How to start investing 101

Blog March 2024

Ways to start and what you need to know

Investing doesn’t require you staring at charts, account sheets, and candlestick graphs for hours. If you’re wondering about how to start investing, you can start investing with very minimal money and let it grow by itself. Invest wisely so that your money works for you to make more money.

How to start

Investing is an essential part of money-making which is why everyone should start investing. Starting to invest has two parts – understanding the basics of investing and finding the right investment strategy.

We have a detailed article on both which we recommend reading if you are a beginner trying to figure out how to start investing.

When to start

There is no better time to start investing than ‘now’. Doesn’t matter if you are a student, fresher at work, or C-level officer, if you haven’t started investing yet, do it now.

Students can start trickle investing; starting at $50 in assets like equity and crypto while at the same time understanding the ins and outs of investing.

Where to start

Investing choices are abundant and there are a lot of automated, semi-automated, and managed investment vehicles to get started on. No, we are not talking about the trillion-dollar hedge funds. You can start investing as low as $50 from day one, even without much knowledge in investing. Here are some of our picks for you.

Investment 101

The question of where should you invest and how to start investing is where most struggle. Once the first step at investing is made, the whole ocean looks like an easy sail. We’re here to bust the fear of first-time investing and help you make baby steps in investing.

Robo-advisors

Robo-Advisors are investing accounts that automatically allocate your funds to various mutual funds, ETFs, and other investing mediums.

On opening a robo-advisor account you will be prompted to answer a few questions to identify your investing goals and risk appetite. From then you can add funds in any size, any time and the algorithm will balance your investments across various asset classes for the best outcome based on past performance data.

Nothing comes for free. So does the robo-advisor account. You will be charged a nominal fee far lesser than human advisors or managed funds. Robo-advisor accounts are a great choice if you are getting started and don’t want to get into the numbers and charts of investing.

Investments funds

If you want a little more control and allocate funds yourself, Index Funds, Exchange Trade Funds (ETFs), and Mutual Funds are good options. Here your money is part of the pool that is invested in a genre like a commodity, top 50, etc. Mutual Funds are actively managed, ETF are passively managed, and Index Funds require even lesser management.

Mutual Funds and Index Funds can be bought and withdrawn like operating money in and out of an account and come with a small fee.

ETFs are very similar to Index funds except they are traded in the exchange so the fees are lesser comparatively. The minimum barrier to investment funds is a little higher at around $500.

Start with Real Estate

“Ninety percent of all millionaires become so through owning real estate.”
– Andrew Carnegie

Real estate is the most solid asset class that gives both rental revenue, and revenue through appreciation. But investing in real estate comes with its own drawbacks of being a landlord.

But don’t worry, owning a real piece of land is not the only option to investing in real estate. REITs and Real Estate Crowdfunding are gaining popularity which enables people to start investing as low as $5,000 and also have a diversified portfolio of family and commercial properties.

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FAQ

Any questions

What is affordable housing?

Affordable housing refers to housing units designed to be accessible to low- and moderate-income families, typically costing no more than 30% of their gross income.

The definition of “affordable” typically varies depending on location and income levels but generally encompasses rent or purchase prices that don’t exceed a certain percentage of a household’s income.

What is Section 8 housing in the US?

Section 8 is a federal rental assistance program in the US run by the Department of Housing and Urban Development (HUD) that helps low-income families and individuals afford decent and safe housing in the private market. 

The program provides eligible households housing choice vouchers that cover a portion of the rent directly to the landlord, with the tenant paying the remaining amount. Property owners who participate in Section 8 agree to rent units to qualified individuals and families at a rate approved by the program.

How can I invest in Section 8 housing?

There are several ways to invest in Section 8 housing:

  1. Direct ownership: You can purchase a property approved for Section 8 and rent it to a qualified tenant using a voucher and receive rent subsidized by the government.
  2. Real estate investment trusts (REITs): REITs pool investor funds to purchase and manage income-producing real estate, including affordable housing.
  3. Limited partnerships: Limited Liability Companies (LLCs) offer another option for investors to pool resources and invest in affordable housing projects.
What is the difference between multi-family and single-family properties?

Single-family property: This refers to a standalone house or unit designed for and rented to one household.

Multi-family property: This refers to a property containing multiple dwelling units, such as a duplex, apartment building, or condominium complex. Multi-family properties offer the potential for higher rental income but typically require different management strategies and considerations compared to single-family homes.

What is the difference between buying and flipping houses?

Buying and holding: This involves purchasing a property to keep it as a long-term investment, generating rental income and potentially appreciating in value over time.

Flipping: This involves buying a property, renovating it to increase its value, and then selling it quickly for a profit. This is a more hands-on strategy with higher risks and rewards compared to buying and holding.

How much do I need to start investing in affordable housing real estate?

The minimum investment required varies depending on the chosen method. Direct ownership typically requires a higher initial investment for the property purchase, and renovation up to Section 8 standards, while other options like REITs might have lower minimum investment amounts.

Do I need to be a US citizen to invest and own the property?

No, US citizenship is not a mandatory requirement for investing in affordable housing in the US. However, specific restrictions or regulations might apply depending on the investment method and your residency status.

It’s crucial to consult with a professional to understand the legal and tax implications for non-citizens.

Do I need to pay US tax as an overseas investor?

This depends on the type of investment, your residency status, and any applicable tax treaties between your home country and the US.

Consulting with a tax professional specializing in international investments is highly recommended.