How much money do you need for investing? - December 30, 2016

How much money do you need for investing?

Many believe that investing is for the already wealthy and it’s hard to find good investments with smaller amounts of money. Despite this, it’s common knowledge that it’s best to start saving up and investing as soon as possible. This two might be contradictory, so what is the truth and how much money do we need to start investing?

Put it simply, the more we can invest, the better. But the really important thing here is not the amount, but the time period. We should always think on mid- or long-term. Therefore, we should only invest money we will not need for a long time. The reason is simple: most good investments are planned for a longer (5-10 year) period and if we back out of our portfolio we might even face losses instead of gains.

Concerning the details of investment: an amount between USD1500 and USD3000 is already a good start. With the proper goals set up, this amount of money can earn more in a well-balanced portfolio than on a simple savings account. What’s more, interests are generally low lately and that’s not good for simple savings, and this is another good reason to think about investing instead of simply saving. Generally, cash is good for the federal banks, not the keepers.

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Another important factor in saving up is the start date of it. As the famous author, Black Hodes put it: “If you invested $10,000 and left it to grow for 40 years, assuming an average return per year of 8%, you would end up with over $217,000. But if you waited 10 years and invested $20,000 — twice as much — you would only end up with just over $200,000.” We can see investing is not only about the amount but the patience and timing as well. But still, it’s good to know that it’s possible to start investing with smaller amounts than most would think.

Disclaimer: This analysis is for general information and is not a recommendation to sell or buy any instrument. Since every investment holds some risk, our main business policy is based on diversification to minimize threats and maximize profits. Innovative Securities’ Profit Max has a diversified portfolio, which contains liquid instruments. This way, our clients can maintain liquidity, while achieving high returns on their investments.