How to Invest in Stocks with 200 Dollars

How to Invest in Stocks with 200 Dollars
Learning how to invest in stocks with 200 dollars may sound too good to be true, but it’s not! Investing your money in stocks can help you build wealth. It may take a lot of time and patience, but your money can grow exponentially with the right choices and actionable steps. Annual return rates of 10 percent or more are not unheard of, so long as you invest in stocks that are growing and have a good track record. If you are not comfortable picking stocks yourself, you can always invest in a mutual fund or exchangetraded fund that specializes in stocks. These funds give you exposure to a variety of stocks, which can help you spread your risk and maximize your potential for growth. Stocks, bonds, and investing do not give you free money, but all of these methods can help you earn money in several ways. Cash flow is what is important when it comes to your finances. You want to make sure you have a positive cash flow so you can save money and invest in your future. How much money do you need to invest in stocks? The answer is not as much as you think. You can start off with a micro-investment of just a few hundred dollars. Read on to learn how to invest in stocks with 200 dollars.

Investing in Stocks

When you invest in stocks, you buy small shares of ownership in a publicly-traded company with the hopes of that company performing well over time. Those small shares represent the company’s stock, and they will only become more valuable as the company grows. Other investors may want to purchase your shares for more money than you paid for them when that happens. If you choose to sell your stocks, then that could potentially earn you a profit. A 20to1 return is very rare and should not be expected when investing in stocks. In fact, over the past 100 years, the stock market has only returned 20to1 about once every five thousand years! This is because stock prices are determined by the collective actions and expectations of all market participants. Although it is possible to achieve a 20to1 return, it is much more likely that an investor will experience a return closer to the market average. The price of a stock is always changing. If you purchase a stock for $10 and someone else purchases the same stock for $12, then the person who purchased it for $12 has made a profit. The average return is calculated by taking the total gain or loss and dividing it by the number of shares that were bought. One of the best ways to start investing in the stock market is to open an online investment account with investment apps. There are even micro-investment apps specifically suited for investing small amounts in common stock. You can use that platform to:
  • Research stocks;
  • Select which companies you prefer to invest in;
  • Purchase shares of stock or stock mutual funds; and
  • Trade or sell those shares to earn a profit.
You might need the help of brokerage service. A brokerage service is a company that helps customers buy and sell stocks, bonds, and other securities. Brokerage firms are also called securities firms. While comparison service is a company that helps customers compare different products and services. Even if you only have a small amount of money to contribute, you have to start somewhere and make investing a habit. And with many online brokerage accounts, you can start investing for the price of a fraction of a share. Eventually, that small sum will snowball to more significant numbers, changing your future for the better.

How Much Money Do I Need to Invest in Stocks?

The amount of money needed to buy an individual stock depends on the price of its shares. Some shares can cost a few dollars, and others may be a few thousand dollars. For those on a small budget, you may want to look into exchange-traded funds (ETFs), a large selection of stocks within one fund. Similar to buying individual stocks, you can purchase ETFs for a share price as low as less than $100. Some companies offer fractional shares, which means you can buy a share of a company even if you don‘t have enough money to buy a whole one. For example, you might be able to buy 0.25 shares of Apple stock for $50. Fractional shares can be helpful if you want to invest in a company but don‘t have enough money to buy a whole share. Keep in mind that you may not have as much control over your fractional shares as you would if you held the whole share. For example, you may not be able to vote on company matters or receive dividends. Here’s the catch. It doesn’t matter how much money you start investing with at first. The most important thing is just to get started, so you can be on your way to developing real wealth. Whether you have $100 or $100,000, all you need is to figure out where you are putting your money. It should be an investment where you feel comfortable leaving your hardearned cash for at least five years. Investing is more of a longterm game, so you should only use the money you can spare. After deciding where is the best place to invest, you can eventually add to your initial investment at your own pace to diversify your portfolio and boost earnings. Products that may be a good fit for you, depending on your risk tolerance, are stocks, real estate, and bonds. If you are looking for a conservative investment, you may want to consider a CD or a bond. A certificate of deposit is a savings account that offers a fixed interest rate for a set period of time. A bond is a loan that is made to a government or company. The borrower agrees to pay the bondholder a fixed amount of money every year until the loan is paid off. If you are looking for a more aggressive investment, you may want to consider buying stocks. When you buy an enterprise product, you buy a slice of the company. As the company makes money, it can use that money to make more money for you and its other stockholders. Real estate may also be a good investment for you. When you buy a piece of real estate, you are buying the right to use the land and the buildings on it. You can use the property to live in, or you can rent it out to other people. Real estate can be a good investment because the value of the land and the buildings on it usually go up over time. As a financial product, real estate offers a number of benefits to investors. For example, real estate investments are:
  1. Diversified
  2. Tangible
  3. Inflation-Protected
  4. Liquid
  5. Low Maintenance

Benefits of Starting Small When Investing in Stocks

Investing small sums of money can seem challenging. Many investments set a minimum that may be higher than what you can afford. And it could be difficult to diversify your portfolio with small amounts of money. The less money you have to invest, the fewer individual stocks you can purchase. The good news is there are advantages to starting small when investing in stocks. For one, it can be a more straightforward introduction to the art of investing. As a new investor, smaller investments allow you the opportunity to dive into new and unfamiliar territory. You can locate the right assets for your budget and test the waters without being exposed to high risks that may be difficult to mitigate. Also, small investments can lead to consistent investing. While $200 may not seem like much capital now, imagine investing that amount repeatedly. When you make regular contributions, you will notice a considerable growth in revenue thanks to compounding interest. And most brokerage accounts allow you to automate your investments, turning it into a habit so you can purchase shares often at your convenience. The time horizon is the length of time over which you plan to invest. The time horizon for an investor is typically the number of years until they plan to retire.

How Much Should I Invest in Stocks?

If you’re ready to start investing and have $200 or less for capital, you may want to be cautious about where you put your money. It is always a good idea to assess your financial situation before jumping into the stock market. And consider the following first:
  • Will you need access to this money soon?
  • How much risk are you willing to take?
  • What is your investment timeline?
The estimated returns of investment are based on historical data and should not be used as a guarantee of future performance. Actual results may vary. If you can part with that money and are prepared to do long-term investing, we recommend you designate a large portion of your portfolio toward stock index funds and ETFs. Why? They both tend to have a low to no minimum requirement. Also, they provide you with a variety of stocks all in one fund. That way, you will be able to diversify your portfolio at a low cost. You can still choose to invest in individual stocks, but perhaps, they should make up about 10% or less of your portfolio until you can afford to buy more than one share and more than one stock. It would help to always steer toward building a diverse portfolio so that you do not have your money and entire investment future bound to a single position.

How to Invest in Stocks with 200 Dollars

For a first-time investor, investing in stocks can be overwhelming. And the reason for that is you want to make sure you do not risk your financial future with ill-advised investments. There are many factors to consider and research to perform before you even make your first purchase. As mentioned, you do not need thousands and thousands of dollars in your savings account to enter the stock market. If all you have is $200, you can consider the following ways to begin investing:
  1. The first thing you will need to do is open an investment account. For the independent, hands-on types, you may try your luck with a brokerage account. And for those who need guidance, you may have more success using services that offer Robo-advisors. No matter which one you choose, they both cost very little to start investing.
A Robo-advisor account assesses your investment style through an onboarding process and then does most of the work picking investments to manage for you. Unlike the brokerage account, which is perhaps the quickest and most inexpensive way to buy and sell stocks, you may have to pay for this type of service. Before selecting which brokerage account you want, it’s best to evaluate its investment selection, investor tools for research, and costs, such as trading commissions and account fees. Through a broker, you have the option of buying stocks, funds, and a variety of other investments like an individual retirement account or IRA. If you have not already established a retirement plan, IRAs are a great way to save for your future. You can open a traditional IRA, a tax-deferred retirement account, or a Roth IRA where your money grows tax-free.
  • Next, you will need to learn the difference between investing in individual stocks and stock mutual funds. As we discussed earlier, if you have a small amount of money to invest, stock mutual funds and ETFs may be better suited for you because of their diverse selection of stocks and low cost.
  • Then, you set a budget and timeline for your market investment. This step involves the two questions we addressed: how much money do you need for stock investing? And how much should you invest in stocks?
  • The last steps are focusing on investing long-term and managing your portfolio. Once you develop and implement your long-term investment strategy, you should be well on your way to long-term wealth. And then, we recommend you check on your portfolio a few times of year to make sure your investments are still in line with your goals and timeline.
If you need assistance selecting suitable investments to create a diverse portfolio, find out more about our investment products and services here at Shiirs. We can help get you started on your investment journey and improve all of your personal finance goals. Whether you’re looking for help with credit cards, understanding interest rates, stocks, or some other personal finance knowledge we can help. Sign up for Shiirs today.