How to invest in stocks with little money? Normally, my response to this is the one nobody wants to hear: put the money in a savings account or savings bond, check out a book about investing from the library, save more money while you read the book, and start investing once you have the $1000 minimum to open an account at a big mutual fund house like Schwab or Vanguard. I stand by that advice. (My favourite introductory investing book is Elements of Investing, by Malkiel and Ellis.) But it doesn’t actually answer the question, does it? Maybe a kid wants to invest a $100 birthday check from Grandma, or maybe you want to get started on retirement savings right this second, before you change your mind.
Those are good reasons. Twenty years ago, the answer would have been depressing when it came to invest in stocks with little money: you could buy a couple of shares of stock in a company or two, and pay a hefty brokerage fee for the privilege. You’d be down a few bucks from day one (thanks to the fee) and dangerously undiversified. Technology and years of brokerage price wars have changed all that, to the point where, for less than fifty bucks, you can buy a fully diversified portfolio of thousands of stocks and pay pennies in expenses. So I went looking for an online brokerage that treats the low-dollar investor right. These were my criteria:
- No minimum opening balance—in fact, no minimum balance, period.
- Access to diversified, low-cost, commission-free stock and bond ETFs. (“Commission-free” means you can buy and sell them without paying a fee.)
- No other fees. If you’re investing $100 and get slapped with an $8 fee, you’ve just lost 8% of your portfolio.
- Choice of IRA, Roth IRA, or taxable account.
This is a pretty strict list of demands. There are a lot of discount brokerages out there, but this narrows them down to two. This is not to say these are the best brokerages overall, just that they’ll take you in and treat you right if you only have a single Benjamin.
Let’s go investment shopping
The finalist is:
Plus500 offers you an electronic trading platform where you can trace currency, forex, shares or commodoties for free. This system is ideal if you think of becoming an online daytrader. This electronic trading platform can be used multi platform. There is the webtrader on your pc ofcourse, but there also are apps for Google Android and Apple iOs on both smartphones and tablets. Find out what their current sign up Bonus is by clicking here.
They allow signing up with as less as 100 dollars, or euros, or whatever your local currency is. Plus500 is available in 33 languages and currencies. It would be hard to come up with a much better portfolio than that, even if you were investing a million dollars.
There are a lot of people who would love to begin investing but feel like they can’t afford it. In this How-To, you’ll learn valuable tips that will let you start no matter what your income is!
- Pay for things only in dollar bills. Take the change and put it into a jar; you’ll be surprised at how much money accumulates. At the end of every month, put this into a savings account.
- Reinvest your dividends! You hear me say this all the time, but it cannot be said enough! You will have a substantially larger portfolio over the course of ten or twenty years if you use the dividends to buy more stock!
- Enroll in your company’s 401k plan, especially if they offer matching contributions. If you don’t, it’s like throwing free money away.
If you want to invest in stocks with little money in a mutual fund or open a brokerage account but can’t afford the minimum investment, call and negotiate the price down with someone at the fund / brokerage house.
Start to invest in stocks with little money immediately – you’ll end up with more money if you put $2,000 in when you are 30 than if you put $5,000 in when you are 35. It’s all about compounding… the earlier you start, the richer you’ll become.
Finally, just remember to keep your eye on the goal. Identify what it is you are investing for, whether it be a new house, a college education, or retirement. Saving money becomes a lot easier when you see the tangible reward for your efforts! Stay up to date about the financial news and follow me on Twitter.