9 investing tips for the working class

7 Simple Rules of Investing

Investing can be a tricky business, especially for members of the working class who might not have access to the same expert advice and aid as wealthier investors. For effective investing, individuals need to have a solid understanding of the state of the market, as well as a clear idea of the value of the investment, based on expected future cash flows.

Unfortunately, becoming informed about investing takes significant time and effort. Those are two commodities that many individual investors — especially those in the working class — might not have to spare. With that fact in mind, here are nine tips that working-class individuals can use to help improve their investment returns.

Related: Investing for Beginners: What First-Time Investors Need to Know

1. Look for Stocks with Stable Dividends

While it's natural to be tempted by daring investments with high potential payoffs, these stocks can wind up costing you a great deal in the long run. By selecting stocks with reasonable dividends, middle-income investors can ensure they get returns in their pockets every year.

Even if the company does offer high dividends when times are good, it might pay far less in years that aren't as successful. To protect your bank account and retirement fund, be sure to choose stocks with stable dividends year in and year out.

Related: 9 Safe Stocks for First-Time Investors

2. Avoid Stock Gambles

Avoiding highly volatile stocks might seem like an obvious piece of advice. However, the truth is that many stock buyers invest not only for the returns, but also for the thrill of taking part in the market. While buying into risky stocks might be a fine policy among millionaires, financial economists have shown that these types of investments are bad ideas for members of the working class.

Instead of gambling on high-risk stocks, individuals investors should strive to find healthy companies that are growing slowly but steadily with time. After all, you don't want your stocks collapsing during tough economic times when you might be facing job loss and other serious problems.

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9 investing tips for the working class

Dog-sitting, babysitting, or house-sitting

These jobs are always in high demand, and the best part: you can name your price and create your own schedule! Post an ad on craigslist, or use your friends' and family's connections to get your name out there. 

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Rent out your space 

List your apartment on Airbnb or another rental site, and make some easy cash by staying at a friends and renting out your place for the weekend.

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Share your space

Just as you can rent out your full apartment or house, you can also post a free room (or even just your couch!) on sites like Craigslist or Airbnb. This way you can split your living expenses -- and maybe even make a new friend!

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Sell your body parts

Now here's a weird one: Donate your hair, breast milk, or even plasma for a profit. According to Grifols, if you're healthy and weigh above 110 pounds, you can earn up to $200 a month donating your plasma to life-saving medicine. 

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Sign up to participate in medical tests and clinical trials. 

Universities constantly need volunteers to test new medicines and treatments -- and because the pool of willing participants is limited, there is typically a large compensation for being a guinea pig. 

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Participate in a focus group

Companies and organizations will pay you to join a focus group. These can be conducted in person, online, or via phone. You will most likely be reimbursed in cash or gift cards -- plus, you often get to test out fun new products! 

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Take online surveys

Similar to focus groups, you can get paid to give your time and insights on an online questionairre. Plus, you can do this from the comfort of your couch. 

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Bank on your sperm

Although we don't necessarily recommend this option, there is a very high demand for healthy sperm donors. Keep in mind some of the obvious drawbacks, but sperm donation is non-invasive and highly compensated. 

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Crowdfund your dreams

Crowdfunding allows you to raise monetary contributions from a large group of people who want to support your venture. Post your project or idea on a crowdfund site, like GoFundMe.com, and see the cash pile up.

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Become a tutor

If you're qualified, post an ad online or on a community board to tutor children on their school courses or for the upcoming SATs.

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Get a part-time job

Capitalize your free time (on the weekends or after work hours) by working a part-time job. A bartender, waiter, or Uber driver are all great options for an additional source of income -- and great tips! 

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Resell tickets

Take this suggestion at your own risk: If you're staying within legal limits, buy tickets low and sell high as an effective way to source additional money. (Just make sure to check your state and local laws first!)

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You can sell anything on the internet these days... including your companionship! Get paid to go on a platonic outing for a few hours and enjoy your afternoon with a new friend. 

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Rent out your parking spot

Make sure to check with your landlord first, but if you have the option to park your own car further away, lend or share your parking space or driveway for the hour, day, or even month! 

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Keep a coin jar 

This one takes patience before a big pay out, but keep a spare jar or drawer for loose change that you usually toss anyway. It will keep it all in one place -- and those quarters do add up! 

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Make something to sell 

If you have a knack for arts & crafts, create jewelry or other handmade gifts to sell on sites filled with other thrifty vendors like Etsy

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Sell items online

This effective strategy requires low effort with a high return. Post photos of your used or non-used items on sites like eBay or Craigslist, and let the bidding begin! 

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Have a yard sale

Sell clutter you've been meaning to get rid of right in your front yard. This simple tactic is convenient, and guarantees a wad of cash right to your pocket.  

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Return past purchases

This tip may seem obvious, but is often overlooked: Take your recently-purchased items that are laying around back to the store for either store credit or a full refund. 

Recycle scrap metal and cans

Collect cans and scrap metal out your own garbage, basement, and street and bring to your local recycler to exchange your findings for money.  

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3. Try to Hold at Least 10 Different Stocks

Diversification is a crucial part of earning a solid return on your stock investment. To achieve adequate diversification, strive to hold a portfolio of stocks that broadly represents the overall U.S. economy.

While there's no perfect number of stocks to hold, experts suggest choosing at least 10 different stocks in a number of industries. Holding only biotechnology or energy stocks, for instance, can lead to serious problems if that particular sector falls out of favor. Because working-class investors might not have access to the same resources and advice as wealthier stock buyers, they are less likely to adjust their portfolios in time to avoid a loss.

4. Hold Stocks for at Least 366 Days

A common piece of stock market advice that is especially true for working-class investors is to avoid short-term stock trading. In practice, investors should aim to hold stocks for at least 366 days — that is, one day more than a full year. When you keep stocks for less than 366 days, any profits you earn are taxed at a higher rate. By waiting a year and a day to sell, you can minimize taxes on current profits while ensuring future dividends are taxed at a lower rate.

Lower tax rates are an especially important benefit for working-class investors who might not have as many tax credits and deductions as those in the higher income brackets.

5. Rebalance Your Portfolio As You Age

While many investors start out with more sensible investments portfolios, they often make the mistake of failing to change their portfolios as they age. Because individuals' needs and risk preferences change with time, it's important to adjust your stock holdings accordingly.

In general, older and retired people tend to appreciate stable streams of stock income, while younger investors can afford to take more risks, as they aren't relying on this income to live. However, people in the working and middle classes might want to adjust their portfolios each time they get a new job or hit a life milestone. By rebalancing your portfolio periodically, you can ensure that your investments truly are meeting your needs at any given time.

6. Throw Some Bonds Into the Mix

Many investors gravitate toward the more exciting stocks, but working-class individuals in particular should consider adding some bonds to their investment mix. Although they tend to generate less media attention, bonds provide a level of safety and security that stocks simply cannot.

When determining how much of your portfolio to keep in bonds, you might want to use the following rule of thumb:

Subtract your age from 100. This value represents the percentage of your portfolio that should be in stocks. Hence, someone who is 30 years old should have 30 percent of her portfolio in bonds and 70 percent in stocks.

Adhering to these percentages can help protect your investment income as the economy and other life factors change.

7. A House Isn't the Only Real Estate Investment to Consider

While wealthier individuals often invest in rental properties and vacation homes, these purchases tend to stretch the budgets of lower-income investors. Because real estate is still an important asset class, working-class investors might want to consider REITs as an alternative to buying property.

Although they trade like stocks, REITs are an entirely different asset class. Moreover, they provide working-class investors with a more affordable way to buy major real estate projects. If you already own your own home, you might want to consider this potentially lucrative investment opportunity.

8. Know What Kind of Returns to Expect

It's no secret that keeping up with the latest news and trends from Wall Street can be a full-time job. For those of us who don't have trading experts around to answer our questions, it can be tough to know what type of returns to expect on various investments. Not only do many investors hold overly optimistic views of potential returns, but in some cases these beliefs lead people to make poor money management choices, as they expect to have more investment income available down the line.

Realistically, if stocks returns continue to follow the trends of the last 90 years, investors can expect their portfolios to earn about 7 percent more than inflation on average, assuming an inflation rate of around 3 percent. By keeping these figures in mind, you can ensure that all your future financial decisions are based on sound logic.

9. Get Someone Else to Do the Work for You

Perhaps the best advice for time-constrained working-class individuals looking to invest is simply this — get someone else to do the work for you. The truth is that selecting sound stocks is difficult, and many individual investors wind up doing worse than the market as a whole. For most people, the best advice for investing is to avoid picking stocks at all.

Instead, try investing in a low-cost mutual fund or ETF that provides you with smart stock options. You can choose from the various providers available to individuals or ask your employer if he or she has an arrangement in place wherein a company like Fidelity provides staff with mutual fund choices.

Letting someone else handle your investments might not seem as fun or exciting as doing it yourself, but in the long-run your checking account will thank you.

You don't have to be a millionaire, or a stock expert, to succeed in the investment world. By following the above tips, middle-income investors can experience the thrill of the market while reaping great financial rewards.

Related: Why Millennials Are the New Wage Slaves

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9 investing tips for the working class

1. Clear your browser history

Some retailers might sneakily increase prices based on your browsing patterns and demand - so make sure to always clear your history and cookies before shopping! 

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2. Use an alternate email address

When you log in to a retailer's site with a new email address, retailers will often welcome you as a new customer with exciting new promotions and discounts. 

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3. Note price changes throughout the week

Another pro tip: Prices and deals can fluctuate based on the day of the week. For instance, if you're purchasing a flight, monitor prices for around a week to see if they take a dip on any particular day before purchasing. 

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4. Let items linger in your cart

Here's a hack: Add items to your cart, but let them sit for 24 hours before purchasing. The retailer might attempt to lure you back with additional discounts.

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5. Check out multiple sites

Do some research! Don't settle for the first price you see - poke around on a search engine and find the best deal. 

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6. Bargain with customer service

Use customer service to your advantage. If you ask (politely!) about an expired coupon, you'll often find yourself pleasantly surprised by an extension or new code! 

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7. Don't purchase impulsively

Try this shopping hack - don't buy that shiny, new toy right away. Step away for a few hours, and if you find yourself itching to go back and click 'purchase', then you know you won't regret your investment!

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8. Avoid shipping fees

Take advantage of free shipping! If you are a few dollars below the free shipping price point, add a low-cost filler item you need anyway (like socks!) and make the math work out in your favor. 

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This article originally appeared on GOBankingRates.com: 9 Investing Tips for the Working Class

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