Small investors are brokerage clients with the smallest amount of assets to invest. Most small investors are individual people with a set amount of money to put into a market. By contrast, brokerage firms also handle much larger clients such as companies with extensive assets to contribute to an investment plan.
One problem with being a small investor is that lots of investment opportunities have specific minimum contribution requirements. Even the most basic brokerage accounts may have a minimum balance of several thousand dollars. The smallest investors will often have to look for specific low balance opportunities for buying stocks or other equities.
When corporate investors or others have even more money at their disposal, they can take advantage of hedged opportunities that may provide more reliable returns. Small investors are rarely able to participate in these complicated investment arrangements because they don’t have the required capital. Even a regular buy and hold strategy for stock yields is sometimes outside of the price range of a small investor.
With many small investors entering different financial markets, some brokerage firms and other companies are figuring out ways to offer good investment opportunities at a low cost. Brokers are realizing that by taking in small investors, they can grow their client base. There are also alternative ways that small investors can take advantage of the services that brokerage firms provide.
One way that small investors can get yields with low capital contributions are put and call options. Individual investors buy these options for a set price. The options pay off if a stock acts in the way that the investor predicted. Experienced traders and investors with smaller amounts of money to invest may use put and call options to get short term gains.
In order to get gains with a relatively low amount of risk, small investors might use strategies that include buying reliable stocks or bonds in different market situations. It might make sense for an individual investor to allow a professional money manager to handle their money, or the small investor can invest on their own using an online brokerage account. Long term buy and hold investing is a fairly simple way of helping money to beat inflation and retain value or even grow over the long term.