Investing 700 dollars may seem like a small amount, but with proper research and planning, it can be the start of a solid investment portfolio. The key is choosing assets with lower risk and steady returns over time, such as index funds and blue chip stocks. Diversification across asset classes is also important for new investors with limited capital. Investing regularly and letting compound interest work its magic will allow even small amounts to grow substantially over long time horizons. This article will provide key tips for investing 700 dollars wisely.
Build a base with low-cost index funds
Index funds like Vanguard’s S&P 500 index fund are a smart way for beginner investors to gain broad exposure to the stock market. They track major indexes, have low fees, and require little maintenance. Investing a few hundred dollars into one or two index funds creates a solid core portfolio.
Add some blue chip stocks
Blue chip stocks like Apple, Microsoft and J&J offer stability with growth potential. New investors should research companies thoroughly before buying shares. Beginners may want to stick to just 1-2 stocks until they better understand picking individual companies.
Diversify across asset classes
In addition to stocks, allocate a portion to more stable assets like bonds. Short-term government bonds provide income with minimal volatility. New investors should aim for an equity/bond split around 80/20 or 70/30.
Invest regularly over long time horizons
The key is to invest consistently, not just a one-time lump sum. Setting up automatic monthly transfers into your investment account builds discipline. Compounding returns will grow small amounts substantially over 5-10+ year periods.
Investing 700 dollars successfully as a beginner requires focusing on low-cost index funds, quality blue chip stocks and diversification across asset classes. Investing for the long haul and letting compound returns go to work will allow even small initial investments to grow into substantial portfolios over time.