Many people often ask, how much do you need to invest in stocks? To casually buy and sell options you can get started for $1,000. 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 if they want to make more than 3 day trades within a 5 calendar day period.
Table of Contents
- How Much Money Do You Need to Invest in Stocks?
- Is It Smart to Invest in Stocks?
- Pay Yourself First
How Much Money Do You Need to Invest in Stocks?
- Here’s how much money you need to invest in stocks:
- First off, there’s no hard rule but here’s a guide.
- Day trading: minimum $5,000, however, you need $25,000 to avoid pdt rule.
- Swing trading: minimum of $5,000, however, $10,000+ would be ideal.
- The more money that 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, go grab your shovel and let’s get digging!
This may come as a surprise to you, but you probably already are investing but just don’t know it. Do you contribute to your employers retirement plan? I know for you US folks, that’s a 401K. You might even have money in mutual funds, stocks and/or bonds.
Simply put, investing is about buying and holding investments for the long haul. Ultimately you hope for long term gains. Whereas in trading for example, you buy and selling stocks for short-term profits.
Today I’m going to 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 it to sign 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 things like, “I want new shoes, I’m going to spend the last of my paycheck on them.”
To be rich, do rich people things. I’m going to let you in on a little secret: Doing rich people things isn’t hard.
In fact, setting yourself up for success is simple. I don’t care if you work for minimum wage, you can do this.
The 5 Things You Need to Do Right Now
Simply put, the 5 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 you future to look like in 5 years? In 10? Do you want to own a ski home? A avocado farm? You get my point.
- Determine your latte factor. How much are you spending each day on items such as magazines, cigarettes, 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? Yes, it’s a very good idea to invest in stocks but only if you know what you’re doing. Stocks are a great way to make money long term and plan for retirement. They are also a great way to make money on a short term basis. Many traders make stock investing a career.
Like I mentioned earlier, if you’re not yet a long-term investor, get yourself there as FAST AS YOU CAN. What does this mean? This means 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?
Find out how much invested per month for how many months at a realistic rate of return it will take to reach your goals.
I’m going to let you in on 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 in order 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.
In fact, just by putting aside as little as a few dollars a day can really make a difference between accumulating wealth and living paycheck to paycheck.
Think about it, how much are you spending each day 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 was spending close to $10/day on unnecessary things.
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 and I’ll tell you different.
The Power of Self-Discipline
If you can’t get control of yourself and your spending, don’t try to get rich. Quite frankly, 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, lack of self-discipline. If you’re looking to day trade then make sure to learn how low float affects the price movement of stocks.
Self-discipline is like a muscle. As a result, the harder you work it, the stronger it gets. Commit to yourself to building your muscle, EVERY. SINGLE. DAY.
“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.
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. However, after that, the growth from your original investments is what becomes the true driver of wealth.
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.
All things considered this is quite impressive if you ask me!
Pay Yourself First
I can’t afford to pay myself. First of all, that’s not true. I hope by now you can see how simple it is to stock away $100/month.
To be honest, after doing the latte calculator I ended up cutting a lot more than my daily skinny vanilla bean latte, sniff, sniff. Think hair salon* (every 6 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 for you. Don’t try to cut it yourself like me.
In total, I ended up cutting close to $300 a month. With this “extra” money, I turned around and upped my bi-weekly investment contribution’s by $150.
Trust me, if I can do this, you can too! Hence why the Bullish Bears trading service is delving into how much you need to invest in stocks.
Opening Your Brokerage Account
Since you’ll be investing $100 per month, 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.
I, on the other hand, use Interactive Brokers to buy stocks. This is because of their LIGHTENING Fast trade executions. What’s more, they’re affordable at only .005 cents per share.
Personally, I like to day trade (when I get the time) so its mission critical that I have fast executions. On the other hand, speed is not that important for the investor.
In the end, it’s worth visiting each brokerage site to determine which one you feel most comfortable with using on a regular basis.
In fact, we’ve reviewed the majority of trading companies to help learn stock trading.
Get Started Now
To cut a 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. If you want to be part of a winning team, plant your tree with us.