Whats a good amount of money to start with when investing in stocks?

Question

I'm 20 years old, so far I've saved about $1,300 this summer and I'm curious to know how much money would be a good amount to have in the bank before investing in stocks. I'm a complete newbie so any info will help

Answer 1

I was a broker for 12 years......the best thing in the world for you to do is to start to invest money each month into a mutual fund....many mutual funds will let you invest a minimum of $50.00 a month. you have to let them take that money directly out of a checking or savings account each month, you pick the day. by investing in mutual funds you get to own pieces of hundreds of stocks at once, instead of owning just a few shares in one stock. investing in individual stocks is very difficult. call vanguard on their 800 number and tell them what you want to do, or call a guy I used to work with John Busic at 412-276-5600 in Pennsylania and he can help you get started. Investing is one of the greatest things in the world, and if you start to save and invest at an early age, you can make yourself very rich. probably best to start investing into a roth ira mutual fund, which is a totally tax free investment your whole life.......get started asap, one of the very best things you can ever do for yourself....

Answer 2

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Answer 3

To answer your question, it is not necessary to have a set amount "in the bank" before investing in stocks, however, investing as other posters mentioned involves risk, so be sure you are in your investments for the long-term, ie more than 5-10 years or you may want to consider other options than stocks.

You have earned income, so you should be able to open a Roth IRA through Vanguard, Fidelity or another brokerage firm.

A Roth IRA is a tax advantaged investment vehicle which allows a single person with less than around $95K - $110K a chance to invest "after-tax" dollars and not be taxed on any investment gains, ever.

I would suggest you open a Roth IRA and invest in a diversified portfolio of primarily stocks at your age. If you want to be more conservative, you can follow a balanced approach of 60/40 stocks vs. bonds, although at your age, stocks are the clear long-term winner. Invest you initial capital slowly, over time so that you "dollar-cost average" your purchases, meaning you buy more share when they are cheap, and less when they are more expensive.

The good thing about a Roth IRA is that you can always withdraw all of your initial investment ($1,300) without any penalties.

Therefore, I don't feel it's necessary for you to have an emergency fund, since this initial capital will always be available to you. You will, however, not be able to easily tap your investment gains, so if you are investing for a goal other than retirement, you may want to re-think the Roth.

Answer 4

Read MorningStar for good NO LOAD Mutual Funds with high interest. Start with about $300 of what you've saved.

Get automatic deductions (approx $50) into that account.

Watch Cramer on CNBC and learn more about stocks and when to buy. It's really not how much you start with as long as you reinvest the dividends.

Another high interest return is to lend through http://www.Prosper.com - Once again just start with $100 or so. No need to pay too much to learn.

As you learn more as to where to invest for the best returns you can make sound investments for long term success and high returns.

The best thing you can do at your age is to have 10% automatically deducted from your checking account at payday into a high interest savings account.

It may not seem like a lot. But someone your age can put aside as alittle as $100 a month (more when youcan) and retire a millionaire if you never stop doing this and don't touch the money until retirement. it's all about compunded interest.;-)

Read THE AUTOMATIC MILLIONAIRE by David Bach

Good Luck-
http://www.GoodShephard.Free1up.com

Answer 5

You can open a brokerage account with $1000. At first, invest in mutual funds and start accumulating money and putting money into one to three mutual funds.

If you are interested in learning about individual stocks, continue to learn. once you have around $5000, you can start your first 5 stock individual stock portfolio.

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5. If you have $1000 or more, start learning more about the stock market and investing.

6. Once you are comfortable with at least a primer on investing, Exchange Traded Funds (ETFs) and the stock market, you can now open a Brokerage account from brokerages such as E*Trade or Ameritrade.

7. Do you have between $1000 and $5000 to invest? Then I would recommend investing in diversified mutual funds or ETFs. ETFs are Exchange Traded Funds, or mutual funds that are often indexed, that trade just like stocks. For example, you can buy and sell DIA ETF from any broker. DIA represents the 30 stocks in the Dow Jones Industrial Average. One company which provides ETFs that are sold by almost any broker is Barclays Ishares.

A Sample ETF portfolio:



SPY: S&P 500 ETF representing approximately the largest 500 US Stocks.

IWM: IShares US Small Capitalization ETF representing the smaller capitalization US Stocks.

EFA: IShares International Developed Markets including Europe, Japan and Australia.

EEM: IShares International Emerging Markets including Korea, Taiwan, China, Mexico, Brazil, India, Russia.



8. Do you have at least $5000 to invest, and do you have the time an inclination to study stocks and learn more about the market? If you do not, then you can continue using the mutual fund and ETF strategy mentioned above.

9. If you have at least $5000 to invest, and you do have the time and inclination to study stocks and learn more about the market, then you can now invest in individual stocks. You have to continue reading and learning and go deeper in the recommended book list.

For the rest of the full article:
http://techfarm.blogspot.com/2007/07/i-have-sum-of-money-to-invest-how-do-i.html

Answer 6

Start with twice as much as you are willing to lose.
If you are willing to lose $2,000, you should start with $4,000.

If you cannot deal with the thought of losing 50%, you aren't ready to "invest" in stocks.

Do you understand that "investing" in stocks is gambling ?

You are doing good saving. Look for an account that pays at least 5% interest and keep saving.

Read and learn about stocks, and trade on paper. You will find that it isn't easy. There are millions of people "invested" in stocks that have absolutely no clue what they are doing. Some have gotten very lucky, others are going broke.

Depending on where you live, look to real estate and tenants to make you rich. More people have wealth from real estate than stocks.

Answer 7

I did not see any answers to your question about how much to have in the bank before investing in stocks. Let me attempt an answer although it is not easy. You want enough in the bank to meet unexpected expenses. For example, if you have a job and are terminated, it helps greatly to have about 6 weeks to 2 months worth of living expenses in the bank. Or let's say your car breaks down and needs repairs. It is a big benefit if you have sufficient to meet the expected repair cost, maybe $500 to $1000. When I was your age, it put everything into the stock market, and as a result had to borrow money on two occasions to meet unexpected expenses. Of course those expenses occurred while the market was suffering one of its frequent collapses.

Answer 8

You can open up an online account with that little of money.
Congradulations on being a smart young person who wants to learn the importance of investing.
My one suggestion though would be keep in simple at first with good safe mutual funds or the such, until you get the hang of it. And perhaps use an online trader who has a fantasty stock program where you can practice without risking any money.

Answer 9

Really any amount is good just as long as you have a steady stream of income coming in. For you and your age I would recommend mutual funds which is managed by a company and consists of different stocks all in one. Because of your age you would be able to absorb the risk, but beware if you go through mutual funds or buy stock individually you have to pay certain fees

Answer 10

With that little amount of money, go with mutual funds instead of stocks. You will get a more diversified portfolio than you would putting all of it into one company.

General rule of thumb is to have 6 months of salary in savings that you have quick access to.