How Much Money Do I Need To Invest in Stocks: A Beginner’s Guide

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“How much money do I need to invest in stocks?” is one of the most frequently asked questions by those interested in investing.

Most people think that the stock market is exclusive to big businesses alone; hence, the fear of buying stocks.

In recent years, most young professionals overcame their fears and started investing in the stock market. You can, too!

Start by checking out the book summary of The Intelligent Investor. You can also search other book summaries related to stock investments from Blinklist.

Can You Make a Lot of Money in Stocks?

Yes, you can, as long as you understand the business where you will put your money, and you have an idea about investing in stocks.

Many investors can earn thousands of dollars in trading stocks. Others choose to stick it out with a dependable company, making more money in the process.

Traders use the buy-and-sell strategy to earn small but frequent profits, while most investors opt for the buy-and-hold approach while receiving dividends and interests from their shares.

If you have the money to spare, investing for at least five years proved to be safer and profitable compared to trading.

How Much Does the Average Person Have Invested in the Stock Market?

There is a significant drop in the US stock market prices due to the pandemic.

The data from 2016 showed insights into how far the stock market has reached American families. 

According to the data, 52% of American families invest in various kinds of stocks.

A significant portion of which comes from retirement accounts, while the remaining percentage is in individual stocks.

The number of investors varies among different groups, and the assets per family change depending on income, race, and age.

Households with the highest income still hold the most number of stocks, according to the latest data from Federal Revenue from early 2020.

However, there’s a significant drop in stock ownership from mid-income families.

How Do I Start Investing in Stocks With Little Money?

Investing in stocks, even in small amounts, can also gain big profits.

Gone are the days where investors should have thousands or millions in their bank accounts.

Nowadays, investing even a few dollars allow you to grow your money through compound interest.

In these modern times, there are many ways to grow your money through technology’s help.

Here are some tips on how to start investing in stocks, even with little money.

You need extra money to spare to start investing in stocks.

If you don’t have any reserve or an option to open an online savings account, try the cookie jar approach.

Make it a habit to save a few dollars from your earnings regularly until you have enough to start investing in stocks.

Use a Robo-Advisor

Do you feel overwhelmed by all the investing advertisements promising a better profit? Learn how to use a Robo-advisor and let it do the work.

Just answer a few questions and let the app choose the appropriate investment for you.

It will use various formulas to rebalance your account continuously.

You can start your investing journey with $500 or less in your portfolio and let it grow with the help of the Robo-advisor.

Here are three of the most popular Robo-advisors suitable for first-timers in the investing industry:

  • Wealthfront: Wealthfront requires $500 as an initial investment with a fixed minimum fee of 0.25% per annum for accounts with more than $5,000.
  • M1 Finance: M1 Finance accepts a minimum balance of $100 without collecting commissions or management fees. You can make your portfolio or get a premade one.
  • Betterment: Betterment does not require a minimum starting balance like the other two platforms. It has a straightforward platform and hassle-free process.

Start Investing in Stocks

How much money do you need to start investing? Previously, the amount of money you have is the deciding factor if you can invest in the stock market or not.

In more recent times, technology has provided many people the opportunity to invest in stocks even with a small starting capital while getting familiar with the investing processes.

Online platforms are allowing new investors to buy stocks for as low as $1 without commission charges.

They can even purchase partial shares from various prominent companies.

Here are some online platforms that you can try.

  • Public

This user-friendly investing app offers a wide selection of stocks and exchange-traded funds or ETFs with no minimum amount and commission fees.

You can buy partial shares from big companies without shelling out huge chunks of cash.

It also allows you to learn strategies by watching other investors handle their investments.

  • Robinhood

Robinhood is another app for new investors offering one free stock for news members without transaction fees.

Its premium account has a monthly fee of $5, giving you access to after-hours trading and other exclusive perks.

This app supports active stock trading, even with a small amount, different from investing money for a more extended period.

how much money do i need to invest in stocks

Invest in Real Estate

When we hear real estate, we immediately think of dollars—plenty of it.

Fortunately, there’s a new investment category called real estate crowdfunding.

This investment type lets you own partial shares of prominent commercial properties without the hassle of paperwork and other legalities. 

However, there’s the risk of putting all your eggs in one basket with crowdfunded real estate shares.

Luckily, Robo-advisors can help in real estate investing using crowdfunding platforms with a minimal cost because of other investors.

  • Fundrise

You can try this easy-to-use platform with a minimum investment of $500. It allows you to have various real estate investments throughout the USA.

  • DiversyFund

It’s another online platform allowing new investors to buy real estate stocks even with a $500 starting portfolio.

It also offers educational resources for gaining tools about real estate investing and how to grow your money.

Join Your Company’s Retirement Plan Program

If you don’t have enough cash to spare to buy stocks, you can try an employer-supported retirement plan where a small percentage of your salary goes to the project.

You have the option to increase the percentage every year gradually or use an online tool to help you analyze and enhance your investments.

Invest in Mutual Funds

A mutual fund investment allows new investors to hold stocks and bonds in your portfolio under one transaction.

Unfortunately, beginners cannot afford the required initial investment of $500 to $5,000 by most mutual fund companies.

Although you will also find companies willing to suspend the required minimum amount provided that you agree to an additional monthly investment of $50 to $100.

How Much Money Do I Need To Invest in Stocks?

How much should I invest in stocks? That’s probably a question you have been asking with all these talks about stocks and investments.

It’s tempting to invest as much as you want to take advantage of what you will earn from compound interest.

Thus, you need to follow these guidelines to limit your investments.

Don’t Put Your Financial Future at Risk

Never risk your financial future and avoid bankruptcy by investing all your savings in the stock market.

Even professional investors may lose their money in the stock market, whether due to bad luck or poor decision making.

Investors should not be making risky decisions when investing in the stock market if they don’t want to lose all their money.

Don’t Make Short-Term Investments

Do not buy stocks if you can’t hold on to it for at least five to ten years. Prices in the stock market continually fluctuate.

If you have invested in great value stocks but experienced a downturn, your money’s worth will decline.

If you don’t have the luxury to hold onto your investment for a long haul, you will be forced to sell at a lower price.

Don’t Invest Too Much That You Feel Stressed Out

As mentioned, stock market prices continually fluctuate. If you can’t sleep or are stressed, you must have invested too much or are not destined to be an investor.

Lack of sleep and anxiety lead to bad decision making, and eventually loss of profit since you won’t think logically.

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Now that you have an idea of how to answer “How much money do I need to invest in stocks?“, you might feel excited to start your investing journey.

Begin by reading various self-help books about different ways of investing in the stock market.

The market abounds with tons of books about this topic and more. You might even feel overwhelmed with what you will discover.

If you are still wondering how much to invest in stocks, you will find answers and guides from different books about this topic.

We can recommend checking out Blinklist. It’s an online book summary service offering vital information from best-selling books.

The book summaries provide a glimpse of what you will learn from each book, allowing you to choose your needs’ right information source.

Spending 15 minutes of your time reading a book summary makes it easy for you to decide which ones to read from cover to cover.

This subscription service from Germany started in 2012 with a 60-people team.

As of present, it offers more than 2500 book summaries for its over seven million users.

Blinklist has a free downloadable app for you to create an account and read its daily pick.

It’s a daily book recommendation chosen from 4,000 book summaries in its library.

You can have complete access to all its features and services via Blinklist Premium for $12.99 a month.

You can also choose an annual plan that comes at a 50% discount price of $6.67 monthly. 

A Blinklist Premium plan entitles you to an audio version of most summaries, saving your library offline, Evernote highlights syncing and sending outlines to Kindle.

If you don’t want to subscribe, Blinklist comes with a free trial suitable for seven days.

You can search for a particular book title or choose from its 27 categories.

The Intelligent Investor Summary

how much money do i need to invest in stocks
Image Source: Amazon

Start reading about the stock market and how you can invest and optimize your money with various guides and tips.

Check out the book summary of The Intelligent Investor by Benjamin Graham with additional comments from Jason Zweig.

Harper & Brothers first published the book in 1949. The book underwent several revisions, and the most recent is the one with Jason Zweig published in 2003.

It talks about an investment approach called value investing that Benjamin Graham taught at Columbia Business School in 1928.

You can finish reading the book summary in 16 minutes. It’s also available in audio summary for the Blinklist Premium subscribers.

The Intelligent Investor book provides ten central ideas about investing your money wisely straight from an expert.

The author, Benjamin Graham, is an investor who became successful in 1929 after the financial crash, making him an authority on the subject.

The commenter, Jason Zweig, is also a book author who researched the neuroscience of investing.

He also works as a columnist, senior writer, and guest columnist in various publications for several years.

According to Benjamin Graham, intelligent investors don’t rush in and must know the stock market’s history.

Investing lets you earn money quickly, but it’s also easy to lose if you don’t have the formula to follow.

Intelligent investors thoroughly analyze the market and do not and must not speculate when investing in stocks to prevent losses.

Defensive investors have safe and well-balanced portfolios that are easy to handle. On the contrary, enterprising investors have more chances of finding bargains; they don’t follow the market’s fluctuating prices.         

How Much Money Do You Need To Start Investing?

Now that we have discussed some investing guidelines, knowing how much to invest in stocks should no longer be a question.

Asking how much should I invest in stocks depends on how much you can spare, but it’s better to start small while on the learning process.

You need to focus on how much you should add as you understand the process of stock investing.

As you firmly add to your investments, you can be sure of a steady boost to your money and positions.

Learn as much as you can about investing by starting to read The Intelligent Investor from the online book summary subscription platform, Blinklist.

Enhancing your financial literacy will help you understand stock investing better and answer how much money I need to invest in stocks with confidence.

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