The smartest financial stocks to buy with $500 right now

With the market soaring after the Federal Reserve’s big interest rate cut, it might feel like there’s nothing good to invest in on Wall Street. After all, major market indices are hitting record highs, suggesting that a perhaps overly exuberant investor base is running the show right now. But don’t despair, you can still find investments worth buying if you look hard enough and really think about what’s happening today. Here are three candidates to consider, even if you only have $500 in your pocket.

1. Berkshire Hathaway is doing big things

To get the most obvious factor out of the way, $500 is nowhere near enough to buy Berkshire Hathawayhis (BRK.A 0.42%) (BRK.B 0.72%) class A shares, which trade at more than $685,000 each. But $500 is enough to buy the B shares, which are trading near $455. So don’t despair if you want to trade with the Oracle of Omaha, Warren Buffett.

The key to understanding Berkshire Hathaway is that it is so large and diversified that it is very similar to a mutual fund. If you look at it from that perspective, there really isn’t a right or wrong time to buy, because what you’re buying is Buffett’s investment approach. In particular, he tends to be opportunistic. What’s interesting right now is that Berkshire Hathaway has sold big stakes in some of its big winners, including Apple (NASDAQ:AAPL) and Bank of America (NYSE: BAC). This bolsters the company’s already massive cash hoard, which stood at more than $270 billion at the end of the second quarter of 2024.

The bad news here is that Buffett may believe there is material bear market risk. The good news is that they are building up cash that they can put to work in new investments at prices that may be better in the future. If you’re a value investor, investing with Buffett in a market that looks a little frothy might not be a bad call.

2. Visa is a growth stock that looks attractively priced

In the last decade Visahis (V 1.28%) revenues grew at an annual rate of about 10%. It’s pretty good. Earnings per share expanded at an annual rate of 15% over the same period. This is even better! While no company’s fortunes are on the upswing, Visa is still well positioned despite a long run of success behind it. A key part of this is its position as one of the largest transaction processors in the world. Growth investors should be interested here, but there’s more to the story.

Visa’s price-to-sales ratio is currently around 16.9 times versus a five-year average of 17.7 times. Its price-to-earnings ratio is around 30.9 times, compared to a long-term average of 34 times. And while its dividend yield is around 0.7%, it happens to be near the upper end of its historical yield range. All in all, Visa is a growth stock that looks relatively cheap, even if the price is near all-time highs. It’s worth looking into this right now, before more investors get wise.

3. Real Estate Income is a Tortoise of Boring Dividends

Real estate income (A 0.40%) registered the moniker “The Monthly Dividend Company”. This shows a strong commitment to paying investors well for staying. To this end, the company’s monthly dividend has been increased annually for 29 consecutive years. That’s a streak that’s unlikely to end, also thanks to an investment-grade balance sheet and the real estate investment trust’s (REIT) status as the biggest player in the net lease niche (net leases require tenants to pay most of the operational costs at the property level.

Being large and financially strong confers material advantages when it comes to real estate investment, as it provides Real Estate Income easy access to low-cost capital. That generally means it can compete aggressively for deals and still make a profit. Meanwhile, the REIT has a very diverse portfolio, with assets in the United States and Europe and exposure to commercial and industrial properties. Add in a strong 5% dividend yield and income investors will likely find this boring stock quite interesting. To be fair, the yield will be a large part of the return and the dividend will only grow slowly over time. But if you’re trying to live off dividend income, it probably won’t matter much to you.

Don’t give up, there are options out there if you look

When the market looks expensive, it can be easy to give up, especially if you only have a modest amount of money to put to work (like $500 or $1,000). But you can still find interesting stocks like Berkshire Hathaway B stock, Visa and Realty Income. Each will suit a different type of investor, but each still has something worth digging into if you’re looking to invest today.