It is assumed that in order to make money on the stock market, “big money” is needed. The truth is that it does not take a lot of money to start investing. Begin with the little you have and add to it as you earn and save. Learning how to pick the best stocks is even more important than how much money you have to start investing. Stocks have the potential for big gains if you know which ones to pick at the right time.
There is no standard amount that an investor needs to invest in order to generate adequate returns from their savings. The amount invested usually depends on factors such as;
- Risk profile- This is an evaluation of an individual’s willingness and ability to take risks. It also refers to the threats to which an individual or organisation is exposed.
- Time horizon – This is the length of time an investor is aiming to maintain their portfolio before selling their securities for a profit.
- Savings – This is the excess of your income over expenditure.
No matter how much money you earn, the amount you invest should be based on your goals. Your investment goals not only provide you with a target at which to aim, but they also provide the motivation to stick with your investing plan. Your investment goals should also be based on how much you can afford to invest. You can then gradually increase the amount you invest.
Should you decide to start investing, you must bear in mind that any form of investing is accompanied by some type of risk. There is no such thing as risk-free investment. Seek advice from licensed investment advisors before you start investing.
