In recent years, advances in financial technology have dramatically reduced the costs associated with investing. As a result, it’s now possible to start investing with only a small amount of money. Looking to begin your investment journey today with a modest outlay? Here are five top stocks to consider.
Amazon
When you’re first starting out as an investor, it can be a good idea to invest in well-established, large-cap businesses (as these tend to be a little less risky). And one company that fits the bill here is Amazon (AMZN:NASDAQ).
Don’t be put off by the fact that its shares cost around $185 each. Share prices don’t really mean much and a stock with a high share price can perform just as well, if not better, than one that trades for pennies.
While Amazon is a very large business, it still has a lot of growth potential. Today, it operates in many different growth industries including online shopping, cloud computing, and digital advertising.
The US/China trade war does present a risk. However, with the stock trading at a historically low valuation, I like the long-term risk-reward set-up.
Alphabet
Another Big Tech stock that could be well suited to a beginner portfolio is Alphabet (GOOG:NASDAQ). It’s the owner of Google and YouTube.
Like Amazon, this company operates in many different growth industries. In recent years, it has made moves to diversify away from digital advertising and into other industries such as cloud computing and self-driving cars.
Looking ahead, there is some risk associated with the rise of generative AI apps like ChatGPT (which could lower Google’s digital advertising revenues). However, with the share price having dropped from $210 to $160 in recent months, and the valuation now at very low levels, I think it’s worth a look.
HSBC
If dividend income is your goal, banking giant HSBC (HSBA:LON) could be worth a look. It currently trades for around £7.40.
The dividend yield here is attractive. Currently, analysts expect a dividend payout of about 67 US cents per share for 2025. That puts the stock’s prospective yield at around 7%. Dividends are never guaranteed though.
One thing to like about HSBC is that it has plenty of exposure to Asia, which offers a lot of long-term growth potential on the banking front. On the downside, however, the bank could be impacted negatively by US/China trade wars.
Coca-Cola
For a lower-risk, defensive holding, I like Coca-Cola (KO:NYSE), which currently trades for around $70. It’s a global beverage company and the owner of many well-known brands including Coke, Sprite, and Fanta.
This stock is defensive because people tend to consume its products irrespective of what’s happening in the global economy. So, revenues tend to be pretty stable.
It also offers a near-3% dividend yield. So, there’s some income on offer.
It’s worth noting that geopolitical instability is a risk here as it could lead to short-term demand issues. I think Coke is likely to remain popular in the long run, however.
JD Sports Fashion
Finally, check out athletic footwear retailer JD Sports Fashion (JD:LON), whose shares currently trade for just 75p. I think this could be a good pick for those who are comfortable taking on a little more risk.
JD Sports has grown significantly over the last decade, expanding globally. And looking ahead, it plans to continue opening stores all around the world.
A major economic slowdown or recession is a risk for this company. This could result in consumers spending less on discretionary items such as trainers.
However, I think patient investors may be rewarded here. Currently, the company has a very low valuation.
Managing risk as a beginner
It’s worth pointing out that experts often advise owning at least 20 stocks (to reduce stock-specific risk). But if you only have a small amount of money to invest, this may not be possible.
One way to get around this is to invest in mutual funds or exchange-traded funds (ETFs). These products allow you to invest in many different companies with a small amount of money and they can be a good way to reduce portfolio risk.
Edward Sheldon owns shares in Amazon, Alphabet, Coca-Cola, and JD Sports Fashion.
Based in London, Edward is a distinguished investment writer with an extensive client portfolio comprising a diverse array of prominent financial services firms across the globe. With over 15 years of hands-on experience in private wealth management and institutional asset management, both in the UK and Australia, he possesses a profound understanding of the finance industry.
Before establishing himself as a writer, Edward earned a Commerce degree from the prestigious University of Melbourne. Complementing his academic background, he holds the esteemed Investment Management Certificate (IMC) and is a proud holder of the Chartered Financial Analyst (CFA) qualification.
Widely recognized as a sought-after investment expert, Edward’s insightful perspectives and analyses have been featured on sites such as BlackRock, Credit Suisse, WisdomTree, Motley Fool, eToro, and CMC Markets, among others.
You can contact Ed at edward@goodmoneyguide.com
