Until a few years ago, the idea of putting just 500 euros in the markets was unusual. First, because the high commissions barely compensated for the operation and, second, because on many occasions the minimum investment of the product to be contracted did not allow it either.
Added to all this is a third question: will investing such a small amount really generate some kind of economic benefit? Unless this amount had been invested in companies like GameStop and enjoyed some lucky break, the answer would probably have been no.
Today this question is asked by more and more people. The low interest rates maintained by the European Central Bank (ECB) to stimulate the economies mean that savings products offer increasingly lower returns, in many cases bringing them to zero. For this reason, if before it seemed normal for a checking account to offer savers 5% with hardly any requirements, now making savings in the bank profitable is practically impossible.
Fortunately, while banks cut wages and worsen conditions, the market continues to evolve. This means that new investors now have to spend, in many cases, less time in the markets, can choose more options and do not need a large initial outlay to monetize the savings.
Where to invest with small amounts?
When it comes to starting to invest with small amounts, not all products make it easy. However, there are currently several options. One of them are , which directly replicate the behavior of a stock index. This type of investment, which is part of what is known as passive management, requires less activity on the part of the management team, so the commissions are much lower. Specifically, management costs are usually situated at an average of between 0.1% and 0.6%, much lower compared to traditional investment funds, in which the maximum management fee can reach up to 2.25%.
How much can I earn by investing in the long term?
In addition to index funds, a similar option is offered by ETFs or exchange-traded funds, which also use passive management to replicate a stock index and whose costs, therefore, are also lower. However, the difference with respect to index funds is that ETFs are bought and sold like a stock and are not subscribed or redeemed with shares like other funds.
But the alternatives do not stop here. Another option, in addition to funds, is also direct investment in stock companies. However, in these cases, it is advisable to monitor the broker’s commissions so that they compensate the investment. In addition, there is also the risk of investing in only one company, which can lead to losses.
Therefore, if what you want is not to put all your money in a single action and not spend too much time choosing a specific fund, there is also another alternative in , which rely on algorithms to invest in funds (generally indexed). and that serve investors who start from very little, since in some cases they can be contracted from 500 euros.
How much can you earn?
The profitability of the investment will not only depend on the starting point, but also on the financial discipline that is followed month by month.
Thus, if you start with 500 euros and continue with monthly contributions in one of these investment products, the potential benefit will be much greater, since interest will be generated year after year on the interest obtained.
By way of example, if that first investment is complemented with 300 euros per month month by month, after 20 years you could have total savings of almost 129,000 euros, of which more than 40,000 euros would be profitability. All this for a conservative investment profile, estimating an average annual return of 3.88%, according to . Obviously, as a more risky investment profile is assumed, that amount may be higher, although the possible losses may also be.
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