The global stock market represents a very large amount of money -- trillions of dollars. Yet it is possible to get exposure to the stocks of the world with an initial investment of as little as $500. An investment of this amount will put some limits on your choices, but you can get started with investing and add more when you can afford it.
To get an investment that covers the global market, you will need to invest in some type of fund. Global means that the fund owns stock from all over the world, including the United States. A fund billed as international excludes U.S. stocks from its potential holdings. For the index type of funds, the stocks owned will match the components of a specific index such as the Global Dow or MSCI World Index. For actively managed funds, you need to look at a fund's investment objectives and holdings to get an idea of how global of an exposure the fund provides.
Low Minimum Mutual Funds
Mutual funds set a minimum investment amount to open an account. While initial investment amounts of $1,000 to $3,000 cover the bulk of mutual funds, you can fund some accounts with a $500 minimum and a global investment objective. Lower initial investments are more prevalent with load mutual funds. This means you will pay a sales charge or commission to invest your $500. On the positive side, with a load fund you will work with an investment advisor that can help pick out a fund and complete the paperwork.
An exchange-traded fund is an index type of fund, and there is a broad selection of global stock index tracking ETFs. You buy ETF shares through a discount brokerage account and can buy any number of shares at one time. To invest $500, you would divide the $500 by the current share price of the global ETF you select and buy the next lowest whole number of shares. For example, you find a global ETF trading at $54.39 per share. Dividing it into $500 gives 9.19, so you would buy nine shares of the ETF.
Brokerage Account Considerations
Discount brokerage accounts allow you to buy stock and ETF shares with low commission rates, typically $7 to $10 to buy or sell. The minimum money to open an account varies from broker to broker, but you can find some that let you start for $500 or less. A handful of brokers also allow the commission-free purchase of selected ETF shares. To get the most from your $500, look for a low minimum broker that has a no-commission ETF program.
Increase Initial Investment
To broaden your choices for global investing, you may want to consider holding on to your $500 and save a little more to get to $1,000. At the $1,000 level the selection of both mutual funds and discount brokerage accounts gets considerably larger. As you research the different global mutual funds and ETFs and find one that takes more money to get started, set a goal to add to your $500 until you can buy the investment you want.
Tim Plaehn has been writing financial, investment and trading articles and blogs since 2007. His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Plaehn has a bachelor's degree in mathematics from the U.S. Air Force Academy.