When you think about investing in the stock market, you may have mental images of Mr. Monopoly carrying a huge bag of cash. However, you don’t need help from the “community chest” or “chance” to put your money to work in real life. Believe it or not, you can invest with little money. So keep on reading, and you’ll learn how.
First of all, we need to get on the same page. Investing in the stock market, just as every type of investment, carries risk. Chances are, your money may never get back. Nevertheless, on the other hand, if you play your cards right, your money could come back with a certain revenue margin.
How to invest with little money?
You probably know how the stock market works but don’t have enough money to invest big if you’re reading this. Don’t worry; you can still invest with little money and increase your capital as you make your first gains.
One of the ways to invest with little money is through fractional shares.
Fractional shares? This may sound a little confusing. But it is a pretty simple topic.
Read also: How to invest in stocks [Beginner-friendly guide]
What are fractional shares?
If you were good at math class, you sure know what fractions are; they are equal divisions of a unity. Additionally, if you have a basic understanding of investments, you should also know what stocks are; they are guarantees, or shares, representing the percentage of ownership a shareholder has of a company.
Therefore, fractional shares are portions of a stock divided into several shares. By investing in fractional shares, you can get a percentage of the whole stock for a lower price.
Fractional shares work basically to invest with little money. If your investment capital is not enough to buy whole shares (which can sum up to hundreds of dollars), fractional shares are the best option. Even if you invest only $5 or $10 – instead of $316 for a whole share, for example – you’ll still receive your dividends and all the rest of the benefits of a common shareholder proportionally.
Besides letting you invest with little money, fractional shares could also help you have a better perception of the behavior of the market. For instance, after investing $5 in a fractional share of Company A, you can make a decision based on your results.
If you made revenue and can envision a bright future for the company, you can invest in a whole share. However, if the company didn’t have a good performance and you lost your initial investment, you can keep looking for other options, feeling lucky that you didn’t invest a large part of your capital.
How to start investing with little money?
Investing in fractional shares is nothing out of this world. But, on the contrary, it is pretty simple. It requires the same process you would follow to invest in whole stocks.
Nowadays, you can invest with little money a lot easier due to the variety of digital platforms that streamline these processes. FlexInvest is one of the safest and most effective apps that will help you through the whole process without worrying about the cost.
Before deciding, make sure that you research the companies you’re looking to invest in and learn all the investment basics.
