To minimize the risk of your investment, you should invest in several stocks or companies at the same time. This lowers the risk of sinking all your capital at once and, in effect, gives you several passive income streams. Anyone who enters the stock market with little capital, however, should focus on small stocks, for example stocks under $5.

Stocks under $5 - can you actually earn anything with them?

Yes, you can actually earn real money with a stock like that. Just imagine that a stock always starts at a small value and can grow enormously; look at companies like Microsoft, Apple and others. Established companies also fall now and then because of a crisis, and an investor can use the crisis and wait until the company has recovered before selling the stock again. One example is the Wirecard stock. Within half a year it had fallen from 140 euros to under 2 euros. At the end of July, more than 200% profit could be made with it. Of course, there is a greater risk behind this.

Where do you find stocks under $5 in the first place?

You'll find them in pretty much every market, but there are things to keep in mind. You shouldn't constantly buy and sell these cheap stocks under $5; the profit will be minimal and you'll be paying fees all the time. Instead, you should use growth investing or value investing strategies. With the first method, an investor looks for companies (mostly start-ups) that have great growth potential and takes advantage of it. Here you invest based on the price/earnings-to-growth ratio. With the second strategy, the investor looks at key figures such as the price-to-earnings ratio or the price-to-book ratio.

Making money through friends and acquaintances with stocks under $5
Talk to your friends about products they might be using. People often try new products and recommend them. If these are products that have just gone public, the stock is usually under $5. If your acquaintances, or even you yourself, are convinced by a product, it is very likely that plenty of other people will buy this product in the future too, and the value of the stock will rise. If your acquaintances aren't big spenders, though, you can also turn to websites where start-ups present their products. There you can see for yourself and consider whether the company is worth your capital.