How To Start Investing In The Stock Market With Little Money

 

People often tell me that they want to start investing in the stock market with little money and ask if they can start with as little as $100. 

When I ask why they want to start with little money they give me 1 of 2 reasons:

  1. They simply DON’T have much money to invest
  2. They’re afraid to lose money when trading stocks and want to start with a small amount

But how much money do you really need to start investing in the stock market?

Let’s talk about losing money when trading first

First of all, there’s a HUGE difference between the amount of money you are INVESTING and the amount of money you are RISKING when trading.

Let me explain.

Let’s say you want to buy Apple stocks, and Apple is trading around $200. Let’s say you’re buying 5 shares of Apple for $200 each, that’s $1,000.

Does this mean that you’re RISKING $1,000?

Absolutely NOT, and here’s why.

The only way you would LOSE your whole investment is when Apple goes to 0. How likely is that? VERY unlikely, right?

Of course, the price of Apple COULD go down, and instead of $200, the stock could only be worth $180.

So if Apple drops from $200 to $180, you would lose $20 per share. Since you have 5 shares, you would lose $100.

And since you invested $1,000 when you bought 5 shares, and they are now only worth $900, you would lose 10% of your account, right?

Here’s what I teach people at my live events:

Never risk more than 2% of your account on any given trade!

If you have $1,000 to invest, you should risk 2% of $1,000, and that’s $20.

And you’re trading 5 shares, so each share can lose $4. This means that if Apple goes from $200 to $196, you sell your shares.

Why? – Because you were wrong!

You expected Apple to go up and instead the stock went down. So why would you hold on to it?

Now, you might say “But I have to give the stock some “room”

NO!

If you want a stock to go up and it doesn’t do it, then get out. Don’t hang on to a losing trade!

How do most people lose money in the markets?

By hanging on to a losing trade for too long.

Now let’s take a look at Apple and see what happened after you bought it for $200.

It went straight up! And THAT is what you want. You want to invest in stocks that move up immediately and make you money.

And if they don’t:  GET OUT!

Always limit your risk to 2% of your account size. That is what professional traders do!

Now let’s talk about the other reason why people want to get started with little money.

The reason why they ask about starting with little money is simple: They don’t have much money to get started with.

Well, here’s the bad news: When trading, it takes money to make money.

Can you get started with as little as $1,000?

Sure, but it doesn’t make sense, and here’s why:

Don’t fall for all the hype about making 536% on a single trade.

Realistically you can expect to make a 60% return per year. Sometimes it will be more, and sometimes it might be less, but 60% is very realistic.

Now let’s say you start with a $1,000 account. 60% of $1,000 is $600. So you would make $600 per year. Or $50 per month.

For me, that doesn’t make sense.

So if right now you don’t have much money to start trading, take some time and SAVE money. And while you are saving up some money, learn about trading.

Final warning:

Do NOT fall for any of the “get rich quick schemes.”

And it doesn’t matter whether you are investing in stocks, buying real estate or running a business like selling on Amazon or something like that.

It takes money to make money. If you are serious about trading stocks and options, you should have at least $5,000.

If you need some startup capital, start saving. And in the meantime, keep watching these videos and LEARN how to trade.

 



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