Different Ways to Increase Investing Capital
I was having a chat with a few of my juniors from Uni days and they all seem to have this common issue of not having enough capital to start investing. Most of them have at least 2 years of working experience and they work from paycheck to paycheck. The most basic investing would probably be buying funds from their insurance agents or banks' financial advisers. As such they can't seem to find the capital to invest in other ways... I shared two strategies with them and decided that maybe I should share it here as well, hoping to see if there are more strategies I can share with them in the future.
Save Before Spending
What I usually do after my salary is credited is to split them into different accounts; savings, family funds, personal spending and investing capitals. The idea is to segregate every penny before it's free to be spent. It's tough when you walk around the malls and they have sales or discounts, they make you think that you are saving a certain costs instead of spending that certain amount.
The 2nd part to this is to make the savings and investing capital the most complicated to withdraw, especially for investing capital. By having both accounts the hardest to access or withdraw, you force yourself to jump through more hoops then required to pay for something, which might be more luxurious than you would need.
Turn Impulse Spending into "Impulse Capital"
I recently started doing this and it's something that is becoming a habit. My wife isn't liking it very much but it's starting to work very well for me. We have impulse buys especially during the festive periods, an expensive bag to add to that collection of bags, a bottle of wine that costs more so you won't look like a cheapskate in front of your friends. I admit I'm a victim and I do have impulse buys before. So I've decided to do this each time I have an impulse buy before I make payment at the cashier.
My recent "impulse capital" was for a pair of jeans at Uniqlo, it was marked down from $79.90 to $59.90, a savings of $20! While the wife is shopping for her work wear, I decided to try a pair. After trying out, that impulse buy feeling came upon me. I didn't need that pair of jeans but since it was on offer I had that feeling I was going to save! So as I clutched that pair of jeans while walking around the store, I whipped out of my phone. I transferred $60 from my personal spending account into my trading account.
Once that was done, I felt I was $60 "poorer". Suddenly that pair of jeans in my hands didn't feel that worth it anymore. I placed it back on to the shelf and walked away. Immediately I changed from an impulse buy to investable capital, additional monies from my monthly contributions.
Other than reinvesting dividends, what other ways would you recommend in increasing investing capital?
