How to invest small amounts of money?
Want to know how to invest small amounts of money? Just because you’re on a tight budget doesn’t prevent you from being able to invest and grow your wealth!
This post is about how to invest small amounts of money.
Let’s dive into the top 5 ways on how to invest small amounts of money:
1. Fidelity/Robinhood
Fidelity is, by far, one of the favorites for a multitude of reasons. The biggest reason is that Fidelity has no barrier to entry making it much more accessible for people to start investing. Unlike other brokerages that have a $3,000 investing minimum, Fidelity’s minimum is $0!
2. Fractional Shares
Fractional shares is another fantastic option for those who can’t afford the entire share price of a stock. For example, if you want to invest in expensive stocks (think Apple, Amazon, Tesla, etc), but don’t have the cash to buy 1 whole share, you have the option to purchase fractional shares. Buy what you can afford!
3. Index Funds
On the other hand, index funds are a great way to invest in a broad market index. Index funds usually have lower fees and allow people to partake in investing. The goal of index funds is to match the performance of the market, which is why it’s such a great option for those who want to participate in investing without breaking the bank!
4. Choose investments that pay dividends
Dividends are distributions paid by a company to its shareholders. These dividends vary on frequency and amount, but can be a great way to grow wealth. As you receive these dividends, you can choose to either reinvest back into the fund to compound your growth or keep it as cold, hard cash.
5. Automate
Automating your investments can really add up, even if they’re small amounts. Say you decide to transfer $5 each week into your investment account, that still amounts to $20 per month. You would’ve spent that on coffee or on miscellaneous things! That $20 could grow to much, much more.
To reiterate, the top 5 ways on how to invest small amounts of money are:
- Fidelity/Robinhood
- Fractional Shares
- Index Funds
- Choose investments that pay dividends
- Automate
There you have it! Interested in learning more about investing? Check this post out for short term vs long term investing.
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