How Do Beginners Invest In Stocks With Little Money?
How Do Beginners Invest In Stocks With Little Money?
How do beginners invest in stocks with little money?
That’s a good question, and it’s a question that many people ask themselves when they first start planning out their investment strategy.
Everybody knows that you should try to start investing money as soon as you are able to. Starting early is the key to building wealth over time, which can let you retire comfortably when you get older.
But, when you are young, finding extra money to invest can be difficult. In fact, many people avoid starting investing at a young age because they don’t have the funds available.
So, even if you have been working for some time and haven’t started saving money yet, there’s still plenty of time for you to get started. The earlier you start the better, but the important thing is that if you haven’t started investing money, you start doing it soon with a solid investment strategy.
Take Advantage Of Stock Offerings From Your Employer
One way that many people get started in investing in the stock market is through their employer.
A lot of big companies offer programs allowing you to invest money in company stock.
What makes these types of programs beneficial is the fact that they usually offer some type of financial incentive for the employees, such as a reduced price, or an employer contribution to part of the cost of the stock.
The other advantage of this type of program is that it allows you to have money withdrawn from your check and applied to your stock purchases.
This type of investing is what is known as long-term investing. You buy a little stock per pay period, and over a long period of time, the amount of stock you own grows.
Assuming that the value in the stock also goes up, your money will continue to grow. This type of investing is generally considered lower in risk than many other types of investing, but there is still a chance you could lose money.
But, if you work for a large and established company, participating in a stock buying program is usually a safe way to save for the future.
Buy Penny Stocks
Assuming you want a faster turn around on your money, you are going to need a more aggressive solution. That means an investing strategy that is riskier, but the rewards usually make the risk more than worth it.
One strategy you should strongly consider employing is investing in penny stocks.
What are penny stocks?
Penny stocks are stocks that cost $5 or less per share. If you are looking for a way to get into investing in stocks without a lot of money, then buying a cheaper stock is a plan that should make perfect sense to you.
Penny Stocks Are A Perfect Short-Term Investment
You may be wondering why you would want to invest in penny stocks if they can be volatile and the risk of losing money with them is greater than with traditional stocks. The answer is simple, they are cheap so you can get into them with little money, and there is an enormous amount of potential with them.
Referring to the same $100 dollar investment that yielded 100 shares of stock above, what if the stock didn’t fail?
What if it went up by 50% or more?
With penny stocks, the low price of the stock means that the potential for growth is tremendous.
It’s not unheard of for penny stocks to double in price or money in as little as a day.
So, while you are assuming a greater risk with penny stocks, the greater potential rewards are also much higher.
The thing you need to remember about penny stocks is that they are not a long-term investment solution. You don’t want to put your money in them and leave it there for years assuming it will be there when you retire.
Could the penny stocks you buy today grow long-term and end up worth a small fortune? They could, but penny stocks are unstable by nature.
There’s just as good of a chance that they will end up failing in short order.
So, if you make a sizeable profit on your investment, then be smart and sell before the price drops back down.
You may end up regretting it if the stock continues to climb, but if it crashes you’ll be thrilled you got out when you did.
Try Taking Advantage Of Mutual Funds
If you want all of the advantages of the stock market, while also reducing your risk level greatly, then a mutual fund may be just what you are looking for.
What is a mutual fund?
A mutual fund is an investment program that is professionally managed, that uses client money to invest in a diversified number of stocks and other securities. Since mutual funds invest in a diversified way, investors are insulated against a single stock failing.
Mutual funds are a long-term investment, and they are a great way to get started if you are just starting to save for the future.
There are a lot of mutual funds that allow you to get started for very little money, the key here is to get started and keep adding a little more money to the fund whenever you can afford to.
Don’t Be Afraid To Start Out Slowly
Your end goal may be to be independently wealthy, but unless you are born into money it’s going to take time for you to get there.
It’s easy to look at your current financial situation and think that the $5 you can spare to invest isn’t even worth the effort.
It’s easy to think that way, but thinking that way is a mistake.
Take that $5 and use it wisely.
Put it in a savings account and keep adding to it.
Once you have enough money saved, start an online trading account and learn how to use it.
Use the free tools to learn the stock trading game, and start to put your money to work for you.