Many people ask how much do you need to invest in stocks. You can get started for $1,000 to buy and sell options casually. Ideally, you want $5,000 or more. You could swing trade penny stocks starting with at least $2,500. Day traders need at least $25,000 in an account to make more than 3-day trades within five calendar days.
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How Much Money Do You Need to Invest in Stocks?
- Here’s how much money you need to invest in stocks:
- First, there’s no hard rule, but here’s a guide.
- Day trading: minimum $5,000. However, you need $25,000 to avoid the pdt rule.
- Swing trading: minimum of $5,000. However, $10,000+ would be ideal.
- The more money you have, the more leverage you have to capitalize.
They say the best time to plant a tree was 20 years ago. The second best time is now. So, grab your shovel, and let’s get digging!
You may be surprised, but you probably already are investing but don’t know it. Do you contribute to your employer’s retirement plan? I know for you US folks, that’s a 401K. You might even have money in mutual funds, stocks, and/or bonds.
Investing is about buying and holding investments for the long haul. Ultimately, you hope for long-term gains. In trading, for example, you buy and sell stocks for short-term profits.
Both ways seek profits in the stock market, but the methods differ. Yet, one way is not better than the other. There are many different types of stocks.
Today, I will show you how simple it can be and answer the question, “How much do you need to invest in stocks?”
People Who Are Not Serious
“I’m just not very good with numbers.”
“Investing is too risky.”
“I prefer to leave the money decisions to the professionals.
“It’s too much of a hassle.”
“My husband handles the investments for our family.”
“I can’t afford to save more than 4% of my income
“I’ll save more later.”
“My company doesn’t match retirement contributions, so it’s not worth signing up for the plan.”
“My spouse is enrolled in her plan, so I don’t need to enroll in mine.”
If any of these statements resonate with you, keep reading. You’ll thank me for it later as you learn more about how much do you need to invest in stocks.
People Who Are Serious
“No matter what, I will Pay Myself First.”
“I will Pay Myself First at least 10 percent of my income and try to contribute the maximum amount I’m allowed to my retirement account.”
“Will this purchase make me money or cost me money?”
Rich people don’t say, “I want new shoes. I’m going to spend the last of my paycheck on them.”
To be rich, do rich people things. I will tell you a little secret: Doing rich people things isn’t hard.
Setting yourself up for success is simple. I don’t care if you work for minimum wage. You can do this.
How Much Do You Need to Invest in Stocks: 5 Things to Do Right Now
Do you know how much do you need to start investing? The five things you need to do right now to get started investing:
- Make a plan. Sit down and map out your plan. What do you want your future to look like in 5 years? In 10? Do you want to own a ski home? An avocado farm? You get my point.
- Determine your latte factor. How much do you spend daily on magazines, cigarettes, and coffee?
- Be an underachiever. It’s as simple as $100 a month. Set big goals, but take tiny baby steps every day.
- Pay yourself first. Sadly, we pay the government first in the form of taxes. Let’s change that.
- Open a brokerage account. Find a broker that suits your needs and open an account.
Is It Smart to Invest in Stocks?
- Is it smart to invest in stocks? How much do you need to invest in stocks? Investing in stocks is a very good idea, but only if you know what you’re doing. Stocks are a great way to make money in the long term and for retirement plans. They are also a great way to make money on a short-term basis. Many traders make stock investing a career.
How Much Do You Need to Invest in Stocks: Planning
As I mentioned, if you’re not a long-term investor, get there as FAST AS YOU CAN. What does this mean? You sit down and map out a plan.
So many people say, “Oh, I’m not interested in money.” Yet they’ll work at a job for eight hours a day. Quite frankly, this doesn’t sound like a plan to me.
Ask yourself: At what age do I plan to stop working? How much money will I need per month?
Please find out how much invested per month for how many months at a realistic rate of return it will take to reach your goals.
How Much Do You Need to Invest in Stocks: Factors
How much do you need to invest in stocks? I will tell you a little secret: You’ve got the money to invest!
Enter the concept of The Latte Factor® . In essence, it’s based on the simple idea that to finish rich, you just need to look at all the small things you spend your money on each and every day. Then, see if you can redirect that spending to yourself.
Just putting aside as little as a few dollars a day can make a difference between accumulating wealth and living paycheck to paycheck.
Think about it: how much are you spending daily on lattes, bottled water, fast food, cigarettes, magazines, and so on… Next thing you know, $25 is gone.
The Latte Factor website has a nifty calculator. So, I did this exercise for a day and found that I spent nearly $10/per day on
Shockingly, over the course of 40 years at 10% annual interest, I could have close to $1.8 million dollars saved.
As a result, I had an “Aha!” moment that truly changed my life financially.
So, you still think you can’t pay yourself first? What’s your Latte Factor? I’ll tell you differently.
The Power of Self-Discipline
How much do you need to invest in stocks? Don’t try to get rich if you can’t control yourself and your spending. It makes no sense to invest, make money, and blow it.
Take lottery winners, for example. Sadly, you hear stories of them winning big, only to be broke a few years later. The reason for this is a lack of self-discipline. If you’re looking to do day trade, learn how low float affects the price movement of stocks.
Automatic Millionaire
How much do you need to invest in stocks?
“Over time, money compounds. Over a lot of time, money compounds dramatically.” David Bach, The Automatic Millionaire.
To put this in perspective, look at the graph below. Just $100 a month invested back in 1970 (adjusted for inflation) would have been worth over $180,000 today.
Compounding
It’s because of the power of compounding that your money grows. As a result, that’s why many refer to compounding as the 8th wonder of the world.
For the first twenty years, the effects of compounding aren’t anything to write home about.
Fast forward 50 years, and you’ve contributed $60,000 inflation-adjusted dollars to your nest egg. But, due to the power of compounding, you have added another $462,000.
It would be quite impressive if you could ask me!
Pay Yourself First
After doing the latte calculator, I cut more than my daily skinny vanilla bean latte, sniff, sniff. Think hair salon* (every six weeks at about $150 a pop), nails, cell phone expenses, unused monthly subscriptions, eating out ALL. THE. TIME.
*Side note: if you have long hair, find a friend to cut it. Don’t try to cut it yourself like me.
Trust me, if I can do this, you can too! Hence, the Bullish Bears trading service delves into how much you need to invest in stocks.
Opening Your Brokerage Account
Since you’ll be investing $100 monthly, you want your transaction fees to be as low as possible. You can do this one of two ways. First, go with the lowest cost-per-trade discount brokerage out there. Second, wait to buy stocks once every two or three months.
Ultra-low-cost brokerages such as Robinhood allow you to make trades at no cost. However, there are some restrictions in terms of what you can buy using that platform.
I, on the other hand, use Interactive Brokers to buy stocks because of their LIGHTENING Fast trade executions. What’s more, they’re affordable at only .005 cents per share.
I like to day trade (when I get the time), so it’s mission-critical to have fast executions. On the other hand, speed is not that important for the investor.
Ultimately, visiting each brokerage site is worth determining which one you feel most comfortable using regularly.
We’ve reviewed most trading companies to help you learn stock trading.
Get Started Now
How much do you need to invest in stocks? Long story short, investing doesn’t need to be complicated. In the words of investing guru Warren Buffett, “You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ.”
Find a mentor who’s already done what you want to do and is successful at doing it. Do not find an adviser. An adviser tells you what to do but hasn’t personally done it.
The team at Bullish Bears are not advisers. However, they’ve done it and are quite successful at it. Plant your tree with us if you want to be part of a winning team.
Frequently Asked Questions
It's said that investing 15% of your income is the way to go. See if your job has a 401k that will match whatever you invest into it.
How much do you need to invest in stocks? $100 will do the trick. The more you have, the more you can put into an investment.
You will need more than $10 to invest in quality stocks. Stocks under $10 tend to be penny stocks and can be risky.
If you put $1 a day away in a savings or compound investing account, the interest can make you rich.
