Getting started with investing can seem a bit overwhelming, especially when you don’t even know where to begin. Not only that, but it can sometimes feel like you need to have loads of money to even think about starting—but is that true?
Let’s say you have $500 to start with. If you’re investing in the ASX (Australian Securities Exchange), you generally need this as a minimum to begin with, so that’s why it has been chosen.
So, let’s have a look at what you do with $500 and whether or not it’s enough to get started with.
What can I do with $500 when investing?
When looking to invest $500, it can seem like it wouldn’t be enough when you have giant stock prices in big tech companies and the like. However, if you value diversification, then investing this set amount in a managed fund or ETF (exchange traded fund) might be the kind of option that would be preferable.
Alternatively, you may want to invest in single stocks, however, it’s important to make sure that you do sufficient research before committing any cash. If you’re investing in the ASX, you’ll have to keep in mind the minimum investable amount. So. with only $500, you’re generally only going to get one company's shares!
If you’re investing in the US stock market, you usually don’t have the large minimum in trades like with the ASX as well as the ability to buy fractional shares.
Should I wait to invest a larger amount?
Just like with savings, the major benefits of compound interest come from regular deposits and time. So, if anything, a dollar cost averaging strategy where you contribute a regular portion of your income can be helpful.
What’s more, the $500 minimum for ASX shares is generally for your first time buying the share, with all subsequent minimum investments needing to only be the price of the share plus brokerage fees.
However, if you’re looking to invest in a couple of shares (on the ASX) at once, you may want to hold off until you have saved up enough to get all the shares you want at the same time. However, also remember that time in the market is also important.
How can a small amount add up over time?
Now $500 doesn’t seem like a lot when you get started with investing, but the most important thing is that you get started early. The number one reason for this is compound interest.
So, what is compound interest? Essentially, this is when the money you earn from shares (dividends) or a savings account (interest) increases the amount you earn the next time. Over time, this compounds from tiny gains to big leaps.
Keep in mind that, even if you’re regularly contributing only a small amount every pay cycle, this can still help to compound the growth. For this reason, it’s important to make sure you’re budgeting properly.
Where can I invest $500?
When looking to invest, be sure to choose the right platform for you. Part of this is making sure that there are low or no account fees and making sure that your brokerage fees aren’t too bad. Some platforms even allow for no brokerage fees on certain markets like US shares.
Keep these factors in mind when looking for a brokerage platform, as comparison can help you to find the account that works for you. At Mozo, we have dozens of share trading platforms you can compare so that you get the share trading platform that works best for you.
FAQs
If you have $500 that isn't earmarked for bills, that's enough to get started in investing. It may or may not feel like a fortune to you. But with the right investments, it can certainly be used to start one.
Can I start investing in stocks with $500? ›
You can start investing $500 by selecting an investment account, deciding whether you want help and diversifying with ETFs. In general, you should plan to stay invested for at least five years.
Can I start stock trading with 500 dollars? ›
Many people believe that you need at least $1,000 to start doing day trading, but that's not necessarily the case, in fact, you can start with little money. With careful planning and execution, it is possible to start day trading with just $500.
Is $500 a month enough to invest? ›
You can become a millionaire by investing $500 per month consistently for almost 30 years. This is a low-effort strategy, but you can achieve this goal even faster through the right combination of individual stocks.
How much money should I invest in stocks as a beginner? ›
“Ideally, you'll invest somewhere around 15%–25% of your post-tax income,” says Mark Henry, founder and CEO at Alloy Wealth Management. “If you need to start smaller and work your way up to that goal, that's fine. The important part is that you actually start.”
Is $500 worth investing? ›
The short answer to what happens if you invest $500 a month is that you'll almost certainly build wealth over time. In fact, if you keep investing that $500 every month for 40 years, you could become a millionaire. More than a millionaire, in fact. Investing is about buying assets you believe will increase in value.
How much money do I need to invest in stocks to make $3000 a month? ›
Let's consider an investment in dividend stocks for $3,000 a month. If the average dividend yield of your portfolio is 4%, you'd need a substantial investment to generate $3,000 per month. To be precise, you'd need an investment of $900,000.
How many lots can I trade with $500? ›
You have $500 and decide that the acceptable risk level is 2% of your account. With 1:100 leverage, your need to choose ($500 * 0.02) / 100,000 * 100 = 0.01 lots. With $1000 on your account, you will be able to trade ($1000 * 0.02) 100,000 * 100 = 0.02 lots.
Can you make a living just trading stocks? ›
Trading is often viewed as a high barrier-to-entry profession, but as long as you have both ambition and patience, you can trade for a living (even with little to no money). Trading can become a full-time career opportunity, a part-time opportunity, or just a way to generate supplemental income.
Can I make money in stocks with $1000? ›
$1,000 is enough to consider some solid stock choices. If you have an extra $1,000 sitting in a savings or checking account, one of the best ways to earn a return on that money is to invest in the stock market.
If you invested $500 a month for 10 years and earned a 4% rate of return, you'd have $73,625 today. If you invested $500 a month for 10 years and earned a 6% rate of return, you'd have $81,940 today. If you invested $500 a month for 10 years and earned an 8% rate of return, you'd have $91,473 today.
How to invest $500 dollars for quick return? ›
This could include stocks, bonds or alternative investments, among others.
- Investing In Stocks. To get started, you don't have to spend $500 on one stock. ...
- Investing In Bonds. ...
- High-Yield Savings Account. ...
- Certificate of Deposit (CD)
- Commission-Free ETFs. ...
- Mutual Funds. ...
- An IRA or Roth IRA.
For example, if an investment scheme promises an 8% annual compounded rate of return, it will take approximately nine years (72 / 8 = 9) to double the invested money.
How do I buy Coca Cola shares? ›
To buy shares of Coca-Cola, you must have a brokerage account. If you need to open one, these are some of the best-rated brokers and trading platforms. Here's a step-by-step guide to buying Coca-Cola stock using the five-star-rated platform Fidelity. Fidelity makes it easy to buy stocks.
Is investing $1 in stocks worth it? ›
Investing $1 a day not only allows you to start taking advantage of compound interest. It also helps you to get comfortable with investing and develop the habit of putting your money to work for you. As you can see, that single dollar can make a huge difference in helping you to become more financially secure.
What is the safest type of investment? ›
Safe assets such as U.S. Treasury securities, high-yield savings accounts, money market funds, and certain types of bonds and annuities offer a lower risk investment option for those prioritizing capital preservation and steady, albeit generally lower, returns.
How to invest $500 in stock market? ›
How to Invest Rs 500?
- Start a Systematic Investment Plan (SIP)
- Invest in direct equity.
- Open a recurring deposit (RD) account.
- Save up for your daughter's future with Sukanya Samriddhi Yojana.
- Invest in real estate through REITs.
- Buy a life insurance plan.
If you have $500 to get yourself started in investing, you need to think strategically. There aren't many mutual funds with $500 minimum investments, but ETFs are a different story. With $500, a good place to start is a broad-based equity ETF like Vanguard Total Stock Market ETF.
How much money is good enough to invest in stocks? ›
Generally, experts recommend investing around 10-20% of your income. But the more realistic answer might be whatever amount you can afford. If you're wondering, “how much should I be investing this year?”, the answer is to invest whatever amount you can afford!
