Small Investments

We often find ourselves giving in to the common misconception that only more significant investments are where the main capital gains are achievable. Yet, against popular belief, even smaller savings are capable of profit-making, and even small investments can become profitable, especially if you do them regularly.

Many people think that there isn’t much to be done with the last bit of spare money leftover from their previous wage each month because, from some people’s perspective, this leftover amount doesn’t really equate to much value. However, considering that regular monthly investment can usually result in quite a nice return, the previously mentioned misconception is not a good outlook to adopt as that leftover money can most definitely go a long way, no matter how small.

As we had mentioned in our in-depth investing guide for beginners, it is now possible to invest with as little as $10 on the eToro platform.

To do this effectively, of course, you need to know which products are worth buying in small quantities on the market. Although, unfortunately, if you want to invest a small amount, you may not have as many opportunities as others.

Investing in eToro

eToro is one of the most popular and chosen online brokers. If you were to read the reviews about the company and get to know the services on the site, before long, you would soon come to realise how good of a platform it really can be!
Find out more about eToro: Here

When should I choose a small investment?

You should at least consider a small investment, if:

• You have little savings, and you want to increase them.
• You’re a beginner and don’t know the market very well.
• You want to begin generating long-term returns
• You want to try a new product
• You don’t want the risk exposure associated with larger amounts of capital.

Benefits of small investment

• You’re only risking a smaller amount of capital.
• It helps give an understanding of how the market works.
• It is easy to diversify with smaller holdings.
• You can choose from flexible products.
• With regular investment, your portfolio can achieve good returns.
• There are leveraged products available.

Disadvantages of small investment

• Patience is needed when it comes to developing the desired level of holdings.
• Fewer options are available.
• The risk is the same.
• In the short term, potential yield production may be limited.

Shares

Minimum capital: $10 to $10,000

Possible profit: very high

Time horizon: 5+ years

Competence: very high

Risk: very high

Stocks are potentially one of the most popular investments. Thanks to the variety of shares, everyone has the ability to find a product that is perfectly suited to them and their portfolio types. In addition, since we are talking about an investment type that has high diversity potential, you can often find shares that can quite oftenly turn out to be a profitable choice even with very little capital.

Despite the previous point, nobody can forget that stocks are relatively risky. If you want to invest a small amount, it certainly means that you don’t have much savings. With this in mind, you should be especially careful when it comes to stocks because, with a wrong decision, the investor can easily lose even that small amount.

If you want to buy shares, we recommend that you think long-term and preferably not rely on the shares of just one company. When you spread your investments, you are in turn exercising risk management which will actually protect your capital investment should something happen to that one particular company that you would have originally placed all of your money in. This, in essence, means you won’t lose everything in one go.

Bank deposits

Minimum capital: $1,000 to $10,000

Possible profit: low

Time horizon: 0-1 year

Savvy: low

Risk: low

A bank deposit is generally a  safe investment, so it’s recommended especially for those who do not want to put too much risk exposure on their money.

Some may not realise this, but you will be required to have a bank account to deposit. The amount paid will be the bank’s property for a while, but, in return, you will receive interest from it. At the end of the term, you will receive the amount and the interest paid on it.

It is worth noting that, in the case of a bank deposit, we haven’t addressed and talked about is the sometimes high-interest rates. So, for example, you can get a higher return on a share, but you can choose a bank deposit if you want to be sure of reduced risk.

Also, remember that because you have protection when it comes to the deposited amount, you wouldn’t lose your money even in the event of bankruptcy.

Gold

Minimum capital: $1,000 to $10,000

Possible profit: low

Time horizon: 1-5 years

Savvy: low

Risk: low

Gold is an available investment option that has been present in the market for a very long time. It is the most popular investment among precious metals, and most of the time, investors will buy gold for diversification.

Another reason for gold’s popularity is that it can retain its value better than most other securities. An excellent example of this is that shares will decrease in value more than gold in the event of a crisis. Moreover, the value of gold will likely increase during a crisis; this is because many people will invest a portion of their money in gold as a portfolio safety net.

The value of gold is on the rise in the long run. Since we are talking about a rare and finite amount of precious metals, you can be sure that gold will retain it’s value in the future.

If you’re looking for a small amount of investment, gold can be a great way to counter inflation.

Bitcoin

Minimum capital: $1,000 to $10,000

Possible profit: very high

Time horizon: 1+ months

Competence: very high

Risk: very high

Bitcoin could easily be the most popular and well-known cryptocurrency. Cryptocurrencies are internet currencies that operate without a bank or other centralised body. Instead, blockchain technology allows transactions to take place exclusively between users.

Originally Bitcoin was created to keep people safe and allow them to store their money independently of any bank. In our current society, websites and big-name businesses are increasingly supportive of Bitcoin payments, although the future of cryptocurrencies remains in question.

For sure, Bitcoin is currently a very trendy product, and most people see it as an investment. However, the price can be very unstable, which is caused by market volatility, and this is why you can quickly lose your money.

Bitcoin is better recommended to more experienced investors, but – on the other hand – you don’t necessarily have much to lose if you only want to invest in small amounts and can then gain valuable market experience and knowledge at the same time.  The yield on leveraged products is likely the best to use to compare to Bitcoin’s yield.

P2P loans

Minimum capital: $1,000 to $10,000

Possible profit: high

Time horizon: 1-5 years

Savvy: low

Risk: very high

Peer-to-peer loans can be a good source of income for the lender. If you want to invest, you can give credit to people who need it.

Since there is a demand for such loans, smaller amounts are utilised equally to more significant amounts. This point is important because banks usually don’t deal with options such as these less significant amounts. Moreover, when it comes to P2P loans, the borrower will pay interest on the money lent, so, like a bank deposit, you will earn a guaranteed return.

The borrower will also benefit, as they have access to a loan with a lower interest rate than they would be able to source from any bank.

Such lending isrelatively easy to source on most platforms. These sites can easily connect you with the borrowers that suit you.

! Attention !

The use of P2P platforms is prohibited in some regions. Therefore we urge you to DYOR and source the correct information relevant to your specific country orregion. Only if you find that it is not unlawful to do so, should take full advantage of P2P lending.

Commodities

Minimum capital: $1,000 to $10,000

Possible profit: very high

Time horizon: 5-10 years

Competence: very high

Risk: very high

As a term, “Commodity Products” is used to describe raw materials and basic products that are suitable for investment.

These products include:

• Agricultural products
• Commodities
• Metal goods
• Livestock goods

There are several ways that you can invest in these products. The, seemingly, obvious solution for some would be to buy and store physical product. Although, because of the sheer required storage space alone, this is far from a favourable or recommended method. Instead of this, in the majority of cases, it is more highly recommended over anything else that investors buy into an ETF (Exchange Traded Fund) that is suited to their portfolio requirements.

Buying ETFs is much more straightforward and a much more obvious choice in the way that investors can implement them on almost any platform. If you are looking for another alternative, you can choose a suitable investment fund instead.

It is important to remember that when buying a product, you need to be thinking with a long-term mindset.

Invest in Yourself

Many people forget that self-improvement is one of the most important things in the world that you can turn your attention to. Often, learning a new skill holds a lot more value than any product you can find on the stock market. If you spend money on improving yourself, you will almost certainly be making the best decision possible.

If you aim to make more money, the easiest way to go about this is to further develop the skills that will better assist you in achieving these goals.

For example, if you want to invest in the stock market, you you may enrol into a course that will advance your knowledge in new investment methods.

Also, it is advisable that you ensure that you give yourself the opportunity to gain enough personal experience traversing the market, as well as market knowledge, to the point that you feel more comfortable and certainly confident in it processes. An example of a platform that accommodates this necessary stage in any investor’s journey, is eToro, it is one of the most popular investment exchange platforms and provides all newly registered users with demo accounts so that they can do just this and gain necessary knowledge and experience before needing to have true risk management skills.

With the amount on the demo account, you can invest without risk, therefore you can experience not only how to properly use the site, and its different features but also to see how the various different products behave.

How do I create an account on eToro? Guide to open an eToro Account

CopyTrading

For many people choose eToro because of its CopyTrading service. CopyTrading allows you to replicate the movements of more experienced investors. Commonly, individuals usually feel safer in their market movements when they have received this kind of assistance from an experienced party.

If you decide to choose CopyTrading, first compare different investors based on their eToro profile. On the site, you will find all the useful information about them that you will need to make a decision, including the recent profit/loss they have made on their portfolio.

Don’t forget the risk!

CopyTrading may be a good decision, but the risk is there with every investment. The functioning of the market cannot always be determined in advance and therefore experienced investors can also occasionally lose money too.

Pay attention to this when investing a small amount

It is worth taking a few tips of advice when it comes to small investments. This includes the following:

• Don’t have unrealistic expectations. Since small investments are usually long-term, you will only generate true returns over time.
• Don’t forget about the risk. There is also risk involved when you invest a small amount of capital. If you choose the wrong product, you may lose the entire amount of money.
• Try to invest and diversify regularly. The more products you invest in, the safer your money will be due to portfolio diversification.

Synopsis

If you are a novice investor, starting by investing with smaller amounts is a wise decision. The market has many possibilities for you to choose from, all you have to do is be sure that the product(s) that you select suits you and your planned portfolio requirements as best as it can.

Remember, small investments also have pitfalls, so if you choose a risky product, it may be worth seeking an expert’s opinion. It is also always important to only risk as much money as you can afford to lose without being overly affected.

Disclaimer:

You make every investment at your own risk. Your money is at risk, and past performance may not be a reliable indicator of future results. You never know if an investment will pay off or not.