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30 Jul 2021

Could You Invest in Stocks with $5,000? | Pauline Teo

Could You Invest in Stocks with $5000? | Pauline Teo
(c) Sadie Xiao

So you have $5,000 and thinking to invest it? Congratulations! I love that you have the resolve to start your investment journey. And as always, I’m happy to share my knowledge with you.

Before taking action, we must first settle two things.

First, is $5,000 purely your investible money or is it your total savings? If it’s the latter, I urge you to re-evaluate, because you need to make sure you have an emergency fund first before you invest.

See also: Tips to help you kickstart your investing journey

Second, are you decided on which investment option to use? Do you want to invest in precious metals, commodities, bonds, annuities, ETFs, or stocks? These are options you have in your hands with your $5,000.

And remember, choosing an investment idea for your money is not just an intuition game. You need to know how low or how high your risk tolerance is, what your end goal is, how much time and effort you’re willing to spend on the investment, and what your current circumstances are.

But if your most logical conclusion is to invest in stocks, then you’re in the right place.

Five thousand dollars is actually large enough to kickstart your stock investing journey. As a beginner investor, you can double this $5,000 based on the principle of compounding interest, which Albert Einstein terms “the most powerful force in the universe.”

With $5,000, you can buy shares in exchanges across the world. There are stocks which prices are at less than $1 each. Some are sold in lots (like in SGX which is selling in lots of 100).

When I was just starting, I bought BreadTalk shares at only $0.46 each, and a few years later, I was able to get returns from this investment.

If you want to go international and buy stocks in NASDAQ or NYSE, you also can with $5,000. The good thing about US stocks is you’re allowed to buy a minimum of just 1 share. So that means you can own a share of technology giants like Netflix or Facebook.

Watch: Is Facebook a strong stock and can it still grow?

But picking a good stock can be quite challenging not only for beginners but even for experienced investors. We want our investment to get good returns, don’t we? Investment knowledge is key to make this step easier.

Believe me, I know how difficult it is to want to do something, but you cannot proceed because you aren’t familiar with it. It’s like going for a hike without a trail to follow. That’s why I went to invest in myself first. I attended VI College’s investing workshops and the rest, as you might know, is history.

My recommendation to you is to start investing in your circle of competence. When we say “circle of competence,” this consists of the companies or businesses you know of. For example, I invested in BreadTalk because I know the business and I am a regular customer of the business. So I know they have a huge and regular customer base.

As for you, look around your neighbourhood. What are the businesses that thrive? Look inside your home. What products or services can’t you live without? Because more often than not, these companies are listed in one of many exchanges and are making money.

I also recommend that you invest in yourself. Chase knowledge. Run after self-improvement. You can read books, listen to podcasts, talk to a seasoned investor, or join investment workshops like I did when I was just starting. There’s no harm trying to build your knowledge base.

Once you get the proper knowledge, I’m sure you’ll be a more confident investor. And I sure look forward to that!

If you’re interested, you can join my FREE online masterclass where I talk more about stock investing. Reserve your slot here.

~ Pauline Teo



Disclaimer

No income guarantee or promises of any type are being made in this article. Know that your results will vary due to circumstances that are outside of our control. The author and the company do not warrant, guarantee, or make any representations about the use or results of the use of the products, programmes, services, and resources mentioned in this article. The reader, thus, agrees that the author and the company are not responsible for the success or failure of readers’ investment and business decisions relating to any information provided herewith.