So let’s say that you have $2,000 and are looking for somewhere to invest. Here is a commentary on the matter from four years ago that I wanted to revive. Enjoy, and please let me know what you think.
Hopefully that $2000 is just a start and putting away such sums will become a regular thing, rather than a one-time event. While there is nothing wrong with starting with $2000 or even less, growing wealth involves putting away money regularly. Rarely does one just drop a couple thousand in the market and hit it big – it just doesn’t happen.
That said, when investing you should look at whether it is more important to preserve capital or grow wealth. If you have a small amount to invest, you have little downside risk (assuming that the $2000 is not the rent money) and therefore growth of principle is more important than preservation of principle. One could put the money in five different mutual funds (if they’d accept such low balances) and grow the money at 5 to 10% per year, but even at 10% per year it would…
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