Can I invest a small amount in the US stock market? Here’s how to choose between ETFs, stocks and mutual funds!

Many novice investors do not know how to buy U.S. stocks or where to start. With so many U.S. stock holdings, how should they choose? Books and online articles all recommend choosing from the four major categories of “food”, “clothing”, “housing” and “transportation”. Are there no other more professional and detailed selection criteria? In fact, this problem can be solved by looking at the GICS (Global Industry Classification Standard) developed by Standard & Poor’s (S&P) and Morgan Stanley (MSCI) to understand more detailed industry categories, which will help you choose the investment target that suits you.

Are there any restrictions on small investments?

Many people who work in the small business class think that they need at least tens of thousands of dollars to start investing, but in fact, after deducting the cost of living from their salary, plus a certain amount of cash for emergencies, they can start planning small investments. In addition, many people think that they cannot invest in US stocks because they have little money, but this is actually a myth. What you don’t know is that you can start even with a small amount of money. Through time compounding, you may also benefit.

Introduction to ETFs, US Stocks and Mutual Funds

ETF (Exchange Traded Fund)

ETF is the abbreviation of exchange traded fund, which is also translated as “index stock fund”. It is an index fund that can be traded on a stock exchange and provides buyers with specific index performance tracking. The advantage of choosing ETF (Exchange Traded Fund) as an investment is that it can spread the risk of investment. Investing in a group of targets at a time, even if one of them has problems, will not lead to a total loss and the funds will not bottom out. The cost of investment is lower than other types of investment. There is no need to hire professional managers to follow up or select stocks regularly, so the investment fee is not high. At the same time, because it is a low-cost investment tool that passively follows the index, ETF is very suitable for small-scale investment for the middle class for a long time.

US stocks

U.S. stocks are the abbreviation of the U.S. stock market or U.S. stocks. There are many companies listed on the U.S. stock market around us, such as the “Coca-Cola Company” that we drink at parties, the brand “P&G Baoqiao Company” that we use to wash dirty clothes, etc. Even if you have not used them, you must have seen the products made by these companies in major channels, and the stocks of the company circulating in the market are U.S. stocks. In addition, the S&P 500 Index, the Dow Jones Industrial Average Index and the Nasdaq 100 Index are also very important indicators in the U.S. stock market.

Mutual Funds

Mutual funds refer to a way of financial management that pools the funds of many investors and entrusts them to professional institutions for investment management. The returns and risks of the investment are borne by all investors. It is suitable for both small investments and corporate investments. There is no need to pay attention to market conditions all the time.

Which one should I choose for small investments?

The above introduces the differences between stocks, ETFs, and mutual funds. So how should we choose? In fact, there is no unified standard for the selection method. The most important thing is to decide based on your “investment habits”.

Small business investing in stocks

If you want to buy stocks of companies you choose, you may need to be able to read financial reports, understand the market, or track the company’s recent reform news. Investors need to spend more time on research. If they lack the ability to understand the fundamentals, that is, they just follow the public to subscribe, their funds will have more polarized changes. In addition, there is no daily limit for US stocks, so there is no fixed standard for annualized rate of return. Therefore, if you choose the right target, your profit will increase; otherwise, you may suffer huge losses on paper, so the threshold for buying company stocks will be relatively high. 

Small business owners invest in ETFs

Purchasing an ETF is equivalent to purchasing a basket of companies, with different proportions of constituent stocks depending on the theme. Choosing an ETF that tracks the broad market can basically resist inflation with long-term continuous investment. However, investing in ETFs requires patience and continuous investment. If you do not continue to hold stocks, a small principal will also affect the growth of compound interest. In addition, when purchasing ETFs, you need to pay attention to the internal expense rate and the cost you need to pay to the brokerage firm when purchasing. 1455 is very suitable for small-income investors. There is no investment threshold, and there is no transaction commission for investing in stocks or ETFs.

Small business investing in mutual funds

There are many types of mutual funds , so there are many investment targets. If you want to invest easily and don’t want to spend too much time screening, you can consider this project, but you need to pay a management fee to the manager. If you are a small-income person who usually has less time to research and can accept the management fee, you can choose to buy mutual funds. Small-income people need to remember that investment has gains and losses. Before subscribing, do a good job of information search, adjust asset allocation, and analyze your needs, choose carefully, and choose the investment that best suits you. 1455 provides more than 11,000 mutual funds for investors to choose from. No matter what industry or risk level, you can find a suitable mutual fund from us.

We offers two investment plans suitable for the working class

Whenever your holdings pay dividends, the system will automatically use the dividend amount to buy back the stock, increasing your holdings. For example, if XYZ stock is $10 per share and you receive a $25 dividend, the system will automatically buy 2.5 shares of XYZ for you. DRIP investing allows you to easily increase your holdings without having to worry about placing orders or commissions. Add or remove the dividend reinvestment plan from your account After logging into your account, click “My Account -> Securities Held -> Dividend Reinvestment Plan” to enter the dividend reinvestment settings page. You can choose from two options: (Option 1) Add all eligible stocks in your account (currently held and purchased in the future) to the dividend reinvestment plan or remove all stocks in your account from the dividend reinvestment plan (Option 2) You can specify stocks to add or remove the dividend reinvestment function. Changes to the dividend reinvestment settings will take effect on the second business day.

Small business owners can easily sell their accumulated fractional shares online. As long as you sell all the integer shares, the system will automatically help you sell the shares that are not a full share on the settlement date.

The Securities Lending Income Program provides you with an opportunity to earn additional income by lending fully paid stocks in your cash account. When your stocks are loaned out, it does not affect or limit your right to sell the stocks at any time. Your loan income will accrue daily and be credited to your account monthly.

When the securities lending market has a demand for your stocks, our delivery company Apex will automatically lend your stocks without any operation on your part. Once your stocks are loaned out, you can earn extra income. Your loan income will be accumulated daily and credited to your account monthly. Earn extra income for you. During the period when the stocks are loaned out, you can sell the loaned stocks at any time.

Many methods of small investments have been introduced, but investments can result in gains and losses. When investing, the small business class must regularly manage their funds and pay attention to international situations.