With 700 dollars, you can make a good start on stock market investing. The key is to diversify across different stocks and sectors, invest regularly, and take a long-term view. Don’t try to time the market or chase hot stocks. Focus on building a balanced portfolio of blue chip stocks, ETFs, and some higher risk small cap stocks. Invest mostly in domestic large cap stocks, but also allocate a small portion to emerging markets for diversification. Don’t put all your eggs in one basket. Investing regularly helps dollar cost average over time. Review your asset allocation periodically and rebalance. Compounding returns will grow your wealth over decades.
Diversify across sectors and asset classes
With only 700 dollars, you can’t invest in many individual stocks. The best approach is to buy 2-3 diversified ETFs covering the major sectors like technology, healthcare, consumer staples, utilities, etc. An S&P 500 index fund also provides instant diversification. You could allocate 500 dollars to ETFs, 100 dollars to 1-2 blue chip stocks, and keep 100 dollars for higher risk small caps or emerging markets. This achieves diversity across sectors, market caps, and geographies. Regularly invest another 100-200 dollars monthly into this portfolio.
Take a long-term buy and hold approach
Investing 700 dollars is just the beginning. The key is to keep adding to your portfolio over months and years. The stock market will fluctuate in the short term, but historically returns about 7% annually over decades. Don’t try to time the market’s ups and downs. Just steadily build your portfolio through regular investing, reinvest dividends, and let compound growth work its magic. Review your asset allocation once a year and rebalance to your target.
Choose low cost index funds and blue chips
With only 700 dollars, fees and expenses will really eat into returns. Stick to low cost index based ETFs and established blue chip stocks. Actively managed funds charge higher fees and rarely beat the overall market consistently. Index funds like VTI and VOO provide instant diversification at minimal cost. Leading blue chips like Apple, Microsoft, J&J, etc are safe long term holdings.
Allocate a small portion to higher risk assets
While the bulk of 700 dollars should be in mainstream assets, allocating a small portion ~10-20% to higher risk investments can boost returns. Small cap value stocks and emerging markets offer higher growth potential. But only invest money you can afford to lose as these are volatile. Other alternatives like bitcoin and high growth stocks can also be considered.
In summary, 700 dollars invested wisely in stocks can grow significantly over long periods. Focus on diversification across sectors, low cost index funds and leading blue chips. Invest regularly over years and decades. Stay disciplined and don’t chase hot trends or try to time the market. This will set you on the path to building long term wealth through the stock market.