How Much Money Do I Need To Start Investing?

Contrary to what many movies such as ‘The Wolf of Wall Street’, or the shorter-named ‘Wall Street’ would have you believe, a blank cheque and bottomless war chests are not necessary for making money investing. In fact, you can start off with as little as $10, no more than the cost of a movie ticket.  

You might be wondering: ‘how is this possible?’ It can be daunting to see the prices of some stocks, take Amazon (NASDAQ: AMZN) or Microsoft (NASDAQ: MSFT) for example. A single share will cost in the thousands. Even a cheaper Big Tech stock such as Facebook (NASDAQ: FB) can cost hundreds of dollars. Luckily, it is possible to buy parts of a share, and here at MyWallSt, we make it easy, allowing you to buy dollar amounts as well as share amounts.

But can you make money off this? 

Absolutely! The most important thing about investing is to get started as early as possible and set up a brokerage, whether it is through MyWallSt or elsewhere. Once that is done, it’s as simple to buy a stock as ordering a coffee from Starbucks (NASDAQ: SBUX).

Take Apple (NASDAQ: AAPL), for example, which went public in 1980 at $22 per share, and is now worth close to $300 per share. The stock has split four times since 1980 (if you’re not sure what a stock split is, read our article: What Is A Stock Split?)

The splits went as such: three times at 2-for-1 and one split at 7-for-1. This means you would have received two shares for every one share or seven shares in that one case. This means that a $22 share in Apple bought in 1980 would have turned into 56 shares today, which would bring in roughly $15,500, as of March 11, 2020. Not a bad return over 30 years for $22 eh? You don’t need to be a Wall Street mogul or have deep pockets to fork out $22.

30 years might seem like a long time now, and of course, nobody could have guessed that Apple would become what it is today, but thanks to the nature of the stock market, you could be safe in the knowledge that, with the right company, very little money could be worth a lot. 

The power of compounding

Now not every stock will be a winner, and we encourage new investors to diversify their portfolio across several sectors and companies, in the interest of protecting oneself against a downturn. With just a little bit of investing though, cutting back on even a cup or two of coffee a week, and you could use those savings to make investments. When that starts to build, that’s where the power of compounding comes into play.

If you’re uncertain about certain investing jargon, you can contact us here, or read our articles, such as this one: What Is A P/E Ratio? And Is It A Useful Metric?

Compounding is defined by Investopedia as “the process in which an asset’s earnings, from either capital gains or interest, are reinvested to generate additional earnings over time.”

Without going into too much detail, this revolves around buying and holding a stock for a long period of time, and reinvesting the gains from these investments in order to compound growth. For example, if you invest $100, and this becomes $200 over 5 years, you take the excess $100 and reinvest it, so 5 years later you will have $400. This is how investing legends such as Peter Lynch and Berkshire Hathaway (NYSE: BRK.B) CEO Warren Buffett made their fortune. 

Always remember

Your investing journey can start with as little as $10, and from there, the possibilities are endless, as long as you are patient and invest smartly. Nobody at MyWallSt started off with deep pockets, but now many of us are successful investors, and all of this because we took the first step of just getting started. You can hear for yourself from our Development Lead, Sammy: 

Quickfire Round:

MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.