Having $1000 dollars or less may not seem like a lot of money if you want to invest, however, you don’t have to save or raise thousands of dollars in order for you to start investing. The earlier you start investing, the more you begin to build wealth over the long-term regardless of the capital you have. Here are options you can take to invest with just a little cash.
Invest in the Stock Market With Less Than $1000
While there may be limited options when you want to invest with less than $1000, it is still possible to do. In fact, you can build your wealth by starting with a small investment that does not require a huge amount of money. A viable option you may consider when thinking of how you can invest with an amount less than $1000 is the stock market.
The stock market provides opportunities for individuals to make money and build their wealth. However, the investors need to find out which stock market investment opportunities work for them under the given situation they are in. The point is to start growing wealth as soon as possible without having to wait to get more money in order to invest. You can get stock market investments that would require you put in as low as $250 as your baseline capital.
Consider a Discount Brokerage
A discount broker offers investment to individuals for a small commission. When you have little to invest in the stock market, you want to be wary of the costs or expenses that may drain that small amount you are investing. The fees are among those costs that may take a large chunk of the little money you have for your investment.
When you choose a discount brokerage, you are lowering the commission that is charged by the broker to trade in the stock market. You therefore, have more money to invest. Investors need to know that different brokers set different minimum balance requirements. Some brokers even have a minimum balance required to start trading.
The trick here is to make sure you identify the right broker by reading reviews and doing in-depth research. It may be overwhelming to find a reliable stock market investment broker that offers low minimum balance, but it is possible. The downside with discount brokerage is that they do not offer investment advice compared to full service brokers.
Buy Fractional Shares
Now that you want to invest in the stock market by buying shares, you will discover that whole stocks may be costly. Certain stocks can trade at hundreds of dollars in each share. It would mean that you have limited options to buy the shares, though, it’s not impossible.
What people may not know is that they can consider fractional shares as a suitable option to maximize their potential gains from the stock market investment. Fractional shares won’t make you a millionaire in one day; however, you get a chance to invest and starting growing wealth. Investors should think in dollar terms rather than share terms. When you work out a stock investment based on dollar terms, it means you are able to invest all your money.
It is said that investing builds wealth but holding cash doesn’t. This may be a radical simplification, but it a reflection of the core principles of investing. When you have an investment opportunity, you want to make sure all the money is invested.
Fractional shares make it possible to invest the little you have in an efficient manner. At any one time, you won’t have dollars that sit on the side uninvested. For example, if you were to invest in a stock that costs you $100, and you have $80 dollars as deposit on your stock market investment account, the broker will not be able to add that amount to your investment since it is not able to buy a whole share.
It means that the $80 dollars will remain un-invested until that time you will top up and reach the $100. In such a scenario, you will most likely have money that sits somewhere and not earning you wealth. This is something that can be avoided by seeking fractional shares.
Fractional shares will put all your money into investment. They also allow you to buy any kind of stock regardless of its price. An investor can buy high-priced stocks, but just a fraction of them. The high-priced stocks tend to have quality and huge potential gains. Fractional shares allow different investors with different investment capital to enjoy the same benefits in the stock market.
Use Direct Stock Purchase Plans
Buying stocks using direct purchase plans means that you are purchasing directly from the company. You eliminate the middlemen, who in this case, is the broker. Considering that you have less than $1000, you want to make the best bet in your investment. While not every other company will sell its shares directly, some do.
The companies use what they call Transfer Agents to allow you to purchase their shares. These companies are not listed in the stock exchange market. People who have small amounts to invest are often worried that the returns will be wiped out by the brokerage fees. This is indeed something that can deplete that amount. Think of it this way, you have $100 you have invested with a broker and about seven percent goes to commissions charged by the brokerage firm.
When you calculate that amount for a period of one year, it translates to a huge sum that is lost. It is money that could have earned you wealth if you considered doing away with the broker and investing directly with the company.
All these are viable options you can seek when you want to invest in the stock market with less than $1000 as your initial investment capital. Some people may just decide to wait so that they raise what may be considered a substantial amount or capital to invest. The downside is that, with so many financial needs, you may be tempted and compelled to use the little you have set aside to top up and invest meaning you end up waiting for a long time to achieve the target investment amount.