Not all investing ideas should be geared towards people with million-dollar accounts. The truth is that you can get off the ground and running even with a small investment account. You just need to know how to allocate your funds, and how much to apportion to each position.
The challenge is to overcome the temptation to put everything into one stock. Oftentimes you’ll hear about a “hot” stock in the news or on social media. There’s a major problem with that approach because by the time a stock is very popular and millions of retail investors have piled in, the share price is already expensive and liable to a sharp drawdown.
A much better approach is to avoid chasing after overhyped stocks and instead maintain a diversified portfolio. That might sound difficult to do with a $1,000 investment account. Yet it is possible, so now we’ll explore a comprehensive approach to dividing up your investible capital.
25% in Dividend-Paying Stocks: There are reasonably affordable stocks that pay decent dividends, so these are worth investigating. A few examples would be Bank of America (BAC), Coca-Cola (KO), GlaxoSmithKline (GSK), and General Mills (GIS). You won’t be able to buy a boatload of these stocks with 25% a $1,000 account, but you should be able to pick up a few shares for a nice starter position.
The great thing about dividend-paying stocks is that you’re able to collect a little bit of extra income while you wait for the share price to (hopefully) appreciate over time. Moreover, companies that pay dividends generally often tend to be good companies, especially if they’ve been paying dividends for many years.
Also, after a while you might be able to reinvest the dividend payments. Then you’ve got the magic of compounding working in your favor as there’s now more money to invest and make money on.
25% in Precious-Metals Stocks: Owning physical gold and silver is a great idea, but there’s only so much of it you can own if you’re working with 25% of $1,000. By the time you’ve paid for shipping and/or the dealer’s markup, your allocation could dwindle considerably.
Courtesy: kitco.com
That’s where gold and silver mining stocks come in. There are very low-cost self-directed brokers out there, and Crush the Street is constantly alerting you on precious-metal stocks that are trading at a deep discount.
These stocks won’t necessarily move exactly like the price of gold or silver, but the correlation tends to be high and the stocks can provide excellent leverage to the metals’ prices so you can get the most bang for your investing buck.
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25% in Alternative-Investment Stocks
Just because a company is outside of the mainstream way of thinking doesn’t mean that you shouldn’t invest in it. In fact, some of the best opportunities can exist in places that are rarely if ever covered by the corporate media.
Think about it: cannabis companies weren’t considered an acceptable investment for many years. Even today, after many cannabis stocks have posted life-changing gains, you’d be hard-pressed to find a traditional big-bank investment advisor who would allocate your funds in this high-growth sector.
Courtesy: bizwest.com
From medical-research clinics to alternative modes of transportation, Crush the Street has spent years digging deep and uncovering companies that are off the radar of the financial press – until the share price doubles or triples, and then everybody wants to cover the story. But of course, the idea is to take a position before the media starts to salivate over these up-and-coming companies.
25% in All-weather Stocks
As the coronavirus crisis proved, no investor can afford to be complacent. That’s why it’s important to have to all-weather stocks in your portfolio. By that I mean stocks that won’t decline in value too much even if the economy contracts.
One example would be Johnson & Johnson (JNJ), whose health-care products were in high demand as the spread of the coronavirus intensified. Another all-weather stock would be Rollins (ROL), a global leader in pest-control services. That’s a business that should continue to do well even during a pandemic.
Allocating 25% of your portfolio towards all-weather stocks will balance out your account so that you can shelter yourself from an economic storm. That’s part of what it means to have longevity in the markets, as investing is a marathon, not a sprint.
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