The 3 Simple Tricks to Successfully Invest On A Small Salary

Investing can seem out of reach for people on a small salary. If you make less than $40,000 per year you might have thought of this yourself at some point. However this is far from the truth. There are 3 tricks that anybody on a small salary can use to start their investing journey.

The world of investing is open to anybody regardless of their total salary. The trick is to know what to buy and when to do it. Some of the world’s most successful investors started with an incredibly small salary. For example, Ray Dalio, owner of Bridgewater Associates, started his investing journey by buying and flipping $300 shares of U.S airline stocks. (Source)

The trick to investing on a small salary is to start by investing small. Over time your investments will add up to a sizable amount. If you’re diligent with these 3 following tricks then you will be well on your way to becoming a millionaire.

Here at Chronohistoria I teach people how to generate above normal market returns in their portfolios. I routinely publish articles on investment strategies, research, and tips/tricks of the trade so that you are better prepared. Feel free to sign up for the free newsletter to remain up to date on everything investing.

Let’s jump right into the 3 simple tricks to successfully invest on a small salary.

Small Salary Investing Trick 1: Buy Large Cheap ETF’s

One of the easiest ways to invest while on a small salary is to buy lower priced electronically traded funds. The reason behind this is because each one of these ETFs track an index.

For example instead of you buying the SPY which is priced currently at $450 you could buy VTI which is priced at $235. This instantly lowers the price of entry into the position. VTI will grow at nearly the same rate as the SPY which means that for less money you can capture the same amount of growth.

Further, since you own an ETF your total risk is rather low. This is because each 1 share of an ETF is actually composed of 100’s or 1000’s of much smaller stocks. In order for you to lose 100% on your total investment all 1000 of the smaller stocks would have to fail. The chances of that happening are slim to none.

Here are some cost effective options for large ETFs that are solid picks.

• VT: Total World ETF ($105)
• IVOG: Mid-cap Growth Fund ($203)
• VTI: Total U.S stock Market ($234)
• FNILX: Zero Price Large Cap Index Fund ($16)

Each one of these are solid picks. If you’re interested I wrote up an entire article on the top 5 best ETFs for beginners to invest in. (Click here if you want to read it)

Small Salary Investing Trick 2: Buy Mid Cap Companies

Here is a secret that many investors don’t know. All major growth in the current market happens not in small or large cap companies, but rather in the goldilocks zone that is mid cap companies.

A mid-cap company is defined as a publicly traded company with a market capitalization value between 2-10 billion. This means that the value of their shares adds up to be between 2-10 billion. This is where all the growth happens.

The reason that mid-cap companies are great investments is simple. A vast majority of investors fail to accurately value a mid-cap company. This leads to a large opportunity for an educated investor to invest. (source)

Further, these mid-cap companies are normally priced under $100 per share. This means that you can easily grab a couple shares of these companies. This is perfect for someone on a small salary.

Here is an example list of some mid-cap companies so you know what to look for.

• American Eagle Outfitters. (AEO)
• Blackbaud. (BLKB)
• Bank of Hawaii. (BOH)
• Crocs. (CROX)
• EQT. (EQT)

The mid-cap zone of stocks is one of the best places to be as an investor. The reason is because these companies are not as widely known in the market and as such can rapidly rise in price in relation to news/events. I wrote up an entire article going over how to invest in these mid caps, which you can read if you’re interested in this type of investing methodology. (click here)

Small Salary Investing Trick 3: Buy Fractional Shares

Here is another trick that many investors don’t know about. Depending upon your broker you can actually buy what’s called a “fractional share.” These fractional shares are smaller slices of larger shares. So instead of buying one share for $1000 you can buy only 10% for 100. (source)

In order to go about doing this you need to reach out to your broker. By this point a majority of brokers will allow fractional share buying of the more popular stocks such as VTI, SPY, GOOGL, FB, and AMZN. However everyday more and more fractional share options are being added by the larger brokers.

By holding fractional shares you can actually build your own ETF. This can be done by spreading out an investment of $1000 across as many stocks as you think are correlated. For example, you can buy 2,000 fractional shares of all the U.S tech stocks on the market with only $2,000.

The trick to doing this is to see if your broker will allow you to buy fractional shares.

Conclusion

There you have it. The 3 simple tricks to successfully invest on a small salary. Nowadays anyone can buy good investments with only a little bit of money. Further, every day that goes by companies engage in stock splits to make their shares more affordable to the general public.

Over time these 3 tricks will allow you to snowball a small amount of money into a huge ball of cash. The trick however is to remain diligent in your investing journey and stick to solid advice and investing wisdom.

That’s where I come in. Here at Chronhistoria I teach people to generate above normal investment returns in their portfolios. I do this so that everyone is better prepared to generate returns in today’s crazy stock market.

I routinely publish articles that go over investment methodologies, research, and tips/tricks of the trade. Feel free to sign up for the free newsletter to remain up to date on all things investing. 

Further, you can check out some of the other articles below.

Until next time, I wish you the best of luck on your investing journey.

Sincerely,