There are a few key principles investors with capital constraints should consider when looking to make the most out of their investments, such as:

• Diversification - while it may be tempting to put all of your funds into a singular stock, doing so at the outset can expose you to too much risk and underperformance may discourage you from continuing. Find a few different stocks and allocate your funds based on their beta coefficient, which measures volatility compared to the broader market 
• Low-cost investments - adding a couple of low-cost ETFs to the mix can help you gain a much broader exposure to the market and help you avoid the concentration of risk in your portfolio. Check the expense ratios of each fund before investing
• Commission-free brokerage - it is best to pick a brokerage that does not charge fees per order, as this can quickly eat into the principal amount that you have deposited in your account
• Fractional shares - one of the most important decisions you can make when investing with little money is to pick a broker that offers fractional shares, which means that you will no longer be priced out of owning stocks in the company you really like, including notoriously expensive stocks, such as Berkshire Hathaway (NYSE:BRK.A)
• Research - regardless of the initial capital, researching your investments can be the difference between profitable and unprofitable investments. Take your time to gather sufficient information about the financial and operational standing of the company you are planning to invest in 

Taking these principles into account can help any investor make more rational and informed decisions when interacting with the stock market. 

Having a limited amount of capital to spare can be a challenge for investors using traditional brokers. For example, let’s consider a scenario where an investor wants to buy XYZ stock with $1,000 in their account (assuming there are no trading commissions charges):

• XYZ stock trades at $350 per share
• The investor has $1,000 and cannot buy fractional shares

This scenario would mean that the investor can buy 2 shares of the stock for $700 and would have $300 to spare that they cannot invest in XYZ stock. This would force the investor to add the missing $50 to their account to buy a third share or to try and find something else to invest the remaining $300 in. 

Such scenarios can make investing very difficult with limited capital, as it forces investors to pick only the stocks that are relatively cheap, as opposed to the stocks that can yield them the best returns. 

Luckily, fractional stock investing completely removes this problem from the picture and investors can buy 1/2, 1/5, or 1/10 of the stock they are interested in. 

This way, investors need not worry about not being able to buy stocks that have an expensive market price, as any stock or fund becomes accessible to any investors that wish to buy. 

Brokerages need to generate money - plain and simple. Most of them do so by charging various fees to their clients for using their services. Some common fees charged by stockbrokers include:

• Trading fees - brokers charge fees per each buy or sell order. The amount charged may vary, based on the number of shares being transacted 
• Inactivity fees - some brokerages may charge inactivity fees if the account sits idly for an extended period of time (typically a year)
• Transfer fees - taking money out of the brokerage account may incur additional charges, which can vary depending on the transfer method used 
• Termination fees - some brokers may charge a fee once the client decides to terminate their account 
• Margin fees - if you choose to trade on margin, your brokerage is likely to charge interest on the funds you borrow from them 

Keeping track of fees is crucial for investors with little money, as commissions and other charges can quickly eat into the principal deposit amount. This also puts more pressure on each trade to perform well, as most stockbrokers have a minimum commission fee per trade, which means that these charges can add more damage to an already unprofitable trade. 

This is why it is generally advised to choose a stockbroker that does not charge commissions per trade, as this can greatly reduce your exposure to variable charges. 

While investing small sums of money may prompt some people to stick with a single stock, this poses a lot of risk to the investment and can yield negative results fairly quickly. This is why it is crucial to diversify your portfolio and hold at least 3-4 different stocks at any given time. 

However, you may be wondering what criteria to use to decide which stocks to pick for your portfolio and in what ways they can balance each other out. One important metric you can look at is the beta coefficient, which measures the volatility of a stock when compared to the overall market. The beta coefficient can vary from a positive value to a negative one, which indicates the relationship between the performance of a stock and the performance of the market as a whole:

• A beta coefficient of 1 indicates that the performance of the stock is highly correlated with market performance
• A beta coefficient between 0 and 1 indicates that the stock is less volatile than the overall market (certain blue-chip stocks fit into this category)
• A beta coefficient of more than 1 indicates that the stock is more volatile than the broader market (most stocks will fall under this category)
• A negative beta coefficient indicates that the performance of the stock is inversely correlated with the market 

A good place to start would be to choose stocks with different betas to balance the overall risk exposure of your portfolios. For example, investing in a relatively stable stock, such as Coca-Cola (NYSE:KO), which has a beta coefficient of 0.55, could be paired with a stock like Tesla (NASDAQ:TSLA), which has a beta coefficient of 2.01. This balances the overall beta of the portfolio, but it must be considered that for this to work, the investor should invest a comparable amount of funds into each stock. For example, $500 for Coca-Cola stock and $500 for Tesla stock could help balance a $1,000 stock portfolio. 

Conversely, you can also add ETFs into the mix. Some technology ETFs, such as ARK Innovation (ARKK), are relatively volatile and can add diversity to an otherwise overly conservative equity portfolio. 

Choosing the right stock to buy can be difficult, especially for a beginner. However, some big-name stocks are more accessible than others, and investing in them can be more rewarding for a few reasons:

• Strong financials - these companies are characterized by a strong financial position, with billions of dollars in annual revenues and earnings 
• Lower volatility - blue-chip companies are typically more stable than their counterparts, which reduces the risk of sudden losses for investors 
• Dividends - some companies pay dividends to make up for their relatively low annual capital gains, which gives investors a source of cash flows 

Below is a list of some picks for beginner investors with limited capital. You can also create your portfolio using these stocks, as they vary in terms of volatility, dividend yield, beta coefficient, sector, etc. 

Apple Inc (NASDAQ:AAPL)

One of the largest public companies in the world, Apple has long attracted the interest of investors from all around the world. Anyone from individuals to major financial institutions flock to the market in anticipation of a new announcement from Apple to boost the company’s share price. The stock has had very impressive returns over the past five years - gaining over 265%. With amazing financial performance, coupled with a global presence and unparalleled brand image, Apple has managed to sustain its position on the top of the ladder when it comes to U.S. stocks to invest in. 

The company has a market capitalization of over $2.6 trillion - with only Microsoft competing at $2.3 trillion. 

Apple’s annual revenues reached $393.33 billion in 2022, with net earnings surpassing $99.8 billion. The company maintains a relatively low dividend yield of 0.54%, with $0.23 per share in quarterly dividends. 

With a global supply chain and consistent consumer demand, Apple remains one of the most influential companies in the world - beating out competition and generating billions of dollars in shareholder value each year. 

Investing in Apple stocks is relatively affordable, as the company’s share price fluctuates between the $100-$200 range. While there are certainly cheaper alternatives out there, none can match the results generated by Apple over the years. 

Visa Inc (NYSE:V)

The global payment card provider, Visa Inc, is one of the most stable blue-chip stocks available on the market today. The company was founded in 1958 and has since become one of the leading providers of payment cards around the world, as well as becoming a globally recognized brand. 

The company went public in 2008 and has since become one of the most stable and well-performing companies on the market. Growing annual revenues, coupled with a healthy annual dividend, makes Visa an attractive option for long-term investors. 

According to the 2022 annual report, Visa has generated revenues of over $29.3 billion and net earnings of over $14.9 billion. Such a wide profit margin also allows the company to continuously operate without incurring much debt while increasing its dividend payout year after year. The stock has an annual dividend yield of 0.77% or a quarterly dividend of $0.45 per share. Visa stock has returned over 80% over the past five-year period - making it one of the top performers in the financial services industry.

The global financial services industry is a growing one, which gives Visa plenty of additional room and growth opportunities in the future. Adding Visa stock to your portfolio can reduce the overall downside risk, as the stock has a beta coefficient of 0.96 - making it highly correlated with the overall market. 

Netflix (NASDAQ:NFLX)

The content-streaming giant Netflix was founded in 1997 and has since become one of the largest technology companies in the world. With a breadth of original content, as well as licensing deals with hundreds of major content studios around the world, Netflix has become one of the most popular stocks on the global market. 

The stock experienced massive growth during the Covid-19 lockdowns, as millions of consumers were left at home and in desperate need of entertainment. However, as lockdown measures were lifted, Netflix experienced negative subscriber growth for the first time since its inception, which scared many investors and caused the stock to nosedive. Despite this, Netflix managed to gradually turn things around and the stock has now gained over 60% over the past 12 months. 

While a profitable company, Netflix has no plans of paying dividends to its shareholders in the near future, and the Q1 2023 results have highlighted some signs of slowing down in the company’s bottom line:

• Quarterly revenues have gained 3.73% YoY - reaching $8.16 billion
• Net earnings have slumped by 18.3% to $1.31 billion
• Net profit margin decreased by 21.23% to 15.99%

While Netflix struggles for growth in an increasingly competitive streaming market, this could also mean that investors can buy the stock at a considerably lower valuation in the future. 

Alphabet Inc Class A (NASDAQ:GOOGL)

Alphabet is one of the largest technology-holding companies in the world. Aside from its flagship company, Google, Alphabet Inc also unites the likes of Waymo, X Development, Jigsaw, Deepmind Technologies, and Google Fiber under its corporate umbrella. 

The holding was created in 2015 as part of a restructuring of Google, which saw the search engine giant’s other branches and investments transfer to the Alphabet holding company. 

Over the past five years, Alphabet has been one of the top-performing companies in terms of both stock and financial results. The stock has doubled in price over the same period and underwent a split as recently as July 18, 2022. 

In terms of financial performance, the Q1 2023 financial report shows little growth in revenues and a substantial decline in net earnings, which is a reaction to the generally bearish sentiment present on the market in 2022-2023. 

Revenues have reached $69.79 billion for the quarter, while net earnings totaled $15.05 billion for the same period. 

A remarkably consistent growth makes Alphabet one of the best choices for beginner investors, with the company still having plenty of room for growth in the future. Alphabet has invested heavily in artificial intelligence and machine technology - priming the company for future technological advancements. 

Global X Cybersecurity ETF (NASDAQ:BUG)

Investors who are less inclined to invest in individual stocks, but are nonetheless tech-savvy, have the option of investing in a broad range of technology ETFs, such as the Global X Cybersecurity ETF, which invests in public and private cybersecurity companies around the world. With rising security concerns and the rapid digitalization of the world, cybersecurity has become one of the most strategic industries to help safely transition toward humanity’s next steps in the digital world. 

The ETF has invested in notable cybersecurity companies, such as CrowdStrike, Fortinet, and Palo Alto Networks, among others. 

The global cybersecurity industry is primed for exponential growth over the coming decades, which makes cybersecurity ETFs some of the most promising long-term investments on the market. 

It must be noted, however, that some of BUG’s holdings are pre-revenue startups, which limits the ETF’s growth in the long run but could be the catalyst for massive growth once a bulk of its portfolio companies start generating substantial revenues and even turn profitable. 

Overall, BUG is one of the best options for investors with limited capital, with a strong focus on long-term growth. 

Tesla Inc (NASDAQ:TSLA)

The global automotive giant, Tesla, has long been an investor favorite for its massive growth and relatively high volatility, which also made the stock a valid option for short-term trading.

Tesla’s revenue growth, as well as the opening of new Gigafactory locations outside of the United States, has propelled the company to new heights. However, increasing supply chain issues around the world have had negative effects on Tesla’s bottom line, with the Q1 2023 report showing tight profit margins:

• Revenue grew by 24.38% to $23.33 billion 
• Net earnings fell by 24.26% to $2.51 billion 
• Net profit margin slipped to 10.77% - a 39.12% drop YoY

While the short-term results leave much to be desired, Tesla is increasing its manufacturing output year over year, which is something all investors like to see. 

The company surpassed 430,000 units produced in Q4 2022, which is an all-time high for Tesla. 

The stock has been nothing but amazing in terms of 5-year returns - amassing over 740% in net returns over the period, and even this pales in comparison to its returns at the all-time high in 2021, when the 5-year returns surpassed 1,500%. 

Amazon.com Inc (NASDAQ:AMZN)

The retail giant Amazon.com consists of much more than just an e-commerce platform. The company’s long list of subsidiaries includes the likes of Twitch, Ring, Zappos, IMDb, Whole Foods Market, Audible, and Amazon Web Services (AWS), which is the most profitable segment of the company. 

Amazon has grown from a simple e-commerce platform to a dominant holding company with a presence in multiple markets. The company has maintained its vision of continuous growth and has also invested heavily in artificial intelligence and machine learning to automate its warehouses.

The stock has returned 30% over the past five years, which is due to its slowdown from 2021 when it had returned over 100% at its peak. 

However, the company started 2023 with a bang, as the Q1 2023 report showed a substantial improvement in the company’s bottom line:

• Revenues increased by 9.37% to $127.36 billion
• Net earnings jumped by over 182% - reaching $3.17 billion
• Net profit margin increased by 175.45% to 2.49% for the quarter

At a relatively lower valuation, Amazon represents a solid choice for long-term investors, as the company continues on its journey to increased profit margins. 

United States Oil ETF (NYSEARCA:USO)

For investors that are more interested in commodities, the United States Oil Fund can be a welcome addition that adds exposure to an industry that is less correlated with the stock market. Oil is one of the most important commodities in the world, which often fluctuates in price, which opens up many possibilities for investors to make trades at comparable intervals and profit from the difference. Major economic news and developments in major oil exporters have a considerable effect on oil prices and keeping track of this data can be fairly simple for most investors. 

Investing in oil ETFs adds diversification to any stock portfolio and provides a good hedge against inflation as well, as oil prices increase as inflation increases. Investors do not need to actually own the commodity themselves, which is an added benefit of oil ETFs. 

The United States Oil ETF tracks the daily movements of West Texas Intermediate (WTI) crude oil futures contracts traded on the New York Mercantile Exchange (NYMEX). 

While most entries on this list are long-term investments, USO is a viable alternative for investors who want to make short-term trades to aid the returns of their long-term portfolios. 

• Investing in stock with little money can be challenging - commissions and high stock prices can price many investors out of some of the most sought-after stocks on the market 
• Brokerages that offer fractional share ownership and do not charge commissions can help investors gradually increase their funds free of additional expenses
• Diversifying your investments is crucial for reducing risk exposure and growing your funds over time. Choosing stocks with very different beta coefficients can balance the overall volatility of your portfolio
• Stocks such as Apple, Visa, Alphabet, Netflix, etc. as well as certain ETFs, can help balance the overall risk exposure of your portfolio and lead to better returns in the long run