How Much Capital
Should You Start With For
Online
Investing?
I get
tons of questions from first time investors regarding this topic of how
much they should start online investing with.
Many
investors think when they first start out online investing, that they
should invest all of their savings. This isn’t only unnecessarily true but
could also be very dangerous, if you don’t have a stock option trading
system or the disciple to follow it. As you could easily wipe out your
whole account if you don’t have a trading system in place.
To
determine how much capital you should invest, you must first determine
what your financial goals are and how much you actually can afford to
invest.
First,
let’s address the issue of how much capital you can currently afford to
invest. Do you have any savings that you can use? If you do, that’s great!
However, remember that you want to be able to live comfortably so don’t
cut yourself short when you tie your capital up in an investment. What
were your savings originally going to be used for?
It is
always important to keep a reserve of three to six months living expenses
in a readily accessible savings account – DO NOT invest that money! Don’t
invest any money that you may need in a hurry in the near future.
Begin by
determining how much of your savings should be used for online investment
purposes and how much should stay in your savings account. Unless you have
funds from other sources, such as an inheritance that you’ve recently
received or you got really luck and won the lottery, this will probably be
all the capital that you currently have to invest.
Next,
determine how much you can comfortably add to your online investments in
the future. If you are holding a job, you will continue to receive a
monthly salary, and you can plan to use a percentage of that income to
build your online investment portfolio over time. Another thing you can do
is speak with a qualified financial planner to set up a budget plan to
determine how much of your future income you will be able to invest.
With the
help of a good financial planner, you can be sure that you are not
investing more than you comfortably should – or less than you should in
order to reach your investment goals.
For many
types of investments, a certain initial capital investment amount will be
required. Hopefully, you’ve done your research, and you have found an
investment that will prove to be sound. If this is the case, you probably
should already know what the required initial investment amount is.
If the
money that you have available for investments does not meet the required
initial investment, you may have to look at other investments. Always
remember to never borrow money to invest, and that you should never use
money that you have not set aside for investing!
Cheers &
Happy Trading!
Brian Lee
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