Introduction:
The best stocks for beginners with little
money are those that you can buy at rock bottom prices. A lot of people
think they need to have a lot of money in order to make a good investment. They
think they have to have several thousand dollars, at least, to be able to
invest.
Trading stocks can be very overwhelming and difficult. What's more, many
investors find starting with little money can make the process even tougher.
With what little money you have and not a lot of experience you need to
consider the following 7 stocks to gain momentum in the market.
1.
Vanguard Total Stock Market (ETF)
Vanguard Total Stock Market (ETF)
Dividend yield: 1.80%
Expense ratio: 0.04%
The Vanguard Total Stock Market
exchange-traded fund (VTI) tracks a stock index that covers more than 3,600
U.S.-listed stocks, representing about 99% of the market's total value. This
ETF invests in small-, mid-and large-cap stocks.
The top 10 stocks in the Vanguard
Total Stock Market ETF include Apple, Amazon, and Microsoft. These stocks are
also among the most heavily weighted stocks in the Dow Jones Industrial Average
and S&P 500 indexes.
This ETF has an expense ratio of
only 0.04%, making it one of the cheapest ETFs to buy when you have little
money to invest.
2.
Ford
Ford Motor Company (NYSE: F) is a
great example of an inexpensive stock that could be a good option for beginners
with little money to invest. The automaker has seen its share price soar from
just $1.26 per share in 2009 to more than $13 today, which is almost 10 times
the value it held at the beginning of the decade. Yet Ford also pays a
respectable 3% dividend yield and has pledged to increase that dividend by
one-third by 2020.
The company's success can be
attributed to its focus on the growing SUV and truck markets, as well as its
aggressive cost-cutting initiatives, which have helped boost profits. And with
auto sales still booming in the U.S., investors may want to consider taking a
closer look at Ford.
3.
Johnson & Johnson
Johnson & Johnson (JNJ, $132.36)
is a healthcare juggernaut, one of the 30 components of the Dow Jones
Industrial Average and one of the most widely used stocks for dividend
reinvestment plans (DRIPs). This company operates in the pharmaceutical,
medical device, and consumer goods spaces — think Band-Aid bandages, Tylenol
pain reliever, and Neutrogena skincare products.
The company has an impressive track
record of innovation, producing new drugs to treat a range of diseases as well
as new devices to assist in surgery and other medical procedures. You may be
surprised to learn that JNJ also is one of the world's largest cosmetics
companies, with such brands as Aveeno, Clean & Clear, Lubriderm, and Neutrogena.
Investors are attracted to JNJ stock
because it's a solid blue-chip stock with an excellent dividend record. The
company has increased its payout each year since 1963.
JNJ stock is not immune to market
swings. Like many large-cap stocks, it took a hit during the Great Recession
but has increased in value more than eightfold from its March 2009 low of
$16.01 a share.
4.
Tesla
Because investments are priced in
real-time through active bidding between buyers and sellers, there is no single
price for a given financial product. That means the price you see may differ
from what someone else sees on a different platform, or even if you refresh
your screen.
Investors might wonder what to make
of this fluctuating pricing when building out a portfolio. It helps to have an
understanding of how it works, as well as the factors that influence stock
prices. The most obvious is the relationship between supply and demand for a
given stock. Understanding how investors value stocks is key to picking the
right price to pay for them.
5.
Shopify
Shopify (SHOP, $426.42) is a leader
in the growing e-commerce space and has a massive global addressable market of
retailers that will eventually need to go digital.
It was an early leader in helping
companies set up online stores and fulfill orders. But the company's 2019
acquisition of 6 River Systems makes it a leader in the fulfillment space for
warehouse automation as well.
Shopify stock rose more than 100% in
2019 but is down about 20% year-to-date and trades at just 35 times free cash
flow, which is attractive given its growth prospects.
The company also recently announced
a partnership with Facebook (FB) to make it easier for small businesses to sell
products through Facebook Marketplace and Instagram Shopping. It comes amid an
antitrust complaint against Facebook by the Federal Trade Commission that could
lead to spinoffs of various businesses, including Instagram.
Conclusion:
Determining which stocks are best
for beginners with little money is a difficult task because of many reasons.
The amount of money you invest in the market, how much time you plan on
investing, and the strategy you use when selecting stocks will determine the
number of shares that can be purchased. In addition, your portfolio should
reflect your risk tolerance and time frame. There are costs involved with
trading stocks that should also be considered when figuring out how much you
can invest.
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