How to invest with a low net worth
"You most definitely can invest such an amount profitably, but it makes it even more important to avoid fees, um, at all costs, because fees tend to have a fixed component that will be much worse for you than for someone investing €200k. So:  Edit: The above assumes that you actually want to invest in the long run, for modest but relatively certain gains (maybe 5% above inflation) while accepting temporary downswings of up to 30%. If those €2000 are ""funny money"" that you don't mind losing but would be really excited about maybe getting 100% return in less than 5 years, well, feel free to put them into an individual stock of an obscure small company, but be aware that you'd be gambling, not investing, and you can probably get better quotes playing Roulette." I'm of the opinion that speculating is for young people like you, because they can afford to lose it all. Avoiding losses becomes necessary once you have to sustain a family, and manage a somewhat large retirement funds. Even if you lose all your money when speculating, you'll probably be better off later, because you make less costly mistakes once you have larger amounts of money. You might want to consider 'investing' a portion of that money into educating yourself. The payoff might not be as immediately obvious or gratifying but with appropriate determination, in the long term it will generate you a much greater return. If you would like to learn about investing, a great starting point would be to buy and read the book 'The Intelligent Investor' by Benjamin Graham. This will be a great barometer for how ready you are to invest in the stock market. If you are able to understand the concepts discussed and comprehend why they are important, you will have gone far in ensuring that you will make adequate returns over your lifetime and will - more importantly - increase the odds of safeguarding your capital. I have an opposite view from all the other contributions here. Why not consider starting your own business. With the little money you have the return will most times be much higher than stocks return. The business is yours; you keep the business and the profit streams in the long term. Simply find businesses you can even start with a 100 or 200 euros and keep the rest with your bank. this is a sure way to become millionaire my friends.
I like your enthusiasm and initiative. However, there are a few things you need to consider that you haven't yet thought about. First, it is important to remember that trading with fake money is not the same as trading with real money.  In the fake world, you have $100k.  With this fake money, you can do reckless things with it, such as put it all on one stock.  If you lose, it costs you nothing, so you don't have an emotional attachment to it.  With real money, it will feel different, and that is something you haven't experienced yet. Second, you mentioned that you are good at making picks.  With all due respect, I suggest that you aren't old enough to make that determination.  You haven't been trading for long enough to determine if you are doing well at it.  :)  That having been said, I don't want to completely discourage you from trying something new. Third, you mentioned long-term investing, but you also said that you need to make your money back quick and mentioned trading daily.  Those things aren't really compatible.  I wouldn't consider what you are doing as long-term investing.  With the type of investing you are doing, picking individual stocks and hoping for the value to go up in a relatively short time-frame, it is similar to gambling.  The risk of losing is very much there, and you shouldn't be investing money this way that you aren't prepared to lose.  If you need the money for something soon, don't put it in the stock market. Never forget this.  What can happen is that you start with small amounts of money, do well, and then, thinking that you are good at this, put in larger amounts of money.  You will eventually lose.  If you put in money that you need for something else, you have a problem. If you are trying this out for education and entertainment purposes, that is great.  But when it starts to get serious, make sure that you are aware of the risks.  Educate yourself and be smart. Here is what I would suggest: If you want to try this short-term day-trading type investing, and you understand that the money can easily be lost, I would balance that with investing in a more traditional way: Set aside an amount each month to put in a low-expense index mutual fund.  Doing this will have several benefits for you:  As for your specific questions about stock trading with small amounts: Yes, you can trade with small amounts; however, every time you trade, you will be paying a commission.  Even with a discount broker, if you are trading frequently, the commissions you will be paying will be very significant at the dollar amounts you are talking about.  The only way I can see around this would be to try the Robinhood app, which allows you to trade without paying sales commission.  I have no experience with that app. Compound interest is your friend. For such a low amount of cash, just pop it into savings accounts or deposits. When you reach about 1.500€ buy one very defensive stock that pays high dividends. With deposits, you don't risk anything, with one stock, you can lose 100% of the investment. That's why it's important to buy defensive stock (food, pharma, ...). Every time you hit 1.500€ after, buy another stock until you have about 10 different stock in different sectors, in different countries. Then buy more stock of the ones you have in portfolio. You're own strategy is pretty good also. TL:DR: You should read something like The Little Book of Common Sense Investing, and read some of the popular questions on this site. The main message that you will get from that research is that there is an inescapable connection between risk and reward, or to put it another way, volatility and reward. Things like government bonds and money market accounts have quite low risk, but also low reward. They offer a nearly guaranteed 1-3%. Stocks, high-risk bonds, or business ventures (like your soda and vending machine scheme) may return 20% a year some years, but you could also lose money, maybe all you've invested (e.g., what if a vandal breaks one of your machines or the government adds a $5 tax for each can of soda?). Research has shown that the best way for the normal person to use their money to make money is to buy index funds (these are funds that buy a bunch of different stocks), and to hold them for a long time (over 10-15 years). By buying a broad range of stocks, you avoid some of the risks of investing (e.g., if one company's stock tanks, you don't lose very much), while keeping most of the benefits. By keeping them for a long time, the good years more than even out the bad years, and you are almost guaranteed to make ~6-7%/year. Buying individual stocks is a really, really bad idea. If you aren't willing to invest the time to become an expert investor, then you will almost certainly do worse than index funds over the long run. Another option is to use your capital to start a side business (like your vending machine idea). As mentioned before, this still has risks. One of those risks is that it will take more work than you expect (who will find places for your vending machines? Who will fill them? Who will hire those who fill them? etc.). The great thing about an index fund is that it doesn't take work or research. However, if there are things that you want to do, that take capital, this can be a good way to make more income. Patience is the key to success. If you hold strong without falling to temptations like seeing a small surge in the price. If it goes down it comes up after a period of time. Just invest on the share when it reaches low bottom and you could see you money multiplying year after year "There are two things going on here, neither of which favors this approach. First, as @JohnFx noted, you should be wary of the sunk-cost fallacy, or throwing good money after bad. You already lost the money you lost, and there's no point in trying to ""win it back"" as opposed to just investing the money you still have as wisely as possible, forgetting your former fortune. Furthermore, the specific strategy you suggest is not a good one. The problem is that you're assuming that, whenever the stock hits $2, it will eventually rebound to $3. While that may often happen, it's far from guaranteed. More specifically, assuming the efficient market hypothesis applies (which it almost certainly does), there are theorems that say you can't increase your expected earning with a strategy like the one you propose: the apparent stability of the steady stream of income is offset by the chance that you lose out if the stock does something you didn't anticipate." "JoeTaxpayer's answer is dead on... but let me give my own two cents with a little bit of math. Otherwise, I personally find that people talking about diversified portfolios tends to be full of buzzwords.  Let's say that Buffett's investments are $10 million. He would like to earn ≥7% this year, or $700,000.  He can invest that money in coca-cola//underwear, which might return: Or he can invest in ""genius moves"" that will make headlines: (like buying huge stakes in Goldman Sachs), which might return: And he makes plays for the long haul based on the expected value of the investments. So if he splits it 50/50... ($5 million/ $5 million), then his expected value is 822,250: By diversifying, he does reduce the expected value of the portfolio... (He is not giving $10 M the chance to turn into $1.5 million or $2 million for him!). The expected value of that shock-and-awe portfolio with all $10 million invested in it is $1.2M. By taking less risk... for less reward... his expected return is lower. But his risk is lower too.  Scale this example back up into the $100 million or billion range that Buffett invests in and that extra margin makes the difference.  In the context of your original article, the lower-risk 'cake and underwear' investments let Buffett go big on the things that will make 20%+ returns on billions of dollars, without completely destroying his investment capital when things take a turn for the worse." Dollar Cost Averaging would be the likely balanced approach that I'd take. Depending on the size of the sum, I'd likely consider a minimum of 3 and at most 12 points to invest the funds to get them all working. While the sum may be large relative to my net worth, depending on overall scale and risk tolerance I could see doing it in a few rounds of purchasing or I could see taking an entire year to deploy the funds in case of something happening. I'd likely do monthly investments myself though others may go for getting more precise on things. "There are several brokerages which have lower minimum deposits (often $500) and allow purchase of index ETFs. I won't name them to avoid advertising. The best way to find out is to go to your bank, and ask to see a financial advisor. Then explain your difficulty to the advisor (who should caution you about the issues with investing such a small amount) and ask for advice on where to find a suitable broker. Also, sometimes banks offer services where you can buy shares of a fund through your bank account. This is probably not ""as good"" as the brokerage (performance may be not as good, fees may come out higher), but especially for small amounts and for convenience, this may be easier. Again, you should inquire at your institution." I'm not aware of any method to own US stocks, but you can trade them as contract for difference, or CFDs as they are commonly known. Since you're hoping to invest around $1000 this might be a better option since you can use leverage. Your idea is a good one, but, as usual, the devil is in the details, and implementation might not be as easy as you think.  The comments on the question have pointed out your Steps 2 and 4 are  not necessarily the best way of doing things, and that perhaps  keeping the principal  amount invested in the same fund instead of taking it all out and re-investing it in a similar, but different, fund might be better. The other points for you to consider are as follows. How do you identify which of the thousands of conventional mutual  funds and ETFs is the average-risk / high-gain mutual fund into which you will place your initial investment?  Broadly speaking, most actively managed mutual fund with average risk are likely to give you  less-than-average gains over long periods of time.  The  unfortunate truth, to which many pay only Lipper service, is that  X% of actively managed mutual funds  in a specific category failed  to beat the average gain of all funds in that category, or the  corresponding index, e.g. S&P 500 Index for large-stock mutual funds, over the past N years, where X is generally between 70 and  100, and N is 5, 10, 15 etc.  Indeed, one of the arguments in  favor of investing in a very low-cost index fund is that you are effectively guaranteed the average gain (or loss :-(, don't forget the possibility of loss). This, of course, is also the argument used against investing in index funds.  Why invest in boring index funds and settle for average gains (at essentially no risk of not getting the average performance: average performance is close to guaranteed) when you can  get much more out of your investments by investing in a fund that is among the (100-X)% funds that had better than average returns?  The difficulty is that which funds are X-rated and which non-X-rated (i.e. rated G = good or PG = pretty good), is known only in hindsight whereas what you need is foresight. As everyone will tell you, past performance does not guarantee future results.  As someone (John Bogle?) said,  when you invest in a mutual fund, you are in the position of a rower in rowboat: you can see where you have been but not where you are going.  In summary, implementation of your strategy needs a good crystal ball to look into the future. There is no such things as a guaranteed bond fund. They also have risks though not necessarily the same as in a stock mutual fund. You need to have a Plan B in mind in case your chosen mutual fund takes a longer time than expected to return the 10% gain that you want to use to trigger profit-taking and investment of the gain into a low-risk bond fund, and also maybe a Plan C in case the vagaries of the market cause your chosen mutual fund to have negative return for some time. What is the exit strategy? "You may want to look into robo-investors like Wealthfront and Betterment. There are many others, just search for ""robo investor""." "An individual's net worth is the value of the person's assets minus his debt. To find your net worth, add up the value of everything that you own: your house, your cars, your bank accounts, your retirement investments, etc.  Then subtract all of your debt: mortgage, student loans, credit card debt, car loans, etc.  If you sold everything you own and paid off all your debts, you would be left with your net worth. If Bill Gates' net worth is $86 Billion, he likely does not have that much cash sitting in the bank.  Much of his net worth is in the form of assets: stocks, real estate, and other investments.  If he sold everything that he has and paid any debts, he would theoretically have the $86 Billion.  I say ""theoretically"" because in the amounts of stock that he owns, he could cause a price drop by selling it all at once." If you have little investing experience, you shouldn't involve yourself in leveraged investments or short-term speculation at all.  You will probably just lose money. If not, is there a better way to invest with a small amount of money? If you have little investing experience, you should not attempt to make a lot of money on a small investment at all.  You will probably just lose money. The best way to invest with a small amount of money is to put it in a low-cost, mainstream investment product (like an index fund), and wait and save money until you have more.  By that time, you may decide that leaving the money in a low-cost index fund is actually the best thing to do anyway.  (Incidentally, I don't know if fund minimums are different in the UK, but in the US, an amount equivalent to £100 might not even be enough to start, so you might have to just put it in a savings account until you save enough to even buy into a mutual fund.) "Put it in a Vanguard fund with 80% VTI and 20% VXUS. That's what you'll let set for 10-15 years. For somebody that is totally new to investing, use ""play money"" in the stock market. It's easy for young people to get dreams of glory and blow it all on some stock tip they've seen on Twitter." For a non-technical investor (meaning someone who doesn't try to do all the various technical analysis things that theoretically point to specific investments or trends), having a diverse portfolio and rebalancing it periodically will typically be the best solution. For example, I might have a long-term-growth portfolio that is 40% broad stock market fund, 40% (large) industry specific market funds, and 20% bond funds.  If the market as a whole tanks, then I might end up in a situation where my funds are invested 30% market 35% industry 35% bonds.  Okay, sell those bonds (which are presumably high) and put that into the market (which is presumably low).  Now back to 40/40/20.   Then when the market goes up we may end up at 50/40/10, say, in which case we sell some of the broad market fund and buy some bond funds, back to 40/40/20.  Ultimately ending up always selling high (whatever is currently overperforming the other two) and buying low (whatever is underperforming).   Having the industry specific fund(s) means I can balance a bit between different sectors - maybe the healthcare industry takes a beating for a while, so that goes low, and I can sell some of my tech industry fund and buy that.   None of this depends on timing anything; you can rebalance maybe twice a year, not worrying about where the market is at that exact time, and definitely not targeting a correction specifically.  You just analyze your situation and adjust to make everything back in line with what you want. This isn't guaranteed to succeed (any more than any other strategy is), of course, and has some risk, particularly if you rebalance in the middle of a major correction (so you end up buying something that goes down more).  But for long-term investments, it should be fairly sound.