3 Ways to Wisely Invest Small Amounts of Money

Even small amounts of money can show substantial growth when invested wisely. Small amounts of money also have the added benefit of allowing an investor to be riskier with their investments in the hopes of larger returns. There are many great ways to invest small amounts of money, especially today.

1. Penny Stocks

Penny stocks are stocks in extremely small businesses, so named because the stock prices are very cheap. Investors buy penny stocks in the hopes that the business will either grow dramatically or be purchased by another, larger corporation. Penny stocks are a challenge to an investor because the majority of small businesses will not grow, or will even go out of business. Penny stocks are a high-risk, high return, investment, which makes them perfect for investors that are looking to invest a small amount of money in hopes of a larger return.

2. Foreign Exchange

The foreign exchange market allows trades that are as low as just a few cents, and mini accounts will let traders begin with just a few hundred dollars. The foreign exchange market is deceptively complex, so investors looking to get into the market should do a lot of research and use demo trading platforms to simulate trades before entering the real market. The foreign exchange market is another high-risk, but high return, investment. Playing with a lot of money on the foreign exchange can be very dangerous, especially for a beginning investor.

3. Dividend Reinvestment Plans Or Index Funds

Both DRPs and index funds usually have a low financial barrier to entry. Dividend Reinvestment Plans allow people to invest in a company directly with less than a hundred dollars, and the investor can continue investing in this plan as time goes on, slowly building up their investment. DRPs are offered by the companies directly, so the investor should do their research before making an investment and select the companies they want to invest in wisely. Index funds allow an investor to invest in the stock market without having to pick specific stocks. Index funds can be priced anywhere from a few hundred to a few thousand dollars, and should be researched before being invested in to see their historic returns. 

Before anyone should begin investing they should already have the other aspects of their financial picture complete. This means paying down debts, creating an emergency fund, and planning for retirement.

Author Bio

Hayley is a freelance blogger. Are you struggling with debt?

Lexington Law credit repair services can help manage any debt or credit issues before you begin building your investment portfolio. For more financial advice, visit http://money.cnn.com/.

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