Many young people think they have too little money to start investing. They prefer to wait until they have more money available to then invest larger sums. But this approach is wrong. For those who forego small amounts leave a lot of time and potential unused.
One reason why it pays to invest with small amounts is the compound interest effect. Through regular payments into a securities account, even small amounts can reach considerable sums over time. For example, if you invest 50 euros a month and achieve an average return of 6 percent, after 10 years you will already have saved around 7,000 euros. After 20 years it is already over 18,000 euros – and all that with comparatively small monthly contributions.
Another advantage of investing small amounts is the use of the „dollar cost averaging“ strategy. Here, one regularly invests small amounts in securities, regardless of their current price. In this way, you automatically buy more shares when prices are low and fewer shares when prices are high. In this way, you can reduce the risk of investing at an unfavourable time and being affected by strong price fluctuations. Dollar cost averaging also allows you to reduce the influence of emotions when investing and focus on returns over the long term. This strategy is particularly suitable for investors who want to invest for the long term and smooth out fluctuations in the markets.
Furthermore, investing small amounts is a good way to gain experience. After all, if you invest larger sums first, you expose yourself to a higher risk. If, on the other hand, you start with smaller amounts, you can slowly approach the subject and gain experience without risking high losses.
In summary, it is definitely worthwhile to invest with small amounts. The compound interest effect, dollar cost averaging and the opportunity to gain experience speak for this approach. Those who regularly invest small amounts can build up considerable assets in the long term and thus secure financial freedom.