Who says investing in the stock market is only for the rich? There is this misconception that one has to shell out a sizeable amount in order to start investing. Contrary to common belief, it is possible to invest in the stock market with little money. This “go big or go home” mentality discourages people with just enough income regardless if they are the ones who could benefit the most from profitable investments.
There are quite a number of reasons why people invest. But one of the main motivations of many is building wealth in preparation the future. Sure, you may have a steady income at the moment. Unfortunately, there will come a time when, for whatever reasons, you are no longer able to work or generate the same amount of income regularly. You need to be financially prepared for that inevitable moment and for any other emergency instances that may come up later in your life. In that regard, investing early on in your life allows you to feel more confident and secure about the future.
Where to Get Started in Stock Market Investing
Before you jump in the stock trade, you need to arm yourself with the stock market investment know-how so you do not waste away your hard-earned cash. Let us study the following these budget-friendly stock types that you can consider for your first investment:
ETF
Short for exchange trade funds, these products track the performance of various areas in the stock industry. Though they are different from individual stocks, they trade similarly. A good incentive here for beginners is that it does not have a minimum amount required to invest.
DRP
Short for dividend reinvestment plan, DRP is an investment method that lets you receive a dividend from the company offering the stock. You don’t need to hire a broker to purchase them. This saves you from spending extra on commissions and other service charges.
Tips to help keep the ball rolling
- Evaluate your spending habits and from that, develop a saving fund. Decide which items you purchase are really necessary and pick out items that you can go without buying. The money you save from skipping your daily dose of gourmet coffee, your weekly nail salon appointment or your in-game purchases will all build up into a fund you could use in opening other investment plans.
- Start small with the intention of growing big. Take a look at investments that only require a small initial cash out to get a feel of how things work. When you start gaining experience, you will not only gain knowledge but also the confidence to invest smarter in the stock market. Use the profits you earn from these small investments to eventually invest in bigger, more profitable stocks.
- Educate yourself. Follow market trends and listen to recommendations from the experts. The internet is overflowing with free resources so take advantage of them to gain as much knowledge you can. Remember: An educated investor makes great money-making decisions.
- Find yourself a broker. This will come further down the path when you have more funds. A stockbroker is a trained financial expert in stock trading that will assist you in carrying out stock market transactions. Working with a stockbroker will help you build your investment portfolio more conveniently.
- Investing in the stock market is not a “get rich quick” scheme. However, the little you invest today can go a long way in the future. One of the most common reasons to invest in stocks is to save for retirement. Start as early as you can preferably while you are still earning a regular income. Time is money, so invest early.
A positive attitude towards investing
It’s not all about your capital or your knowledge. Your mindset on spending and managing your finances matter a lot in saving up or setting aside funds for investment. When you are actively setting aside a portion of your income, you may have to let go of little luxuries like frequent Uber rides, eating out, and the like. A good way to manage these changes in your spending habits is to think of it as delaying gratification. The things you give up now will pay for the convenience of your future.
Starting Small
While entering the stock market is definitely possible with a small amount, it is not going to be a walk in the park. You need to have a good grasp of investing terminologies, techniques, and ways on picking the right stocks for good return on your investment. We have created a FREE ebook that will help get you started in the game. Additionally, you can check out our previous blog posts for more information on the industry.
Do you have any additional tips on investing a small amount in the stock market? We would love to hear your thoughts. Let us know too if there are any topics you would like us to cover in future blog posts. If you like this post, feel free to pin it for future reference:
