Top Fintech Shares to Invest in with a $500 Budget at Present
Fintech is on the rise as businesses merge financial products with tech innovations, and investors looking to capitalize on this trend have various stock options. Two potential investments for $500 are American Express and SoFi Technologies.
1. American Express
While American Express might not immediately spring to mind as a fintech stock, its tech-focused offerings like digital credit cards, mobile payments, and buy now, pay later services cement its place in the fintech realm. The company's third quarter, ending September 30, reported impressive sales growth of 8% and increased earnings per share by 6%. Card membership also increased by 6% during this period, with more than 3.3 million new card acquisitions, primarily from younger generations.
Warren Buffett, renowned investor, has been a loyal American Express supporter since 1991, making it the second-largest holding in his Berkshire Hathaway portfolio. A testament to the company's long-term potential as a buy-and-hold investment.
2. SoFi Technologies
SoFi's innovative spirit and adaptability during the pandemic earned it notable recognition in the fintech sector. While its primary focus is student loan refinancing, the disruption brought about by government-mandated loan suspensions required it to diversify its offerings.
Today, SoFi provides checking and savings accounts, credit cards, investing services, loans, and refinancing—all while growing its member count from 1 million to over 10 million in just five years. Sales in the third quarter increased by 30%, while adjusted EBITDA rose by an astounding 90%.
However, SoFi shares are currently pricey with a forward P/E ratio of 77, considerably higher than American Express and the S&P 500 average. Investors may benefit from a cautious approach, starting with a modest investment and holding for potential long-term gains.
In summary, both American Express and SoFi are making significant strides in the fintech industry, with American Express leveraging its strong brand and diverse portfolio to deliver stable growth and SoFi driving innovation with its disruptive Fintech services. Investors looking to invest $500 in either company should carefully consider their investment goals and risk tolerance.
American Express's strong financial performance, with sales growth of 8% and increased earnings per share by 6%, proves its potential as a solid investment in the realm of fintech and finance. With Warren Buffett, a renowned investor, holding a significant stake in the company, it underscores American Express's long-term investment appeal.
SoFi's innovative approach to fintech, leveraging the opportunities presented by the pandemic, resulted in a rapid expansion of its services, from student loan refinancing to savings accounts and investing services. Despite the premium valuation of its shares, with a forward P/E ratio of 77, a cautious investment strategy could yield potential long-term gains for investors seeking exposure to this dynamic fintech company.
