Stock exchanges. ETFs. Money market. Bonds. Shareholding. Assets and liabilities. Diversified portfolios. For a new investor, the flood of unfamiliar jargon can be foreign, frightening, and downright intimidating. Add to that the complication of a low income, and the stage is set for unwise investments, wasted funds, and a (potentially indefinitely) delayed retirement. This is the prospect that many people face today: single parents, recent college grads, newlyweds, and even middle-aged men and women whose youthful frivolities have left them crippled with debt. Should these people even be considering investing?
I would argue that not only should low-income households consider investing, but it can even allow these people to thrive in ways that they did not think possible. Thriving financially begins before investments start, with the choice to get personal finances under control. Complete stability is not necessary, but each person needs to understand his financial position. This allows the young, single mother to know how much leeway she has for investment risk, or a recent graduate to know how much debt should be eliminated before beginning to invest. The second step to financial well-being is investment education. Uninformed investment can be disastrous, and low-income people have less margin for error than others who have more financial breathing room. Finally, thriving starts small. Certain investments are better to establish as your foundation than others, so it is important to learn exactly what those introductory investments are and where they can be found. Continue reading “Investing With A Low Income”