When you invest, it is not always the case that you have a lot of financial resources, or can invest a lot of money. For the novice investor who still needs to gain learning experience, it is therefore very attractive to start investing with just a little money. How does this work exactly?
Get started with little money?
It is very possible to get started with investing with little money. You can do this by, for example, trading with a broker:
- You will immediately receive a free demo with which you can try trading.
- You can trade in stocks, commodities and currencies!
- You can never lose more than you put in!
With Plus500 you can invest in CFDs using a demo of £20,000!
Set clear goals
If you want to invest with little money, this requires a different preparation than if you invested with a lot of money. When we speak of little money, we are talking about sums of about a hundred pounds or a multiple of these, and not the thousands of pounds that are sometimes used when investing.
Before you start investing with little money it is important that you make your goals clear to yourself. The stock market has a tendency to fluctuate, so it is important that you set long-term goals for yourself. If you have a clear idea of what your goal is (e.g. investing to have additional money for your pension later on) then you will be able to invest more effectively.
Investing in CFDs
If you want to invest with little money, CFDs are a very suitable investment product, with which you, as an investor, can achieve high profits. If you invest money with CFDs, the stake is increased by a certain factor using leverage. The advantage of this leverage is that you can assume a larger position than when this leverage is not activated. In short: the greater the leverage, the higher the potential return.
Efficiency with small investment
If you invest little money in CFDs, the returns on this investment product are often a lot higher than if you invest in products without leverage. In short, it means that your return is proportionately much higher than the height of the leverage.
To give an example: if you use leverage of 1:10, your profit is ten times larger. If you use a 1:30 lever, it is thirty times larger. This means that the returns for the investor with a small investment can increase significantly!
Most providers of CFDs use a minimum deposit of one hundred pounds. This means that you only have to have one hundred pounds available to start investing. If you use a leverage of 1:50 with this deposit, you can have an invested capital of 5000 pounds. It is also possible as an investor with little money to put your money in multiple positions.
If you do this, you spread your chances and thus increase the chance of the highest possible return. As a novice investor, it is very well possible to invest with small amounts of money, to gain learning experience, but also to achieve actual returns!