How to invest in stock with little money
Investing in the stock market is an excellent way to grow your wealth. It means purchasing a part of a company and having a stake in the company’s ownership.
And you can do it with little money contrary to popular opinions. This opinion is why so many people have put off investing in a stock.
But it’s not all a bed of roses journey. Compared to other forms of investments, stock investment has more risks. But if it is exercised wisely, the rewards are highly satisfactory.
Statistics show that in these last decades, most stock investments return an annual average of 10%. And this is how those profits pile up after you invest in the stock market:
- If the stocks you purchased go up during the time you own them, you can sell for more than you paid for.
- This one is not accessible by all stocks, but a few companies give regular payments to their shareholder. These payments are called ‘Dividends’. Most dividends come in a quarterly term.
Some Information About The Stock Market
- If you look into the history of stock markets and investments, you will find that in the past shareholders receive stock certificates in a paper called security. Nowadays share ownership are recorded electronically verifying the number of shares they hold and are held in brokerage firms.
- There are two types of stocks for you to invest in. These are common stocks and preferred stocks. The former gives its shareholders voting rights but does not guarantee dividend payment. The latter works vice versa.
Let us get back to the main topic of this article. Is it possible to invest in stock with little money? Can your investment survive the ups and downs of the stock market? I am here to tell you that you can invest with as little as £25 a month. Once you have that little money to play with, it’s time for investing.
How? Well first bear in mind that we are living in the 21st century. This means there are many stock trading apps you can use to invest with little money and also learn how to at the same time. It is not a scary or risky choice. Since there are so many choices out there, it is more simple and straightforward than ever.
How To Invest In Stock With Little Money
Learn the basics of stock investment
The stock market is not as difficult to understand as it seems. Anyone can learn to trade or invest in stocks. If you put time and effort into learning, you will find that it is rocket science. You still don’t believe me?
Okay, then follow these easy steps and you will understand what I am saying.
- Hit the books: Read books on related topics such as stock markets, investment strategies, and more.
- Have a mentor: When you have a mentor lending you guidance, you will have access to experience and tricks of the trade. This person should be well experienced and must-know details about the stock market.
- Take online courses: Nowadays online sites provide courses on stock trading and investments. Here you will be provided with two choices: be a trader or an investor. The difference between the two is how long you can hold on to your stocks. A trader holds for a short duration while an investor holds for a longer duration. There is a community in the UK that has integrity in teaching beginners about investing in stock and share. You can read join Financial Joy Academy if you want to have access to a lot of courses about stock market investing.
|You can get 15% discount if you sign up to FJA using my referral link by clicking here.|
- Always analyse the market: Update yourself on the conditions as well as the history of the market. See and record the performance of the markets. When doing this, you will get to know what causes a change in stock markets.
- Never invest more than you can afford to lose: This for those who believe in investing in large amounts because of greed. When you are investing in small amounts on regular basis, it will save you from the fluctuating stock market. When and if the market crashes, it won’t result in a big loss. This will save you from being in debt and lose your way.
- Website is the cheapest way to invest: If you are looking for investment options, several online platforms provide them. Make sure to decide on which platforms to use then choose what investment to buy. Depending on the platform you choose, you might have to pay a fee to access the platform.
- Start investing: Final step! In this technological era, you can start investing with little money because of online platforms. Gone are the days when the phrase “it takes money to make money” was a mandate. So what is the minimum amount for investing? How about £1 with no trade commission? You can also invest in fractional shares. This is only a fraction of the share of the company.
You can start investing with Trading 212 which is one of the stock brokers that do n ot charge fees. You can get free share if you are new to Trading 212 by using the link below.
Tips while investing with little money
- Set long term goals: Know what your goals are clearly before diving into investing. It is important to consider your financial wealth when investing. Will you be needing money soon or you can afford to leave it for a long time. Usually, investing in long-term stocks yields good returns, so make sure to consider that.
- Under Risk Tolerance: Greed is one of the easiest ways to lose money in any investment. You should never invest in any stock that you consider too risky even though it promises a larger yield.
- Emotion control: As a beginner, it is normal to be emotional when investing. Especially the highs that come with profit returns and the lows that come with losses when the market is down. Profit and loss are all on paper. If the market is down, you have not lost anything until you sell so don’t worry when the market is down if you are investing for the long term. Emotional control is important so you don’t gamble with your investments.
- Be realistic: Investment takes time to yield, as it should. Do not expect fast returns. Since most stock investments take time, you have to be patient while investing.
- Investment Diversification: Never put all your eggs in one basket. This will protect your money if anything happens to the stock market. It is also the recommended advice by many money managers. This way you won’t lose all your money all at once if you invest in several assets.
Yes, you can invest in stocks with little money. All you need is to grasp the basics of stock investment and understand the dos and don’ts then you are on your way to growing your money.
With more experience, your investment journey gets easier with time. I hope this article was informative enough and answers your question. If so, what are you waiting for? Go ahead and invest!
You can read my article about ‘investing in stock for beginners’ next.