Many people delay investing due to limited funds. However, there are several options that can be started for under $100.
Here are 4 choices that may deserve a place in your investment portfolio:
Direct Stock Purchase Plans (DSPP):
Numerous companies offer a direct means for investors to buy shares. These are typically brand name businesses with established market positions.
You can often buy just 1 share of stock to get started and use dollar cost averaging to buy through market changes. Investment managers and small investors alike can take advantage of DSPPs.
With a limited budget, you can purchase shares of companies in different sectors to easily diversify.
The advantages of direct stock purchase plans include low cost, control and household names. Conversely, you will need to manage the investments and make buy or sell decisions.
Even if you don’t realize it, everyone has a need for currencies. When you buy a flight ticket, the amount is often converted to another currency. When you go on holidays, when you buy electronics from a foreign merchant… You are using currencies, and Forex trading offers you a way to take advantage of currency fluctuations so next time you require some, you have already bought them when they were cheap.
Thanks to companies like CMC Markets, you can trade Forex easily online. You just need to open an account and fund it to get started. Be careful with trading on margin though, as you have a higher risk if the currency goes against your trade.
Several mutual funds offer professionally managed portfolios of stock or bonds with low minimums. Different mutual funds have unique objectives, which can range from American stocks to overseas investing, among others.
A mutual fund saves you time from having to research individual stocks and closely follow market conditions. Mutual funds have expense ratios, which vary greatly and affect your returns. Time should be taken to consider fees associated with the mutual funds you are considering.
Additionally, mutual funds offer little control, as you are turning decisions over to the manager.
REITs (Real Estate Investment Trusts):
Investing in real estate requires capital, market savvy and financing. For those with limited budgets and time, a REIT offers real estate exposure without owning property.
REITs are publicly traded securities that can be bought through a discount broker, often for just one share.You can also earn passive income on a monthly or quarterly basis, as REITs pay out money from collecting mortgage interest and rental income.
Since real estate has a negative correlation to stocks and bonds, buying REIT shares can lower risk in your portfolio.
With monthly and quarterly income, REITs offer an additional revenue source. When real estate in the portfolio is sold for a profit, REIT shares can increase in value. Unlike owning real estate, you can sell shares at any time.
Real estateshould be considered after core investments such as stocks or bonds are made.
Compounding helps those who get started have greater success than delaying. With numerous asset classes available, you can invest according to time horizon, risk tolerance and other personal factors.