How to Invest With Low Capital
The biggest misjudgement in the world of investing is when beginners believe that they don't have enough money to invest. However, this is far from fact; you can invest with quite literally any amount of capital. Even putting $100 into the markets is a good start! Beginning with a small amount of money is a great way to get a feel for the market- understanding the nuances of its movements and reactions with a low risk factor.
When I first started investing, I had $600 in my portfolio, which I poured into a single ETF. Humble beginnings for sure! Here are three options for those who want to invest with a small amount of money, and don't know exactly where to start.
Although diversification is key when building a portfolio, it's tough to do so with little capital. Therefore, individual stock investing could be the next best option for you. That being said, don't take a chance on risky stocks! Whatever stock you pick should be one that you extensively researched and believe in. My recommendation is to stick to S&P 500 companies poised for growth.
Lots of brokerages such as Robinhood allow you to buy fractional shares of a stock. That way, if you are confident in a stock like Amazon, that sits at over $3,000 in share price, you can buy a small portion of that stock that's within your budget. This is a great way to position yourself in a strong company that's already shown positive growth.
Ah, ETFs: the perfect diversification tool for a beginner investor. ETFs are a great investment to go all in on because of their built in diversification, as they are a compilation of various stocks rolled into one security. Additionally, their lost cost structures are friendly to those who don't have much to spend.
Look into study S&P 500 of growth ETFs, as these are the most broad and will oftentimes move the way the market is moving as a whole. If you want to get more specific, you can research a sector-specific ETF in a sector you feel is poised for growth.