Stock Market Investment: How Much Money do You Need to Start?
It could be as low as Rs 1,000 and as high as Rs 1 crore.
“How much” – this number varies between investors. A wide range of dynamics come into play here. So, setting an entry benchmark for yourself, blatantly, without considering the various factors is uncalled for.
If you’re planning to start in the stock market, and wondering how much money do you need to get things going, here are two very important things you must consider:
Are you investing or planning to trade?
Many beginners usually forgo the difference between the two. You can either invest in the stock market with the long-term scope, or you can trade stocks. The latter requires a bigger at-hand capital to cut decent profit in buying and selling. To that, it’s also difficult and demands a good amount of your time and energy, with wider risk-reward ratio. So, the beginners are usually advised against it.
On the contrary, stock market investment is fair and simple. You find good stocks and you put your money in them for a long period. Even when its price crashes, the market usually self-corrects over a period. So, in the years and decades from now, your investment would always return with good rewards; provided, of course, you have picked the right company.
So, decide whether you want to be an investor or a trader.
Do you know anything about the market?
It’s quite a no brainer, is it not? If you’re inexperienced and know not much about the market, staking a lot of your money doesn’t make sense. Taking such big risks is a bad idea.
So, when you’re wondering with how much money should you start in the stock market, a large part of your consideration should go to how better you understand the market.
If you don’t know anything, starting with the smallest sum is right. Start small, gain experience, actively learn the game, and then increase your capital.
However, on the other hand, if you’re well-informed about the market, have gone through best online stock trading courses, and are proficient in the technical analysis (example, MACD indicator strategy), starting with a big amount, with proper planning on the back, isn’t such a risky thing.
Aside from these two major factors, there are many other things you should consider when deciding how much money do you need to start in the stock market. Like…
- Your existing financial health
- Your risk-taking capability
- The kind of portfolio you want; goals
- The consultant/expert you’re working along with
Bottom line is that there exists no benchmark amount as to “how much”. You can start investing in the stock market with any amount per your needs, requirements, and goals.
So, consider all the factors before making any decision.