How to Build Wealth When You're Broke!

Even if you only have .50 cents, you can build wealth through investing in stocks. Here's why it's important and how you can do it!

Many Americans, especially during the pandemic, are completely strapped for cash. However, like some of my friends, if they completed a monthly budget, they might find $3.00 or more to invest per week.

Bankrate recently surveyed 2,500 Americans. The results were staggering in terms of lack of wealth-building for individuals in the U.S.

• 39% of adults say they have no money to invest in the stock market.

• Lack of resources holds back 56% of adults from investing.

• Lack of investing knowledge holds back 32%.

Sowing Seeds of Doubt

Because we have been led to doubt so much information over the past few years, research has found many now believe the market is rigged against individual investors. More than half of those surveyed felt this way. Yet - nearly 94% of the top income group owned stocks in 2016 according to the Federal Reserve. Many of these individuals have flourished financially through the pandemic (Billionaires Got 54% Richer During Pandemic, Sparking Calls for "Wealth Tax" - CBS News, March 31, 2021). How did they get richer? They invested in stocks and benefited from a system that many feel is designed for them to fail!

Track Where You Spend

As detailed in Don't Die Broke: Easy Steps on How to Save, Invest, and Build Your Wealth, so many of us are guilty of spending our income on feel-good discretionary pleasure items such as eating out, coffee, cigarettes, alcohol, etc. Download a budget spreadsheet and track where you spend money for 2 weeks. I did this and found I wasted quite a bit of money on coffee and other unnecessary items.

Unlike even five years ago, you now can purchase fractional shares of mutual funds or stock in major growth companies such as Amazon, Tesla, Microsoft, and Square.

Fractional shares means, instead of paying approximately $3,000 to own one share of Amazon, you can now pay $5.00 or less to own a piece of the company. Now you benefit financially from the company's growth. The same applies to mutual funds (which are much safer investment vehicles when starting out as a new investor).

What Do The Wealthy Know About Investing in Stocks That You Don't?

The wealthy understand that money grows through compounding interest over time. Visit this Compound Interest Calculator to learn how this principle works if you are not familiar. Follow these steps on the calculator:

1. Enter an initial investment amount of $50.00.

2. Enter a length of time of 10 years.

3. Enter a conservative investment rate of 8%.

4. Calculate

You will see your $50.oo investment is now worth $107.95. Your money has doubled in value over 10 years. An index fund that tracks the S&P 500 can generally garner you a safe yearly return between 8% - 10% over 10 years.

Now, add a Monthly Contribution of $20.00 in the blank field and calculate.

Over 10 years, you will have contributed $2,450.00. With the power of compounding interest, your money will have grown to $3,584.72.

If you invested this same $50.00 in a bank savings account at a 1% yearly interest, your money would have grown to $55.23 over a 10 year period. When you park your money in a regular bank account, it diminishes in value over time due to inflation. That’s not great for long-term goals like retirement. “Over long periods of time, you’re not going to maintain the value of your money, much less grow it,” says Greg McBride, Chief Financial Analyst for Bankrate.

Stock Market Facts!

From 1965 through 2020, the S&P 500 produced a 10% annualized gain, for an overall gain of more than 23,000%.

The wealthy know the secret. The stock market, over time, is not rigged. Long-term investing can grow wealth!

How Do I Get Started Investing?

It's simple. Purchase or gift a copy of Don't Die Broke: Easy Steps on How to Save, Invest, and Build Your Wealth. Before beginning to invest, you most certainly want to understand the following:

• How to set up your budget for saving and investing to build wealth.

• Simple budgeting tips for saving and investing to build wealth

• The facts that erase the fear of investing (this is critical!)

• How your money grows long-term on the stock market.

• Where to go to start investing now for $5.00 or less (beginning with fractional shares of great mutual funds or stocks).

Investing in the Stock Market is EASY

The hard part is getting started. The easy part is watching your money grow over time! Remember, get started, stay with it, and Don't Die Broke!

Learn more about investing in Don't Die Broke: Easy Steps on How to Save, Invest, and Build Your Wealth by R.L. Borom.

Tip of the hat to the Acorn Newsletter for some of the stats cited in this article.