Gone are the days when investing in the stock market was the preserve of the rich. Even with a small budget, today you can invest in the market, build up a diversified portfolio of assets and grow it.
Equities like Forex offer investment products tailored to the needs of savers who want to invest in the stock market with little capital.
What should you invest in on the stock market with a small budget?
To get started on the stock market on a small budget, the generally recommended option is investing in stocks. But you may well choose the equally simple option of investing in Forex.
Invest in stocks
Investing in the stock market has certain advantages, including that of having lower volatility. However, it involves higher commission costs which can be crippling for a small budget. If you choose to invest in stocks, you will have the choice between several different asset classes.
You can invest in active funds, index funds or Trackers (generally recommended because of their simplicity and efficiency) or live securities. As for the stocks in which to invest, it will be necessary to proceed with caution, favoring solid and safe stocks with upside potential.
Invest in Forex
Forex trading offers a simpler investment alternative that is better suited to the needs of small budgets. Forex refers to the currency market. In short, it simply allows you to buy and sell currency.
It offers many advantages over investments in shares. In particular, greater flexibility in opening accounts and lower commission margins. It also offers greater leverage compared to equities.
Another advantage of Forex is the constant access to the currency market open 24 hours a day and allowing you to trade anywhere and anytime, according to your schedule. However, its market has the disadvantage of being more volatile.
What techniques to invest your small budget well
Above all, it is advisable to define a realistic action budget and stick to it. This is the amount of your capital that you intend to expose by taking positions in the market. It should ideally take into account your investment horizon and your perception of risk.
You then need to diversify your asset portfolio to minimize your exposure to stock market risks. In particular by spreading your budget over various asset classes and by investing in different media (life insurance, PEA, etc.).
You must invest your capital gradually, focusing on long-term profitability. Finally, use the leverage effect with caution to grow your capital without risking breaking the bank rather than expected.
How to choose your broker to invest?
The broker is your intermediary in the stock markets and it is important to choose him with the greatest care. Several essential criteria must be taken into account when choosing the right online broker for your investor profile. In particular, you must take into account:
- The reliability and notoriety of the broker or broker
- The transparency of the prices charged (commission fees, account taking, leverage effect, etc.)
- The diversity of financial products available
- Accessibility to the platform.