Hey U30 Wealth Nation!
How’s it going?
I’m going to make this a pretty short and straight forward article.
To get started investing in stocks, you need to:
- Learn – educate yourself prior to playing with real money
- Simulate – paper trade with fake money. Use online apps or simulation programs that give you fake money to trade with. Start with Investopedia.com/simulator virtual trading platform
- Set Up an Online Account to Trade From – Read how here
- Decide how much money you want to invest/gamble
- Stay level headed if you win, and keep educating if you lose
How Much Money Do I Need?
You need to determine how much money you can afford to lose and still live life like you never had the money in the first place.
If you’re brand new, maybe start with a few thousand dollars maximum so that it’s not going to effect your lifestyle if you lose it all.
Minimum amount will depend on your fees from your online broker. I typically would recommend $1,000 minimum but you can get away with $500 if you’re going to add more to your account over time.
Here’s why I set that as a minimum:
- $7 commission to broker for a buy order
- $7 commission to a broker for a sell order
- $14 in commissions means you need to earn 14% to break even if you invest only $100.
- If you invest $500, you’ll need to make 3% to break even ($14 fees/$500 = 3%)
- If you invest $1,000, you’ll need to make 1.4% to break even ($14/$1,000 = 1.4%)
Overall takeaway: You have to factor in commission fees because they will eat into your profits if you’re day trading. Therefore, I would start with fake money and learn first, then start with $1,000 minimum to avoid being held down by commissions killing gains. Maximum would be what you can afford to lose. Ideally, day trader’s don’t consider it investing but rather gambling because there’s a good chance you’ll lose money. Investing is holding long term and has a higher chance of making you money because of the history of the stock market increases over time.
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