How to Invest 500 Dollars – Make a Million Small Investments at a Time
For many people, $500 can either be small or a big amount of money depending on their perspective. No matter the perspective, however, you can make a million dollars out of your 500 bucks and get a big bang out of it. The trick is in making small investments at a time from your seed investment capital.
Invest on a Compounding Certificate of Deposits
Banks and credit unions offer certificates of deposit, which are basically savings account with a difference. Certificates of deposit are on a fixed terms, fixed interest basis such that you cannot withdraw it before its maturity date although the interest rates are higher than most savings accounts. To choose from amongst the best CDs that will give you the best bang for your buck, use tools like the annual percentage rate and annual percentage yield. It must be emphasized, however, that you should also consider withdrawal and renewal options, among other things.
Invest in Stocks on Your Own
You need not hire a stockbroker to invest in stocks. You can save on the stockbroker’s fees, thereby, allowing your $500 to buy one more share. There are approximately 1,400 publicly-traded companies that offer shares directly to investors. The best thing is that you can choose the terms of investment that suits your needs and seed capital, whether it is terms of minimum stock purchase, enrollment and inactivity fees and other requirements. Examples of these companies include Coca-Cola (one minimum share, no enrollment fees) and Disney (invest for as little as $100 with a $10 enrollment fee).
Invest in Stocks with a Discount Brokerage
If you still want a stockbroker to deal with the nitty-gritty details of your investments, you can always opt for the discount brokerage houses. You will have numerous options in the stocks you can invest in with the added bonus of the stockbroker fees not making too much of a dent into your already meager seed capital. When choosing the discount broker, you have to select based on fees collected, range of access in terms of communication and money, and customer service. You want the best in a discount stockbroker without paying for it with plenty of money.
Go for a Stock Purchase Plan
There are three ways to go about availing of a stock purchase plan (SPP). First, you can ask the company you are working for about an SPP. Depending on the company, it can take the form of compensation when your employer matches your stock purchase or stocks can be offered at a special discount. Second, you can buy smaller quantities of stocks for little to no transaction fees provided that you purchase on a regular basis. Even blue-chip companies can offer this so check with your stockbroker, if you have one. Third, if you are already a stockholder and you wish to grow your investments with the $500, ask the company management about programs where your dividends are reinvested in additional shares or where you can buy additional shares through automatic payments from your salary. Your $500 can add capital to these programs.
Now, assuming that you have an extra $500 every other month from your savings, you can invest in these venues and watch your money grow and grow. After all, $500 can become a million dollars when you invest and reinvest it.