We all know that we need to save money regularly to have good financial health and the opportunity for further financial freedom. However, if you really want to make the most out of your money, and help it to grow, then you’re going to need to consider investing too.
Unfortunately, a lot of people assume that they need to have a huge income or lots of disposable income if they want to get involved with the stock market. However, the truth is that you don’t necessarily need to take out a personal loan to begin investing – unless you want to. Instead, you can begin investing as slowly as you like, with tiny investments.
Starting Slow in the Stock Market
There are a lot of investment opportunities available for people who don’t have a lot of spare cash available today. These solutions are designed to appeal to a world where people are generally dealing with tight budgets. For instance, you can even download an app onto your phone that allows you to invest the leftover cash from your purchases. For instance, if you pay £8:88 for something, your app would ask if you wanted to invest the remaining £1.12.
In the stock market, the amount of money you’re going to need to start investing will depend on a number of factors. Specifically, you will need to look for a brokerage firm that has a low minimum amount. Some self-directed brokerage firms demand that you need to spend at least a certain amount on your investments (often thousands of pounds) before you can get started.
To open a traditional full-service brokerage account, you’ll need an even bigger minimum amount to get started, and you may have to pay commissions to get the extra assistance that you need.
The Minimum Cash Required to Buy Stocks
So, how do you figure out the amount you need to buy stocks once you know how much your brokerage account is going to cost. Well, if you want to buy a stock, the first thing you need to do is make sure that you have enough money to purchase at least one or multiple shares of that stock, plus any brokerage commission costs. The share price of different companies will vary based on that brand’s overall value.
One of the great things about the stock market is how diverse it is. A single share can trade for a price that ranges all the way from just a few pennies to hundreds of thousands of pounds. One thing to keep in mind is that many of the stocks that trade for under £5 are usually very speculative and sometimes dangerous – they might not be safe for every investor, particularly if you choose to invest by using an unsafe brokerage or exchange.
Another point to keep in mind when you’re looking for stock investments, is that you don’t want the cost of your commissions to eat up too much of your investment. Keeping your commission to under 1% of each investment is a good way to get started. For instance, if your brokerage commission is £7 and you want to keep your commission costs to lower than 1%, then you’d need to make an investment of at least £700 to make the most out of every time you spend cash.
What about Investing in Funds?
The more time you spend checking out stocks and other options for growing your money, the more you’ll learn about how much money you need to invest. For instance, you might decide that as well as stocks and securities, you want to diversify your portfolio by investing in mutual funds too. Many mutual funds come with minimum investment requirements, and you’ll need to check on the details of the fund before you get started to ensure that you’re not over-spending.
For instance, the Vanguard Index Fund for the S&P fund requires a minimum initial investment of around £3,000, and that’s around typical for most investors. If you don’t have that much money to start you off, and you don’t want to take out a personal loan for extra cash, you can still get more diversification opportunities for your portfolio. The best way to do this is to invest in a fund that trades on a stock exchange, similar to the rest of your securities. This means trading with an exchange-traded fund, which can be a lot cheaper.