Investing is one of the most important tools to make money in the long run.
Investing is one of the most important tools to make money in the long run. In an age where inflation is inevitable and everything is getting more and more expensive, the gap between the wealthy and the pool is getting larger and larger and it seems like you are never earning enough money, investing may be the only way out.
When should I start investing?
The answer is always now. It is important to know that the earlier you start investing the better as your investment will compound over time. Let’s say you start investing at 20 and you invest $500 each month for 30 years with an annual return of 10%, at 50 your investment will be totaled at $1 million, and $850 thousand of it is your interest earned. This is the power of compounding.
How do I start investing?
The technical side is pretty simple, you can go to a brokerage firm or your bank or investing app such as Robinhood to open an investing account and once you transferred the money into the account you can start investing.
I do not recommend going into the stock market without any basic knowledge of how the economy works. The stock market is essentially a reflection of the economy and knowing how the economy works helps you make the right decision in the stock market. One video that I recommend everyone to watch is How The Economic Machine Works by Ray Dalio. The 30-minute video is simple and easy to follow. It is also narrated by Ray Dalio, one of the most successful hedge fund managers in the world.
Also do not put your hard-earned money into the stock market straight away. It might be overwhelming at first and you might not be all that familiar with how everything works. Most brokers now offer a demo account so I would recommend opening a demo account to get familiar with different features and functions. You do not have any financial obligation with a demo account so be active and get comfortable with buying and selling. Once you feel comfortable knowing how everything works you can now start to trade with your actual money. Your mentality is one of the most important aspects of investing. No one succeeds in one try. Most beginners leave the table after they lose on their first trade, but just like everything else, it takes time to master the art of investing. Reflection is key in investing, it is frustrating when you lose on a trade but it is more important to find out what went wrong with the trade, It helps you make better decisions going forward. Did you pick the wrong stock? Did you mess up the timing? write it down in a notebook and avoid these mistakes later on. Turn your bad trades into useful lessons. Investing is a long and ongoing game so over time you will get better and better at it.
One of the most boring but useful tips that I recommend everyone to do is to read more. From books to news to articles and etc. Investing is complex and ever-changing, it is important to equip more knowledge and to keep up to date with the market and the economy. If you don’t know where to start I would recommend “a random walk down wall street” an iconic book written by American economist and professor Burton Malkiel. As for news and article, Bloomberg offers a wide range of news and quality articles about the market and the economy. Seeking Alpha also offers news and articles by individual writers.
Can I start investing with just $100?
Definitely, unlike in the old days, investing is easier than ever. Even with only $100 you can get started with a lot of options. Here are some examples.
Want to invest in blue-chip companies such as Amazon, Google, Apple, Facebook, Microsoft, Netflix, etc but don’t have enough money to buy 1 share? You are now able to buy a fraction of a share. For example, if one share is $200 and you only have $100 in your broker account, you will still be able to purchase 50% of one share which is 0.5 shares. This provides a lot more flexibility and opportunity for investors that are just getting started to invest in different companies with an expensive share price. It is worth noting that not all brokers provide this feature so it is important to choose a broker with this service if you are interested in buying fraction shares.
Blue-chip dividend stocks under $100
Unlike Amazon, Google, Apple, Facebook, Microsoft, Netflix, etc, there are other quality blue-chip stocks that are trading below $100 per share. Two examples of blue-chip dividend stocks are AT&T (T) and Realty Income (O). AT&T is a cable and wireless service provider and one of the biggest companies in the United States. It is currently trading at $28.78 with a dividend yield of 7.23% that is declared quarterly. Realty Income is one of the largest REIT (Real Estate Investment Trust) in the United States. It is currently trading at 66.74 with a dividend yield of 4.23% that is declared monthly. Both companies have been around for a long time with a great record of dividend history. These two companies are a good start for investors with $100 that want to start building up their passive income stream.
High-risk speculative stocks
A lot of investors and beginners have an appetite for high-risk high-return investments, and high-risk speculative stocks fit right into that category. Unlike other stocks with a large market cap, stocks with a small market cap usually have a lower share price for each share, and a lot of them are trading at just single digits. This is very convenient for an investor that wants to start investing with $100. Some of my favorite high-risk speculative stock includes Kubient (KBNT), Kaleyra (KLR), VerifyMe (VRME), and NextNav (TMTS). These companies all trade below $20 a share, I’ve also written an article about each company so feel free to check it out. One important thing to know is that high-risk speculative stocks can be very volatile it is possible to lose a huge chunk of your money, therefore I would recommend doing more research on the company you are buying into before investing.
In the modern age, everyone is able to invest easily, there are a lot of options out there even if you only have a budget of $100. Yes, investing can get overwhelming at times, but don’t give up because it is certainly worth it in the long run. Hope this helps you get started and happy investing. If anyone has any questions regarding investing feel free to comment I’m more than happy to answer them.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2021 felix fung