The best investment options ensure robust present and long-term future financial security. Investing is often associated with hefty amounts of money, great risks, and constant nervousness. While risks and nervousness prevail in the investing world as they do in any other aspect of life, you need not necessarily be a Wolf of Wall Street to start investing. It absolutely is a myth that one needs to be born with a silver spoon or have heaps of money to start investing.
Let’s take an example- One of Warren Buffett’s smart ways to invest has been in his own flagship firm, Berkshire Hathaway. According to research reports, back in the day in the 1970s, the Oracle of Omaha’s investment pertaining to the firm was mere US$2 per share, which eventually generated returns of US$280 per share!
Let us acquaint you with some of the ways to invest in a small budget, but before that- In the wise words of American businessman and author Robert Toru Kiyosaki-
‘’It's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for’’
Investing on a Small Budget
History has proved that even with a few dollars to spare, an opportunist can grow his money in the share market. What one needs is some direction and a lot of market knowledge. With time, experience teaches the tips of the trade to the investor even well.
(Please note that the below should be considered as opinions and not recommendations)
To begin with, one needs to firstly discharge a major portion of all his debts, especially the ones that are with high-interest, and secondly automate his savings (irrespective of the amount) to utilize them to invest later. In today’s contemporary times, technological help for this is available via various smartphones and computer applications.
While saving, one should also gain market knowledge via experts- an investing agency or guide to help in understanding the share market dynamics, possible risk appetite, areas of interest and create the blueprint of the investment portfolio which will eventually help to make better choices as the investment pot grows.
Direct Stock Purchases
This has been regarded as both the simplest and smartest way to invest in a low budget. As the name suggests, one needs to select a company of his choice and buy stocks directly from it. In these purchases, there are no brokerage account or middlemen (which saves a certain amount of fee/ commission as an add on expense) and the investor directly deals with the company that issues the stock.
Virtual Brokers/ Investing Apps
Technological advancement and modernization have had a positive impact on the investing world like it has had on other aspects of our lives. This has not only contributed to streamlining of processes, but also saves time and money. Online discount broker and investing apps offer the option to create an automatic investment plan that eventually helps an opportunist to start building his customized portfolio, for a minimal amount (service and maintenance fees).
Diversify on a small budget through ETFs
Exchange-traded funds (ETFs) trade like stocks and are considered a great way to diversify an investment portfolio without shelling many bucks. Since ETFs are not actively managed, therefore they are low-cost investments as they ignore the minimum initial investment. They have a specific share price and can be bought via a broker, which means that one can choose from the wide plethora of available options.
Dividend Reinvestment Plans
Abbreviated as DRIPs, permit investors to purchase additional shares of the underlying stock by reinvesting their cash dividends (on the particular dividend payment date). This is considered as a feasible plan to invest small amounts of money into stocks of companies that pay dividends.
Employee Stock Purchase Plan
Another lucrative option to invest in having a small budget, if one works in a publicly-traded company catering to a business that he understands, is to check for an employee stock purchase plan (ESPP). An ESPP is a simple way for employees (who are also opportunist investors) to purchase their company stock with zero fees, and likely at a discount off the trading price.
It is safe to state that the typical belief of a stock market being overwhelming, intimidating, and scary is only partly true till an investor starts to understand the tips of the trade, is comfortable with his risk appetite, and satisfied with his investing portfolio. With the ample options present in today’s world, an investor need not wait to accumulate hefty amounts and then begin investments.
The market is dynamic and will always be; and risk factors will continue to prevail, but opportunities to invest in a low budget should not be missed, as they are perhaps the smartest way to get rich!
This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.
Want to get exclusive insights into the star stock of the year? Gold stocks stood solid and ensured a safety net for investors.
Click now to access our report on Gold Stocks to understand how the rise in gold prices propelled the ASX-listed gold stocks, and many emerged as the star performer of the year.
Inside this report, you shall discover
How the price trends of gold have got it where it is With the rallying gold prices and the record-buying from Central Banks, the gold spot rose from $1,655.14 (low in December 2018) to $2,322.26 (high in August 2019). A promising return of over 40 percent was seen in the year 2019. Get exclusive insights into how the trends set the foundation for the performance and how Gold stocks seem to be a safe bet when you look back.
Which stocks you should have been looking at: Find out which stocks delivered promising returns to investors. Gold stocks such as Gold Road Resources Limited (ASX: GOR), Kirkland Lake Limited (ASX: KLA) Newcrest Mining Limited (ASX: NCM) delivered better returns against the S&P Commodity Producers Gold Total Return Index.