How much money do you really need to start investing? - By: James Matthews

Many people put off financial planning because they think that they are not in a position to start saving and investing money. However, it is never too early to get started on this process, and you may be surprised to find out how much money you actually need to start devote – it’s not as much as you might think.

An Individual Perspective

The first thing to understand when asking this question is that there is not a specific dollar amount required to begin. Instead, the amount of money necessary depends on the type of investment you are interested in making and how you want to make it. For example, you can start buying stocks yourself with even a small deposit, but you will need a larger amount to work with a brokerage firm. You should consider not only your current financial picture but also your goals as you determine the best course of action for your financial future.

So, How Much Do I Need?

Once you have developed a basic plan for your financial future, you are ready to evaluate different financial options which may require more or less money. So what does this mean in real terms?

Here is a general idea of how much money is necessary for some popular investment choices:

- Direct stock purchase and dividend reinvestment plan (DSP/DRIP). For those with very little capital, these plans offer a way to purchase stock directly from the company, cutting out the middle man. Once you have accumulated enough stock in this manner, you may be able to open an account at a larger brokerage firm. These options are not advertised, so you will have to look at specific companies to see if they are offered.

- Online brokers for stocks. This another low-cost way of getting into the stock market. You can generally open an account with an online broker with only a few hundred dollars, but be wary of transaction fees which can add up quickly if you intend to buy and sell often.

- Brick and mortar brokerage firms. These are larger firms with a physical location. Opening an account with a firm of this nature will require a greater starting balance in most cases. Some will provide services to clients with only $1,000 to start and most begin taking clients at $3,000. If you maintain a lower balance, however, you may be charged an annual maintenance fee.

If you are ready to start putting some money into the market, speak to a financial advisor today. Even if you aren’t in a position to make a major investment, you can begin saving immediately to put yourself in a better position in the future.

About the Author

For more information about personal financial planning for your situation, contact the professionals at FBT Investments. With offices throughout Louisiana and Mississippi, we are available to help you create a financial plan to reach your long-term and short-term goals.

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