family members and friend can be apprehensive to loan you if there is no formal documentation. You can also strain the relationship if you don’t keep your word.
7. Save up
Lastly, you can wait until you have a substantial amount of money. Investments don’t have to be urgent. This option is good if you don’t want to get into debt. It can take some time to accumulate a “respectable” amount of money (such as £1000); however, you will avoid common risks associated with traditional credit. You can give yourself a year to accumulate some money and then start investing once you have some “seed” money.