Micro-investing: How to effectively invest frequent small amounts of money in equities?
In terms of building the initial investment using some kind of mutual fund, I'd suggest you see my answer to this similar question https://money.stackexchange.com/questions/9943/cheapest-or-free-online-broker-for-beginner For buying individual stocks later, you could look at sharebuilder, or a low cost broker, however most of them charge between $5-$7 per trade, and if you are doing small dollar value trades then that can really really eat into things if you try to trade a lot. Compound interest is your friend. For such a low amount of cash, just pop it into savings accounts or deposits. When you reach about 1.500€ buy one very defensive stock that pays high dividends. With deposits, you don't risk anything, with one stock, you can lose 100% of the investment. That's why it's important to buy defensive stock (food, pharma, ...). Every time you hit 1.500€ after, buy another stock until you have about 10 different stock in different sectors, in different countries. Then buy more stock of the ones you have in portfolio. You're own strategy is pretty good also. (For people looking at this question many years later...) Schwab and Fidelity offer a wide selection of commission-free ETFs.  You need an initial purchase amount, though, of (when last I checked at Schwab) $1,000.
Rs 10,000 is a small but good amount to begin with. I would suggest you start by investing in some good mutual funds. Do some research, a balance mutual fund is less risky less returns compared to a equity mutual fund. The other option is directly investing in stock market, however this needs some experience and you would need to open demat and trading accounts that would cost money to open and maintain. The main difference is that the ISA account like a Cash ISA shelters you from TAX - you don't have to worry about Capital Gains TAX. The other account is normal taxable account. With only £500 to invest you will be paying a high % in charges so... To start out I would look at some of the Investment Trust savings schemes  where you can save  a small amount monthly very cost-effectively - save £50 a month for a year to see how you get on. Some Trusts to look at include Wittan, City Of London and Lowland It sounds like you are soliciting opinions a little here, so I'll go ahead and give you mine, recognizing that there's a degree of arbitrariness here.  A basic portfolio consists of a few mutual funds that try to span the space of investments.  My choices given your pot: I like VLTCX because regular bond index funds have way too much weight in government securities.  Government bonds earn way too little.  The CAPM would suggest a lot more weight in bonds and international equity.  I won't put too much in bonds because...I just don't feel like it.  My international allocation is artificially low because it's always a little more costly and I'm not sure how good the diversification gains are. If you are relatively risk averse, you can hold some of your money in a high-interest online bank and only put a portion in these investments. $100K isn't all that much money but the above portfolio is, I think, sufficient for most people.  If I had a lot more I'd buy some REIT exposure, developing market equity, and maybe small cap.  If I had a ton more (several million) I'd switch to holding individual equities instead of funds and maybe start looking at alternative investments, real estate, startups, etc. You are probably right that using a traditional buy and hold strategy on common equities or funds is very unlikely to generate the types of returns that would make you a millionaire in short order. However, that doesn't mean it isn't possible. You just have to accept a more risk to become eligible for such incredible returns that you'd need to do that. And by more risk I mean a LOT more risk, which is more likely to put you in the poorhouse than a mansion. Mostly we are talking about highly speculative investments like commodities and real estate. However, if you are looking for potential to make (or more likely lose) huge amounts of money in the stock market without a very large cache of cash. Options give you much more leverage than just buying a stock outright. That is, by buying option contracts you can get a much larger return on a small movement in the stock price compared to what you would get for the same investment if you bought the stock directly.  Of course, you take on additional risk. A normal long position on a stock is very unlikely to cause you to lose your entire investment, whereas if the stock doesn't move far enough and in the right direction, you will lose your entire investment in option contracts. Very interesting. I would like to expand beyond just precious metals and stocks, but I am not ready just to jump in just yet (I am a relatively young investor, but have been playing around with stocks for 4 years on and off). The problem I often find is that the stock market is often too overvalued to play Ben Graham type strategy/ PE/B, so I would like to expand my knowledge of investing so I can invest in any market and still find value. After reading Jim Rogers, I was really interested in commodities as an alternative to stocks, but I like to play really conservative (generally). Thank you for your insight. If you don't mind, I would like to add you as a friend, since you seem quite above average in the strategy department. "Question 2 Some financial institutions can provide a way to invest small amounts with low or no cost fees over a period of time (like monthly, weekly, etc).  For instance, a few brokerages have a way to buy specific ETFs for no cost (outside of the total expense ratio). Question 3 When someone says that investing is like buying a lottery ticket, they are comparing an event that almost always has at least a 99.9% of no return (large winnings) to an event that has much better odds.  Even if I randomly pick a stock in the S&P 500 and solely invest in it, over the course of a given year, I do not face a 99.9% chance of losing everything. So comparing the stock market to a lottery, unless a specific lottery has much better odds (keep in mind that some of these jackpots have a 99.9999999% of no return) is not the same.  Unfortunately, nothing truly safe exists - risk may mutate, but it's always present; instead, the probability of something being safe and (or) generating a return may be true for a given period of time, while in another given period of time, may become untrue. One may argue that holding cash is safer than buying an index fund (or stock, ETF, mutual fund, etc), and financially that may be true over a given period of time (for instance, the USD beat the SPY for the year of 2008).  Benjamin Franklin, per a biography I'm reading, argued that the stock market was superior to gold (from the context, it sounds like the cash of his day) because of what the stock market represents: essentially you're betting on the economic output of workers.  It's like saying, in an example using oil, that I believe that even though oil becomes a rare resource in the long run, human workers will find an alternative to oil and will lead to better living standards for all of us. Do civilizations like the Mongolian, Roman, and Ottoman empires collapse?  Yes, and would holding the market in those days fail?  Yes.  But cash and gold might be useless too because we would still need someone to exchange goods with and we would need to have the correct resources to do so (if everyone in a city owns gold, gold has little value).  The only ""safe bet"" in those days would be farming skill, land, crops and (or) livestock because even without trading, one could still provide some basic necessities." I'm in a remarkably similar situation as yourself.  I keep roughly 80% of my portfolio in low-cost ETFs (16% bond, 16% commodities, 48% stock), with about 20% in 6-8 individual stocks.  Individual stocks are often overlooked by investors.  The benefits of individual stock ownership are that you can avoid paying any holding or management fee (unlike ETFs and mutual funds). As long as you assess the fundamentals (P/B, P/E, PEG etc.) of the company you are buying, and don't over-trade, you can do quite well. I recommend semi-annual re-balancing among asset classes, and an individual stock check up.  I've found over the years that my individual stocks outperform the S&P500 the vast majority of the time, although it often accompanied by an increase in volatility.  Since you're limiting your stake to only 20%, the volatility is not really an issue. Given that hedge funds and trading firms employ scores of highly   intelligent analysts, programmers, and managers to game the market,   what shot does the average person have at successful investing in the   stock market? Good question and the existing answers provide valuable insight.  I will add one major ingredient to successful investing: emotion.  The analysts and experts that Goldman Sachs, Morgan Stanley or the best hedge funds employ may have some of the most advanced analytical skills in the world, but knowing and doing still greatly differ.  Consider how many of these same companies and funds thought real estate was a great buy before the housing bubble.  Why?  FOMO (fear of missing out; what some people call greed). One of my friends purchased Macy's and Las Vegas Sands in 2009 at around $5 for M and $2 for LVS.  He never graduated high school, so we might (foolishly) refer to him as below average because he's not as educated as those individuals at Goldman Sachs, Morgan Stanley, etc.  Today M sits around $40 a share and LVS at around $70. Those returns in five years. The difference?  Emotion.  He holds little attachment to money (lives on very little) and thus had the freedom to take a chance, which to him didn't feel like a chance.  In a nutshell, his emotions were in the right place and he studied a little bit about investing (read two article) and took action.  Most of the people who I know, which easily had quintuple his wealth and made significantly more than he did, didn't take a chance (even on an index fund) because of their fear of loss. I mean everyone knows to buy low, right?  But how many actually do?  So knowing what to do is great; just be sure you have the courage to act on what you know.