How to Invest in Stocks with Little Money
Want to know how to invest in stocks with little money as your investment capital? Learn how to invest a little money in the stock market today. Nowadays, stock investing is very easy.
There are stock broker companies who allows investors to trade online. Stock investing is one of the high risks types of investments. There are three ways to invest in the stock market.
1. Through UITF – Unit Investment Trust Funds, these are available in the bank. They call it as the “trust account”. The trust group of the bank will invest your money in the stock market through UITF equity fund.
2. Second is a mutual fund. In a mutual fund, a fund manager will invest your money in the stock market by using the mutual fund equity fund.
3. Through a Stock Broker. There are stock broker online such as etrade or scottrade. You can trade stocks by first creating an online brokerage account.
Things Needed
Little money, an email address.
How to Invest in Stocks With Little Money?
1. Open an account, might it be a mutual fund, UITF or stock brokerage account.
2. Fund your account. Decide how much money you want to invest. Some stock brokerage, mutual fund companies allows you to fund your account with as lows as $100.
3. Start buying your stock shares. Example, if you have $100 in your stock brokerage account online and planning to buy ABC shares worth $10 and the board lot is 10, there fore you can buy a stock because $10 X 10 = $100.
But, if the stock price you are planning to buy is $12 and the board lot is $10, you can’t buy a stock with $100 because the required is minimum of 10 shares X $15 stock price is equal to $1,500.
4. Try to add small amount of money in your account every month. Let’s say, $50 per month. Every time you have completed $100, you can buy stocks. A dollar cost averaging is the answer to the question, investing in stocks with little money.
What is a dollar cost averaging? It simply means investing regularly a small amount of money. Say for example, invest $50 per month within 20 years. Do you know that your $50 can be worth $61,000 after 20 years? It is possible to earn that amount using $50 per month.
Try to invest $50 in stocks and maintain it to earn 15% per year within 20 years. You are required to add $50 per month to get that amount. Is $61,000 good for your retirement? Ask yourself.
Tips & Warnings in Investing in Stocks With Little Money
Through the power of compound interest, your $50 per month investment can possibly turn into hundred thousands or millions.
It simply means, even a small amount of money can help you achieve your financial goal. When buying a stocks, since you are doing it for long-term, choose blue chip stocks but for short term try the top 2015 US stocks to buy.
So, invest while you are young to take advantage the effect of compound interest. It is advisable to consult with a certified financial planner before making an investment decision to avoid financial mistakes.
Learn financial education, attend financial literacy seminars or read books, forum and blogs like Return On Investment related to beginners guide to stock market investing..