Investing as an Unemployed Parent With Limited Funds
Being an unemployed parent already presents a lot of challenges. You want to provide the best life for your children, but you have limited resources to pay for daily expenses. Whether you’re unemployed due to COVID-19, a disability, or some other reason, you probably want to know how you can invest in your future — and your children’s future — with limited funds. Fortunately, there are multiple ways that you can learn how to start investing money smartly and start building a nest egg for your family.
3 Steps to Invest With Very Little Money
You may think that being unemployed means that you can’t invest. Contrary to popular belief, you don’t need a lot of expendable income to invest. So, let’s look at the top 4 ways to invest with very little money:
Open a Savings Account
While a small savings account won’t see huge returns, it is a step in the right direction. Many savings accounts allow you to get started with just a few dollars. The important thing is to set aside a certain amount each week or month for savings. This way, you can slowly build up funds to put toward more fruitful investment opportunities in the future.
As of 2020, the average savings account interest rate is less than 1/10th of 1%. That means that your $100 would only accumulate a little less than ten cents in interest over the course of a calendar year. So, don’t think of your savings account as an investment. Instead, think of it as a holding place for your investment funds. This way, you have a separate account for money that you know you can’t spend. This will also encourage you to add to your ever-growing savings!
Use Low-Cost Investment Apps
Once you have some money set aside — let’s say $100 — you can start to look for opportunities to invest. After all, if you just let your money sit in a savings account, you won’t expose yourself to risk, but you’ll also see very small returns. So, turn your attention to low-cost investment apps like Acorn and Robinhood.
Acorn is best for new investors, as it takes the responsibility off your shoulders. Every time you make a purchase, the amount is rounded up to the nearest dollar and that extra money is invested in money market accounts and similar-low risk funds. You can even adjust the settings so that Acorn only invests your money in companies that reflect your core values and interests. However, you will have to pay a small fee to use Acorn services, which will cut into your bottom line.
Alternatively, you can use Robinhood, which is completely free. However, the responsibility to invest is completely in your hands. This means that you will need to do research on your own to make smart investments. However, you won’t have to pay any fees, so you can keep every penny that you make! Additionally, Robinhood has recently introduced fractional shares, which means that you can invest small amounts of money into some of the most popular and profitable stocks in the world!
Open a Retirement Fund
The combination of a savings account and a low-cost investment app will help you build funds over time. Once you’re ready, you can begin moving funds into a long-term retirement account. These accounts typically offer greater security and don’t require you to micro-manage your investments or pay high fees. Combining savings, personal investments, and long-term retirement funds will ultimately provide you with greater financial stability and a nest egg to pass on to your children — even if you only start with a few dollars!