If people hear the word "investing" they think often this is only possible with a great capital. This is surely not necessary; even with only $25.00 or even less you can do investments. Investing is for everyone but there are special plans for people who want to invest with small amounts.
Diversification is the key to have success and you can through mutual funds invest in different companies.
Before you start with investing small amounts it is important to know what the purpose of your investment is. It is the same like with a great capital.
Do you invest to buy something in the near future?
Can you afford it to take any risk?
Do you want to invest for the short term or long term?
Do you want to invest for your retirement?
These questions are important to know which kind of investment you best choose. If you save for a certain purchase in the near future try to search for savings accounts which offer you a higher interest rate than these which the most banks offer. Interest rates change always but in this time some offer you more than 4%; not bad for an investment without any risk.
There are also certain plans where you can invest on regularly times in mutual funds with only $25.00 each month. On this way you can invest your money in a mutual fund according the risk you want to take. It is possible to invest on this way in many companies and it can give you a high return after several years. If you want to limit the risk choose then to invest in mutual funds which invest in a mix of shares and bonds.
People in Europe can invest in pension funds with small amounts and this give you also tax benefits. You earn twice; you save taxes and you will receive a higher return than a savings account when you reach the age of retirement. In America you can invest in the 401 k plans which give you also tax benefits and a higher return on your investment.
Other continents have probably similar systems.
Investing a small amount in shares is often difficult because there is a fixed fee no matter how many shares you buy from a certain company. There are many stocks on the market where the price for one share is low but even if there were no costs you will buy shares of one company and diversification is very difficult. If you really want to invest in shares with small amounts of money you can best buy directly from the company without a broker.
Direct purchase plans give you this possibility but companies can't advertise these systems because it is not allowed by law. In these plans you can invest a fix amount in shares and it is even possible to buy only a part of a share (by example or even less). It is a good system to build up your portfolio and to save for your retirement but in my opinion you can better invest in mutual funds because of the diversification.
Penny stocks is another possibility; many of them cost less than $1.00 but the risk is very high and I don't recommend for people who only want to invest small amounts of money. The risk of losing money is often higher than making some profit.
There are choices enough to invest with small amounts but the key in this case is to invest regularly small amounts and you will be amazed about the return after many years. Invest carefully is the key to success.
 Read also : http://www.helium.com/tm/476094/getting-start-investing-necessary
Author: ERIK V.
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