Ways to invest a small amount of money

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There are many ways to invest a small amount of money, but before investing, the investor must be fully aware of the risks surrounding the type of investment instrument he chooses.

Ways to invest a small amount

The concerned authorities in the Kingdom of Saudi Arabia have worked during the past few years to prepare the market to encourage investors to invest in the Saudi market. And that is through enacting laws and setting the necessary legislations for that and developing previous legislations. In the Kingdom there are many investment options that suit different segments of society, where the investor can choose between a wide range of tools and investment projects such as stocks, bonds, small and medium projects, investment funds, and others. In this article, we will learn about some of the tools and projects that can be invested in the Kingdom.

8 ways to invest a small amount of money

1- Shares

The Saudi stock market (Tadawul) is considered one of the most promising trading markets in the Gulf region. Equity investments have achieved great financial returns compared to many other investments in general, making it the most attractive to investors thanks to the ease of liquidating investments. However, this type of investment involves many risks and requires expertise and know how to deal with risks in order for a person to achieve a good return. Therefore, beginners should not risk large sums and develop an investment plan commensurate with their ability to take risks and increase the value of the stock in the long run.

2- Bonds

Investing in bonds differs greatly from stocks, as the stock investor shares the profits and losses with the company because he is considered the owner of part of the company’s ownership, but when investing in bonds, the investor is considered a lender to the issuer of the bond. According to this, an agreed rate of interest is agreed upon, and the investor does not share any profits or losses with the issuing party unless it stumbles and fails to pay the principal and interest. There are several types of bonds, including fixed or floating rate bonds and zero coupon bonds.

[Steps to help you choose the right investment fund]

3- A savings account or a term deposit

It is one of the safe investment tools that banks provide to their clients, as they allow them to achieve returns on the amounts deposited in these accounts. The savings account is very different from the term deposit account. A savings account provides the customer with a periodic return on the amounts deposited in his account, while providing flexibility in withdrawals and deposits. As for the deposit account, it allows customers to deposit money with a fixed return that is due during a period of time that usually extends from a week to a year or more. Banks offer the option of early withdrawal of the deposit amount, but this means a loss of returns on the deposit in addition to the early withdrawal fee. When the time is due for the deposit, the customer can renew it after adding the returns to the original amount of the deposit, transferring it to his bank accounts, or withdrawing the deposit amount with its returns.

4- Small projects

The small and medium enterprises are considered one of the most important tributaries of the private sector in the Kingdom, as they contribute greatly to improving the living conditions of many citizens by reducing unemployment rates. The concerned authorities in the Kingdom take the necessary measures to enhance the role of these projects in society through setting up training programs or providing financing for those wishing to establish such projects. The activities of these projects vary according to their goal and legal form. The concerned authorities urge the owners of these projects to focus on increasing their market shares and not only to achieve profits, because this contributes to the growth of the project and the stability of its profits.

5- E-commerce

E-commerce has become a large share of market trade today, given the ease and speed of obtaining goods through the use of the Internet on a computer or smart phones. It is very easy to start this type of project. It only requires buying some suitable commodities and offering them for sale on e-commerce platforms after adding a profit margin to these commodities. Some of these sites may charge fees for displaying goods on their platforms. Popular platforms include Souq, Noon, and others.

6- Investing in gold

Gold is considered a precious metal safe for investment, especially as it is not affected by the decline or rise of stocks. Therefore, experts advise people to replace their money with gold to protect it from rising or falling inflation. Gold is also an investment tool that helps diversify the investment portfolio and is a good tool for hedging against potential risks. Thus, the investor is safe from fluctuation in market movement.

7- Investment funds

Mutual funds are among the investment vehicles that help increase the capital of investors. The capital of the fund usually consists of investment units that have a nominal value, are traded on the stock exchange and are managed by a group of financial experts led by the investment manager. Also, the investor does not interfere with the management of these funds at all. The strength of supply and demand plays a role in determining the price of these units. In addition, an investment committee supervises the work of the fund to ensure that it follows the investment plan.

8- Saving and protection programs

Licensed insurance companies in the Kingdom of Saudi Arabia provide protection and savings programs that combine savings and cover the costs of risks to which the insured may be exposed. Therefore, this program helps investors to hedge against future risks and protect themselves and their families from risks that were not taken into account – God forbid – by obtaining the insurance amount that the insurance company will pay if the investor strikes any harm or at the end of program duration. The investor will participate in this program in return for a monthly payment, as agreed upon in the document when signing the contract. At the same time, the insurance company, after a specified period of subscription, begins to calculate specific profits on the amounts paid, which contributes to increasing savings, and the investor can after that period withdraw the sums he paid with their profits if he wanted to.

There are many ways to invest in the Kingdom of Saudi Arabia, where an investor can start it without the need for large capital. However, before investing in the investment, the investor should be fully aware of the risks surrounding the type of investment instrument he has chosen. When choosing the type of investment, he must also ensure that he obtains the necessary approvals and licenses.

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