HOW MUCH DO I NEED TO START INVESTING?
You can probably start investing in the market with $5000. It is vital to realise that we all have to start somewhere, and that with non-advisory brokers offering cheap online brokerage these days, one can effectively reduce the amount needed to be invested without brokerage taking a huge slice of funds invested.
Also, you must compare the stock market to other forms of investment and if you can do better in the market than anywhere else with $3000, then go for it. Making twenty per cent in a year on $3000 may not be a lot of money, but it is better than leaving it in the bank. It’s the performance, not the amount, which matters.
Before you commence investing in the stock market, it is worthwhile paper trading first. What is paper trading? Paper trading is when you buy and sell shares hypothetically – that is, you don’t use real money.
You simply select shares to ‘buy’ and you monitor their performance. That way, you get to learn from any beginner’s mistakes that you make, without actually losing money.
Any novice investor should try paper trading for a time before investing actual capital. There’s no downside to it; it’s just simulated trading to help you learn for when the time comes to invest for real (an appropriate analogy would be a flight simulator to help train pilots).