Many people suppose that, to make decent money on investments, one needs to obtain a large capital and deep experience in this sphere. However, even if you have only a few thousand dollars at your disposal, you can count on weighty returns. Rely on the experience of our experts and choose from the methods described below.
1. Pay off all the debts. In the first place, focus on the ones that involve high interests, like credit card debts. When you have debts, making investments is almost useless as you will have to spend the earnings on covering related expenses.
2. Index ETFs. How to Invest $5,000 if your experience in this sphere is minimal? If you are a beginner, choosing the right company for investment will be a serious challenge for you. So, you have better opt for package investments, for example, via the S&P 500 list, which includes the most successful US companies in terms of capitalization. On average, with index ETFs, you can earn about 10% per year.
3. Other ETFs. You can utilize such funds to invest in precious metals, real estate, stocks. Among the pros, one must mention decreased risks, transparent pricing, an opportunity to reinvest earnings, and portfolio management. As for the cons, these are execution problems and high commissions.
4. Utilize a trading robot (or a robo advisor). Such software will execute deals instead of you at the most favorable times in compliance with your trading approach.
5. Roth IRA. A perfect choice for those who are concerned about their wellbeing after retirement. Compared to other similar savings accounts, it allows one to earn from reinvestments without paying taxes for that.
6. Individual stocks. Buying the stocks of a particular company directly will provide you with dividends at the end of each year. Still, you will have to constantly monitor the performance of the company chosen.
7. Copy trading. It’s another great variant for beginners. To utilize it, register on eToro or another service for social trading and choose a trader with a high winning score, whose trades you want to copy.
8. High-return funds. These are mutual funds that make investments in stocks and pay high rewards to their clients ― up to 30%. But, as you have probably guessed, the risks are high as well.
9. Buying crypto. That can bring bigger returns compared to trading Forex, but, due to increased volatility and frequent unexpected price fluctuations, it is much riskier.
10. Penny stocks. This term is used for small companies with extremely cheap shares ― cheaper than $5. In many cases, such companies are not listed on public exchanges and lack regulation and transparency. It is much harder to monitor such stocks. Yet, this method allows multiplying your capital within a short term.
To summarize, even if your budget is limited, it is not a reason to refuse the idea of investing. Still, if you are a newbie, it is advisable to opt for less risky solutions from the top of our list.
