There are plenty of people who don't have or want to invest a lot of money. So, I've decided to share what I would buy with just $1,000. Before I go into the specific stocks, I'd just like to point out that if you're someone who is looking for some motivation to save money and invest, a great way is to put aside a set amount of money per week - say, $25 - and be diligent about not touching it. Before you know it, you will have saved enough to reach your "seed money" for your first portfolio - whatever that number may be.
It is important to be disciplined and conscious of what you're investing in; remember, this is investing, not trading, so you're in it for the long-haul. I would advise that investors who are starting with little capital (and those with tens of thousands of dollars in their account) stay away from penny-stocks. While the headlines and success stories are extremely enticing, it must be understood that penny-stocks are extremely volatile and speculative, which are certainly not qualities of a long-term investment.
The first company I would invest in is Apple, and I would buy 5 shares. Before you think that this seems like nothing, remember that this is a move for years down the road. And let me put it in perspective: In 1990, the price of a Macintosh Classic sold for $1,500. But what if you invested that money instead? Sure, you wouldn't have had a computer, but that same $1,500 would have made you over $125,000 with reinvested dividends. I'll take the latter any day of the week.
So, $1,000 - (5 x $128.00) - $10 (TD Ameritrade Trade Commission) = $460 Apple is the largest company in the world, which is just one reason why investors find its stock extremely secure. Its ecosystem is unparalleled, they have an immense pile of cash, insane revenues and trade at just 14.45 times next year's earnings. The latter figure is why I think the stock is extremely undervalued, and seeing as $AAPL sports a 1.63% ($2.08) yield, the stock is very attractive. The second stock I would buy is $DIS. Although it's not as cheap as $AAPL, $DIS trades at 22.08 times next year's earnings, which is fairly valued. However, that's assuming that Disney doesn't deserve a premium - I think it does. Investing in Disney would allow you to cover all the bases: cruise lines, movies (Star Wars), amusement parks, sports (ESPN), restaurants, and is a play on just about everything else. Its exposure and dominance across countless industries makes owning Disney like owning 10 or 20 other stocks. It's kind of like $SPY, but averages better returns! Further, $DIS will give you a 1.03% ($1.15) yield. Sure, it's not the best yield there is, but there is no doubt that the company will dish it out, seeing as they have an immense stockpile of cash (like Apple). $460 - (4 x $112.50) - $10 (Brokerage Fee) = $0 I also like $SBUX. Click here for my company analysis.
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