How can I invest in financial securities? I don’t have enough money -whenever we think of investing, this thought crosses each and every investor’s mind. There are many people out there who put off investing because of this single thought that investing takes a lot of money. Due to this false narration in context to investments most people never even start investing.
Well, the answer to your statement is – “Yes, you can start investing even with less money“. Anyone can invest in stocks or other financial securities with a very small amount of money when it comes to investing.
It’s not mandatory that you need to have tons of money to start investing. Even if you have a few dollars with you to spare don’t be afraid to invest. As it will only grow with compound interest over time. Moreover its always been advised to beginners to start with less amount only.
What are the Two Challenges in Investing with a Small Amount of Money?
Though there are two challenges that you may face while investing with small amounts of money. But don’t you worry these two challenges can be easily conquered too. So the first challenge is that –
a. most of the investments require a minimum amount, and
b. another one is diversification of your amount of money.
Diversify here refers to spreading your money around but because of a limited amount, it becomes a challenge. The lesser the amount you have, the harder difficulty you may face in spreading.
What’s the solution to these challenges?
The solution to both of the challenges is to invest in mutual funds (Stock index funds and ETFs- Exchange-traded funds). Mutuals funds might require you a minimum of $1000 or more whereas index funds tend to lower. However, ETFs are bought at a share price so they could be lower further.
There are two brokers – Charles Schwab and Fidelity, who offers index funds with 0 minimum requirements at all. This took down another challenge of diversification because they hold different stocks within a single fund too.
One last thing, we would like to share with you guys is – Investing is a long-term game. So don’t go with the fulfillment of the amount you might need in a short period of time (for example to meet inconsistent emergency etc).