Investing in the stock market with a small budget
Investing in the stock market is not reserved for people with large savings. It is quite possible to make financial investments with a small budget. Discover hereafter several advices to start in the stock market and make your assets grow if you have the second investor profile.
100 or 500 euros: Define a budget and make it’keep them there
Success is not always related to the size of the capital invested in the stock market. Even with a small budget, you have as much chance of succeeding as a wealthy saver. It is the investments chosen and the risk-taking that make the difference.
As an illustration, with 500 euros, an investor will have to take more risk than with 5,000 euros for his investment in the stock market to be profitable.
In general, the initial investment The minimum investment required to invest in the stock market online is 250 euros. It is nevertheless possible to invest from 20 euros on certain sites. In any case, you will have to define the amount to invest taking into account your income. You must be able to continue to support yourself.
Once the amount is determined, make sure you stick to it. Indeed, the stock market investment must be considered on the long term. Otherwise, don’t expect to generate capital gains.
Furthermore, opting for a long investment horizon (at least 10 years) is relevant in view of the numerous fluctuations occurring on the financial markets. Thus, it is recommended to start as soon as possible. This advice applies all the more if you plan to invest in the stock marketinvest in the stock market with a small budget.
On which shares to invest when you have a small budget ?
If you are taking your first steps in the stock market and have a small capital, it is not recommended to invest in cryptocurrencies. This option is best suited for seasoned investors with a high risk appetite due to the extreme volatility of virtual currencies. To keep them beginners, it is rather recommended to invest in shares. Know that there are many affordable listed stocks.
Some can be bought for about 10 euros.
For invest in the stock market with a small budget, it is essential to invest in shares whose value is bound to increase. In 2021, it is advisable to privilege those of the companies evolving in promising fields such as health, technology or energy.
If it is possible to buy shares on the stock market with a small budget, it will be difficult to set up a diversification strategy in this way. The ETFS allow this problem to be remedied. Also known as trackers, these financial instruments allow you to invest in a basket that includes hundreds of shares, sometimes thousands.
Accessible from several tens of euros, they are up to 10 times less expensive than UCITS (Undertakings for Collective Investment in Transferable Securities).
How to invest in the stock market with a small budget ?
For a beginner, investing in the stock market with a small budget allows you to become familiar with the functioning of the stock markets and financial products. It is also an excellent way to understand the different investment vehicles such as life insurance, PEA (share savings plan), securities account or savings book.
Apply the following tips to maximize your profits. First of all, make sure to invest the same amount of money at regular intervals and over the long term. This strategy allows you to benefit from compound interest, the reinvestment of which significantly increases the performance of your stock market investments.
It also reduces the volatility of these. Therefore, plan for programmed payments from your current account (at the beginning of each month for example) is a good idea.
In addition, remember to diversify your stock portfolio. It is imperative to limit the risk of capital loss. As already mentioned above, ETFs are perfect to set up a diversification strategy with a limited budget.
In addition, do not hesitate to inform yourself about investing in the stock market. Various solutions to learn the basics are available. You can consult the specialized media.
Another option is to take a training course with a broker.
There is one last tip for playing the stock market. It is valid, whatever the budget you intend to allocate to an investment: invest only the amount you are ready to lose.