Best way to invest 500 dollars, euros or pounds
There are probably a lot of people with 500 dolars or euros in saving who are interested in putting that money into a useful purpose.
As it is logical that kind of money is typical of a low wage worker who might find it hard to save up that amount.
Someone the kind of Cristianos Ronaldo or Lebron James, or even a surgeon who makes 20.000 dollars a month is not too worried about 500 dollars.
Before deciding to invest 500 dollars or pounds we should have notions about the financial world and where we should invest that money since the probability of being cheated are quite big. That probability is bigger now than ever with our world full of internet announcements selling us the marvellous world of investing.
Many of those adverts are really of betting products, not investing ones. They try to sell them as “investing” since it will attract more potential customers for the simple reason that the word “invest” is more appealing than “betting”.
As you may suspect those “investing” products are going to cause us quick and huge losses, sometimes of all our money.
In some cases we might be lucky, win and withdraw our money, but they will be rare occasions.
In many other cases we will withdraw a partial amount of our original money, which has most probably been already lost.
In other cases we will have lost the entire 500 dollars.
Invest 500 dollars in the Stock Market
We are not going to be rich by investing 500 dollars in the short-term. Of that you can be sure.
Whoever wants to put 500 dollars in those kinds of products mentioned is free to do so, but make sure you know you are not investing, but trading and in the world of trading the majority lose.
When we invest it should be with the idea of winning money.
The problem with people who want to do short-term trading is that they think they can win a lot of money trading the short-term of the markets.
The truth is that better ways to earn quick money in the short run is by opening any kind of business or being a thief, either a typical one or a sophisticated one like a politician.
The best and most efficient way of investing that kind of money, or any kind of money actually, is to do it in stocks or products related to them, as ETFs or investing funds.
Investing in bonds or real estate is restricted to that small amount of money.
The problem is that even for investing in stocks 500 or 1000 dollars or pounds do not seem to be very efficient.
Many brokers will not let us open an account with less than 2000 dollars or pounds, others will charge the same commissions for a 1000 dollars account than for a 10000, with which those with small accounts will have too many costs to be able to invest efficiently.
Another problem is the custody commissions.
These commissions tend to have a minimum, which will make our small investment to suffer a lot.
For instance, many of the brokers charge 4 pounds quarterly, which is a lot for a 500 pounds account.
This would not affect so much a 5000 dollars account.
The best way to invest small amounts of money is through products that allow us to diversify into many stocks.
These products are ETFs or market funds, although some of them have subscription costs.
Normally we should be able to find funds that allow us to invest 500 or 1000 euros and will charge us a 1 or 2% commission annually.
Although if we plan to win a 10% annually those costs could be acceptable, although not something we are forward to.
Therefore, when we think about investing 500 euros or dollars we should look for the cheapest option.
Investing 500 dollars or pounds a month
If we are able to invest 500 or 1000 dollars or pounds a month in a diversified stock portfolio it is likely we can become financially independent some year in the future.
When we are in the stock market we should not expect to have returns of over 15% as an average in the long-run.
Not many are able to do that.
Cases like those of Warren Buffett or Peter Lynch are not very common.
The rest of the mortals, like us, should be happy with a 10% average return.
Trying to win more in the short-term usually ends up in disaster.
We should not either forget the State and its tax office, always hungry for income.
Whenever we are going to liquidate our investment they will appropriate a significant part of our profits which always make it more difficult to build a long-term investing portfolio.
Therefore, the returns we should expect are even lower than a 10%.
Investing as well as life is an exercise that requires patience.
We should not be carried away and hurry up trying to take short-term paths. They will most probably end up badly.