I have been looking at some of the best ways to get into investing with small amounts of capital. If you’re like me, you might not have a ton of extra capital to just throw at the wall and see what sticks. You don’t have a personal money manager telling you to put your money here or there.
You have to figure it out, just like myself. In another post, I’ll talk about a few of the books I’ve read to get better involved with investing. It’s such an important part of becoming financially independent and I want to understand as much as I can. The best way to do that, is read. Read a lot. That’s what I’m doing right now.
Within my research, a few items continue to pop up. With some of the newest fintech, investing, and stock market applications, they come with a huge benefit of $0 commissions and fees on most trades. With that, buying and holding ETFs became more attractive, at least for me.
I know that if you put your money into an Index fund that you can generally grow your money over time with pretty low cost fees, but sometimes you need a minimum to even invest within those funds. Mutual funds are the same way, they may sound attractive, but often we find ourselves put off by the minimum that is sometimes over $3000. Well, I did find one that appeared to not have any minimum, and currently testing it out, Fidelity. More specifically, Fidelity’s S&P Index 500 Index Fund, FXAIX.
I am happy to report that having no minimum, you can deposit some money into your Fidelity brokerage account, and immediately invest within this Index Fund, FXAIX. This way, not only are you covered by following the natural uptrend of the S&P 500, you can continue adding to it, increasing your shares over time.
If you need another option, there are ETFs, Exchange Traded Funds. These are very similar to Index Funds, but they are traded on the stock market just as regular stocks are. They are anything but regular stocks. They hold within them, depending on the ETF, about 80% to 90% of a certain sector of the market. They have anything from Energy ETFs to Bond ETFs, Marijuana ETFs, Gold ETFs, you name it, they have it. They also have social media or meme stock ETFs coming like, BUZZ and FOMO.
These ETFs have management fees, but for the most part are very low cost. Make sure you do your due diligence before purchasing an ETF, find out what sector it is tracking and what are the top companies within. Also, make sure how much the management costs and fees are for the ETF, as higher costs and fees eat away at your returns.
I am new to this world, so I apologize if I have anything wrong here, but I am learning more and more every day. I am attempting to take what I learn, and apply it. I may not always have the most money to throw down, but hoping to take advantage of these products, see what happens to be my best strategy, and then move more directly with that strategy.
Another option are REITs, Real estate Investment Trusts. Many of these are also on the stock market, trading as normal stocks do, but looking closely, you can find the differences within their profile and stock information.
REITs are great because real estate is a tried and true money maker. When investing within a REIT, you can get high dividends, and reinvest them within so that your return is higher. Real estate is a proven giant so you know it’s not going anywhere.
If you are able to invest into a REIT that is not on the stock market, you can find yourself not only getting dividends, but extras as properties become more valuable or even when they sell.
An example of a non stock trade REIT is the application Fundrise, which I plan on taking a good look at before pulling the trigger. This application allows you to invest into a REIT or multiple REITs for as low as $500.00 to start. They have some fees that I would like to read up on and become more familiar with the company, but the reviews have been generally good, with earning between 9%-12% every year.
With everything that is out, it’s good, but it also takes a lot of research and learning so you know exactly what you are getting yourself into. You don’t need a money manager, you just need to learn a little bit to make better decisions.
Thrifty Investing 