If i am living at poverty level, what are my best option for savings and investment?

I currently make just above poverty level. I do end up a with a little extra cash at the end of the month, what are my best option for savingins and investment for the future, while retaining liquidity for unexpected needs?

You're obviously a smart person, thinking about the future. My recommendation is to use those smarts to work into a position that is well above the poverty level.

There are two obvious ways to increase your savings rate: Increase your income and cut expenses. You should probably look toward doing both of those things.

Regarding increasing your income, consider the following options: Get a better job, get a second job, ask for more money from your current employer, or invest your time to acquire skills that will allow you to get a better job.

Look out a year. What can you do NOW, so that you can make dramatically more money in a year? Go to school? Self-educate on the Internet? YES, that is possible! Get a job that has the possibility of more rapid advancement? Sure!


Regarding cutting your expenses, one major trick is to eliminate interest payments by paying off your debt. Make a list of all your debts, and organize them in order by interest rate, highest to lowest. Usually Credit Card debt is top of the list. Your goal is to reduce your TOTAL debt as fast as you can, but also replace high-interest debt with lower interest debt. You may be able to do this by paying off credit cards faster than you pay off secured debt (like your car).

A few other obvious places to cut:
- Don't do anything like Payday loans. Those are typically outrageous rates. Better to temporarily borrow from savings than borrow from a loan shark.

- Look at how much you spend on basic "living", and consider what the BARE MINIMUM is. For instance, are you buying soda or starbucks? Are you going out to eat? What's the cheapest you could live on, and try it for a month.

- ANYTHING that you have that is a luxury needs to be eliminated, until you get a savings plan in place. Cable TV? Cancel it. Cell phone AND a land line? Cancel one. Dish? Come on! High Speed Internet? Use a free service for a while.

- Eliminate ALL fees from your life. Are you PAYING for your checking account? Paying to use an ATM? Paying late fees on credit cards? Each dollar here and dollar there adds up. You should strive for ZERO fees.


Once you can afford to save, consider some FUND investing. The stock market can be a great place to watch your money grow; it can also wipe out a lot of money. If you buy into a fund, you can often reduce your risk, since mutual funds buy lots of stocks.

Don't forget to set aside money in a 401-K. MANY employers will MATCH some of your contribution. This is like FREE MONEY. I am always amazed at the number of people who pass this up.

If you get a few thousand together, consider opening a brokerage account with Schwab or a mutual fund company. Many mutual funds will accept a few thousand dollars, and open an account, and then you can benefit from the gains in the stock market. You can research on the web for the "best" funds (Morningstar rates them; listings can probably be found in Fortune magazine, Schwab.com, and others.) You probably want a reasonably aggressive fund which allows you withdraw whenever you want.




Best of Luck to you! Hope I have been of some help.

Great detailed answer!
The only thing I would add would be to consider an "Index fund" instead of an actively managed one, bc the fees tend to be less, and they outperform over 50% of mutual fund managers anyway.
Thanks for the great answer great ideas! Report It

Find some nice stocks, and invest in them.. When the stocks provides further proper buy point, invest more on them, average up your investments.. not average down... Start by buying 1 share, and slowly increase your positions at proper buy points.