A hundred dollars to invest in the stock market may look to be small capital to start with. Still, it will help you take the first few steps to create wealth in the stock market. Even with $100 you can build a stock portfolio for long-term financial goals. Over time, you can start adding to your capital and increase the investments for meeting your goals such as retirement or home buying. But not all quality stocks may come cheap. Many top US stocks are not available under $100, still, you may own a portion of them. You can buy fractional shares of stocks with high share prices through brokerages.
Once you have identified the stocks you want to hold in your portfolio for the long term, start buying them systematically over a regular period. Buying them every month with a fixed amount of money will help you accumulate stocks at a lower price through dollar cost averaging.
Equities tend to move up over the long-term horizon instead of short-term volatility resulting in market corrections, dips, or crashes. Many long-term investors buy more of the same stock during market crashes if they have a conviction in the stock performance over the long term.
What you need to remember are these few things:
Set up your time horizon and returns expectations
Be ready with an exit plan and stick to it
Be diversified across sectors and market cap
Select stocks based on fundamental strength and growth outlook
Be patient with stock price movement over the short-to-medium term
If you are not comfortable picking the right stock for your portfolio, it is better to buy exchange-traded funds (ETFs).
An ETF is a type of mutual fund that tracks a specific index, which could be the S&P 500 or Nasdaq 100. By investing in such an ETF, you end up taking exposure to all the stocks of the index in the same proportion and weightage as that of the index stocks.
The only place where the ETF’s units can be bought or sold is on a stock exchange during trading hours. What’s more, ETFs are inexpensive investments that give investors access to several stocks that are part of the same index at once. Like stocks, each ETF has a unique Ticker symbol. Not all ETFs are index-benchmarked, as some track a particular industry. Numerous ETFs that track the banking sector or tech stocks are available on the US stock markets.
So, whether through ETFs or individual stocks, building a portfolio to create wealth and become rich over the long term is possible, provided you stick to the basics and follow the time-tested rules of the stock market. Rome was not built in a day, goes the old saying, similarly, give time to your portfolio to reap the rewards later on.