blog . invest  .

4 minutes reading time (704 words)

Invest Like A Poor: How To Invest $50. Here's What We Recommend.

How to start investing with $50. Photo credit: U.S. Currency Education Program

It is true that $50 is not going to turn you into the next Warren Buffett, but it can help you make a triumphant entry into the world of investing. You can invest $50 in either stocks, index funds, mutual fund, among other options. Alternatively, you can hire a robo-advisor to do the job for you. Let's weigh a few options. Which one makes the most financial sense for a rookie investor?

1. Stocks

In simple terms, stocks allow you to own a piece of a company. Learn more about stocks. They offer investors arguably the highest potential for capital appreciation. But given their relatively high volatility, you can lose a considerable amount of money, if the company stock decreases in value. In addition, investing in stocks comes with many intricacies that the newcomer investor may find particularly challenging. First, stock picking is an art; an investor needs to do considerable research to pick "winning" stocks. Second, there are fees associated with trading stocks, including but not limited to brokerage fees. Such fees can diminish your returns over time. Another drawback is the inability to buy fractional shares, an option afforded by mutual funds... BUT ROBINHOOD FIXES BOTH ISSUES! They offer commission free trading AND fractional shares, as well as automatic investments, and automatic dividend re-investment (DRIP). Join Robinhood today and get a FREE stock!

[Recommended: The Ultimate  Interview Guide to Dividend Growth Investing.]

2. Mutual funds

Mutual funds offer numerous benefits. They are a type of investment that pools money from many different investors, in order purchase other investments, such as stocks, bonds, etc. They offer investors an extraordinary opportunity to build wealth in the long haul. Compared to stocks, they are less risky, and allow investors the opportunity to buy fractional shares. For example, if the net asset value, NAV, of a mutual fund is $9.50, you would be able to purchase 5.263 shares with $50 (50/9.50). Although many brokerage firms do not charge fees when you buy or sell mutual funds, there are other management fees to be mindful of. For instance, the expense ratio, which tells you how much the fund charges annually to operate it, is one of such expenses. Passively-managed mutual funds, like index funds, incur lower fees than actively-managed ones.


[Recommended: Best Stocks to Buy Right Now for Great Returns.]

3. Index funds

Index funds are special types of mutual funds. They track the returns of a broader market index, such as the S&P 500, Russell 2000 Index, NASDAQ Composite Index, etc. The benefits of index funds are many. You can use them to help create a more balanced portfolio with a single fund. They allow you to buy fractional shares, and carry very low low expenses ratios. They are so awesome that Warren Buffet has endorsed them! Here's our final verdict. 

The bottom line

You don't need to be wealthy to start investing. The novice investor may find stock investments challenging, due to the reasons outlined above. Because index funds track the returns of a broader market index and carry very low expense ratios, the inexperienced investor may want to invest his/her first $50 in a low-cost S&P 500 index fund to become a Warren Buffett winner. Suitable S&P 500 index funds include the Fidelity® 500 Index Fund (FXAIX), the Vanguard 500 Index Fund (VFINX), the iShares Core S&P 500 ETF, or the Vanguard S&P 500 ETF (VOO). For the investor who does not want a S&P 500 index fund, a total market index fund could get the job done as well. Variations of these funds can all be traded directly from the ROBINHOOD mobile app or website. SIGN UP FOR YOUR FREE STOCK TODAY!

Please share and comment below. Here are a few other articles you may find useful: Stocks vs. index funds vs. ETFs: differences and similarities 3 large-cap growth index funds for your investment account | How to invest $100 | 9 costly investing mistakes that make you look like a rookie investor. | Cash is trash, not king. Invest it | 5 smart investing money moves to maximize your 401k or IRA | 10 shocking reasons why you will be broke at retirement | We exchanged our REIT ETF for 4 REIT stocks. What took so long?

Ready to start investing? Choose a platform below. 

Micro Investing And The Passive Investor: How To S...
Why you Should Start Investing. You Don't Need A L...

Related Posts

 

Comments 1

Guest - Jason McKay on Saturday, 09 February 2019 14:46

Thank you sir for the good tips. Index funds are great investments.

Thank you sir for the good tips. Index funds are great investments.
Already Registered? Login Here
Guest
Thursday, 14 November 2024

Captcha Image

By accepting you will be accessing a service provided by a third-party external to https://newvestor.com/

SPONSORED CONTENT

Stock Screening Tool

Stock screening and investing made easy with Stock Rover. Discover your favorite stocks! Why Stock Rover? Disclaimer.

BECOME A FAN. SUBSCRIBE

Investing is for Everyone.

Investing is one of the best ways to build wealth quickly. Let's get you started below.

Investing can be intimidating when you're just getting started. Let's simplify it for you. Let's start with the building blocks.

Read our latest blog articles about investing, financial freedom and debt management. Give us your feedback.
Got $5, $50, $100, $1,000 or more? Investing your way up to financial independence is achievable.  Ready to get there?

#Featured Stories

#Sponsored Content

#Most popular

How to invest in real estate without buying properties.

Can you invest in real estate without buying physical properties? Yes, indeed! Here's your guide...

Poor? How to invest $50. Here's what we recommend.

Got $50 collecting dust? Get on the path to financial independence. Here's what to buy...

Cash is trash, not king. Invest your cash to build wealth.

Got cash sitting around? Being robbed by banks? Your money is losing value. Invest it to build...

#Product Reviews

Stock Rover: stock screener!

From stock screening and research to full portfolio analysis, we haven't found a more robust screening tool.
Read more

SoFi: Simple investing platform

Investing has never been so easier with SoFi. With a simple app, start investing in stocks, ETFs & Crypto.

Read More

Stock Rover: Stock Screener.

From stock screening and research to full portfolio analysis, we haven't found a more robust screening tool.

Read More

#Let's Invest!

Disclaimer: We may receive a commission for products or services you sign up for. Thanks! Full disclaimer.

#Get in touch.

Please fill out the form below. We will get in touch soon.

#Become a fan.

Subscribe for our latest updates, blog posts and investing tips. No spamming!