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Is there any value in investing in individual stocks if you have less than $500 to invest?

If you pick a broker who will charge you zero commissions so you can buy even 1 share of a stock and pay nothing to do so, then yes, you can still do it. Choose high quality dividend growth stocks (dividend aristocrats), 3 to 5 companies, buy few shares (choose stocks in the $40 – $50 range), set dividend reinvestment (DRIP) plan, and let it go. You won’t make much (meaning that in 20 years you still will not be able to retire on it) but you will still make more than in a savings account. Note that investing in stocks is a long run. So if you plan to buy today and plan on selling in a few months or even a year or two, then this will not work and you will lose money. This will work if you buy now and let it sit there for 5 to 10 years. A good example would be Mastercard (MA). I bought the stock a few years ago for $75 a share. Today, it sells for $303 a share. Do not worry about diversification. I agree with IBD and Warren Buffett on this matter who both consider diversification a myth. You can be very well diversified with 5 stocks too. If you do your homework, study the companies you plan on buying and know their business (for example, know how Mastercard make money – and it is not in lending money to people) then you will be safe.

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