Stock investing is not just for those who have big capitals. People with small capitals can also invest in stocks and make profits from it. The following are six tips on how you can get started in the stock market with a small capital and how to consider trading binary options using paypal.
1. Join Broker with Low Minimum Deposit Requirement
Almost all stock brokerage firms have minimum deposit requirements. This means that they won’t let you open an account if you can’t deposit the minimum requirement. Before signing up with a broker, make sure you shop around and compare the minimum deposit requirements across different brokers.
2. Take Into Account the Transaction Fees
It is not a good idea to buy a lot of stocks with just a small amount of capital. This is because you will get charged with a transaction fee everytime you place a trade. The transaction fees can add up to a lot of money and reduce your investment capital. Instead of buying real stocks, you could try out trading binary options. With binary options you don’t actually buy the stock, but rather predict its price. Also there are no fees when using Paypal to deposit and withdraw your money.
3. Join a Discount Broker and Use Paypal
Finpari is the best paypal binary options broker. If you only have a small capital, it is recommended that you sign up with a discount broker. Discount brokers charge lesser fees because they won’t be giving you any investment advice. Discount brokers that have very low or no minimum deposit requirement usually charge a lot of fees. Thus, it is important to check the fees they are charging before you open an account.
- More resources: Binary Option Brokers Using Paypal.
4. Invest in ShareBuilder
If you are unsure about binary options, you can invest in a budget investment company such as ShareBuilder. Sharebuilder allows you to easily get started in stock investment by letting you create automatic investment plan for just $4. The cost for placing a market order is $16. Sharebuilder’s fees are lower compared to the full service brokers. There are some restrictions but it is a good way to start your investment if you don’t have a lot of money.
5. Purchase ETFs
People with small investment capitals can opt to buy ETF. ETFs are like stocks and have share prices. You can buy ETF from all online brokers. Some brokers will charge you fees for overseeing your funds. Despite that, there are lots of cheap options. You will be charged with commission everytime you place a trade. The commission is quite high so it can finish up your capital quickly if you invest frequently. In ETF, you are charged with an annual management fee of about 0.15% of your investment. However, ETF will make a good investment if you are going to trade only once in a while.
6. Avoiding Capital Gains
You will want to watch out for the capital gains tax as it can have a big impact on your share investment. You will get charged with the full tax if the share is sold within less than 1 year. You get a 50% discount if you hold the share for more than 1 year. When calculating the returns, make sure you take into account the inflation as inflation can reduce the value of the money you earn through stock investing.
In conclusion, it is possible to invest in the stock market with just a small capital. You will find that investing in a small amount in stocks every month will benefit you in the long term. What’s even better, is to start trading binary options using paypal.