Today’s article came to me when I was chatting with one of my friends who recently received a job promotion and wanted to start investing in the stock market. She looks at me, square in the eyes and with a straight face goes, well you need at least 1k of extra cash to get started investing right? Wrong! The answer is so wrong!! You don’t even need $1,000 to start investing in the stock market today. Maybe back in the day sure, it made sense to only invest in the stock market if you had a lot of money because you needed to cover the cost of the fees. Today, you don’t need that much.
While I was talking to my friend, it got me thinking, well if she had this question about how much money do I need to start investing in the stock market, then I’m sure other people had the same question. This brings me to my next point, I will debunk myths about how much money you need to invest in the market and answer some follow-up questions first time investors typically have.
How much money do you need to start investing in the stock market?
Ahh the question you have been dying to know the answer too. One the most talked about conversations, how much money do I need to start investing in the stock market. The truth is you don’t need much these days. In fact, you can buy fractional shares now. A Fractional share is a portion of a stock. I would say a good starting point is to have $100 bucks. That’s it, start investing with $100 bucks, if you don’t have $100, then do as much as you can.
Realistically, What is a good amount of money to invest in the stock market
You may be thinking, yeah yeah i know in the last paragraph you said you only need a hundred bucks, but realistically what is a good amount to have invested in the stock market? Think about it like this, if you invest in the market 100 bucks and the stock goes up 20% in 5 years, then you’ve made 20 bucks over 5 years which is 4 bucks a year. However, if you invested 10,000 dollars in the stock market and you made 20% in 5 years, then that equates to $2,000 which is 500 bucks a year.
I always tell people that you should be comfortable investing with, but everyone’s situation is different.
The truth is, we don’t know what will happen to the stock market. This year, in 2020, the stock market crashed, in 2008 you had the financial crisis, before that you had the dot com crisis. There is always something, but the truth is if you don’t invest, you don’t take advantage to capitalize on the positive returns the market does have in those non crash years.
As my dad always says, “it’s okay to take profits along the way.” Meaning, feel free to cash out on your investments from time to time.
The more you invest the more money you make, but the more money you could potentially lose. That’s why I always tell people when you start out investing you’ll make mistakes, don’t worry about it, but only invest in what you can afford to lose.
Personally, I like to have between 15% of my income in the market, outside of retirement plans.
Stocks can be expensive, hell Berkshire A stock is trading at over $300k a share, for one share, can you believe that? Today, you have the option to buy a fractional share of a stock. Meaning that you don’t have to buy the entire share of stock you can buy a fraction of it. For example, if you want to buy a share of Microsoft stock which is currently trading at 200 a share, but you can’t afford to buy an entire share of Microsoft, you can buy a fraction of a share. Aka if you only have 50 bucks to buy can ¼ (.25) of a share of Microsoft.
Fractional shares are a relatively new thing, in fact prior to 2019 fractional shares didn’t even exist. However, they are here to stay, and more and more brokerages are starting to allow fractional share trading.
What if I’m unsure of what to invest in?
Like many people, if you are a new investor you are probably unsure with what to invest in. I always tell people to invest in the S&P 500 (which is the stock market as a whole), ETFs which is a group of stocks bundled together, or do robo-investing /M1 pie investing.
If none of those options above seem appealing to you, when in doubt, use Peter Lynch’s strategy; he only invested in stocks he knew the product, understood it, and believed in it. For example, if you have a mac computer, an iPhone, an iPad, then Apple would be a good stock for you to invest in. You already know they produce high quality products and you’ve spent money on their products. Investing in stocks can be as complicated or simple as you make it. My advice, don’t over complicate it.
Where to start investing
Now that you are ready to start investing, you might not know where to invest in the market. Below is a table of my favorite places to invest in the stock market.
| PLATFORM | FEES | PROMOTIONS | ACCOUNT MINIMUM |
| TD AMERITRADE open account | $0 per trade | $100 with $25k deposit | $0 minimum |
| M1 FINANCE open account | $0 per trade | $50 for signing up!! | $100 minimum |
| ROBINHOOD open account | $0 per trade | Free share of stock | $0 minimum |
Also, as always if you have any questions about how much money you need to invest in the stock market, or how to get started with these platforms please feel free to send me an email.
Conclusion: how much money do you need to invest in the stock market?
In conclusion, you don’t need as much money to start investing in the stock market as you think. I always say the best rule of thumb is to start with 100 bucks. That’s it, start with 100 see how it goes and then go from there. There are so many myths and people believe that you have to have a lot of money to invest in the stock market and that’s just not true.
Today, you can buy fractional shares of a stock, work with robo-investors, even diversify with a M1 finance expert pie, or even sticking to the S&P500 is recommended as well. I’d love to hear any additional myths you may have heard in the comments about how much money you need to invest in the stock market.