What Do You Need to Start Investing?

by Miranda Marquit · 17 comments

One of the best ways to build wealth over the long term is to invest. Investing allows you to take your capital and put it to work for you. In the past, the perception was that you needed a large sum in order to start investing. However, thanks to technology, and online brokers, almost anyone can start investing without too much trouble.

Do You Have $25? You Can Start Investing

Most online brokerages will allow you to start investing with as little as $25. Some, like TradeKing, don’t require you to make an opening deposit at all. You can open a brokerage account, and then fund it when you can.

In many cases, you can even buy partial shares. If you are investing in an index fund or an individual stock, you can purchase a portion of the share. If you have $30 that you want to invest, you can purchase as many shares as possible. If a share costs $20, you can get 1.5 shares. You don’t have to buy complete shares all the time.

Opening a brokerage account is fairly easy. You can do it online, as long as you can provide the following information:

  • Name
  • Birth date
  • Address
  • Social Security Number

You can also link your brokerage account to a bank account so it’s easier to fund your investments. You will need your bank’s routing number and your account number to link the two. Some brokerages also require your signature, but you can usually print out the appropriate form, sign it, and then scan it into a PDF and email it to the brokerage.

To ensure that you continue investing, you can set up an automatic withdrawal from your bank account, and set up a recurring investment order. This will help you to build up your portfolio over time. Investing a little bit consistently over time can have a significant effect on your future wealth.

What Should You Start With?

Because there is a risk of loss anytime you invest, it is important to start with investments that you understand. Learn how stocks work before you invest. Prior to purchasing a bond, know how they function. And make sure you know what an index fund is before you put your money in. The simpler investments can be understood after a few minutes’ study.

Many experts recommend that you start with the simpler investments. Index funds are popular because they are easy to understand, low cost, and come with built-in diversity. Treasury bonds are also popular for novice investors. For those who want to try investing in individual stocks, dividend aristocrats are often considered less risky choices.

Whatever you start with, though, it should be something that fits with your long-term financial goals, and that will help you reach your money objectives. Be careful as you start, though, since you don’t want to invest money that you can’t afford to lose. Always be aware that you could lose money, and that there is no full-proof way to invest and earn money. However, that said, if you are willing to take a little risk, you have a better chance of returns.

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{ 17 comments… read them below or add one }

panamalaw rip off April 20, 2012 at 4:08 pm

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Sherwin Inigo April 29, 2012 at 9:34 am

Can you make it easier for your readers to browse your articles?

Is it possible that you classify and index your articles with general headings and sub-headings. Example, classify your topics into investing, saving, retirement, travel, etc. Then group them into general heading: investing; sub-heading: stock investing.

I’m sure it will make your posting more user-friendly.

Try also to keep in mind that many of your readers are non-US resident.

I appreciate your postings.

marilyn j.candia August 21, 2012 at 12:49 am

Can you also recommend investing techniques, what and where to invest for people residing in the Philippines?

Elia September 5, 2012 at 4:55 pm

If a Social Security Number is required, what provisions have you made for those who either do not have one, or choose not to put it online?

John Doh November 25, 2012 at 9:47 am

Elia: those without a social security number should worry more about IMS than investing and also not give up their gardening day job!

Pauline November 25, 2012 at 10:18 am

I used to trade forex and there was a demo account with the live rates so you could try with play money. Since the risk is so high it is worth trying a little. I would look for the same in this case. And never invest money I can’t afford to lose.

Emergency Cash December 3, 2012 at 2:59 am

Well, yes in theory you can start investing with a $25 deposit. I wouldn’t recommend stocks though, as you will be looking at trade fees of $5 – $10 upwards, so you will already be behind at least 20% on your trade before you even start.

The practise trading accounts that some supply are great though – they give you a chance to test your mettle on a live market before you start risking your hard earned cash.

Michelle Williams December 11, 2012 at 10:27 am

For first time investors, starting with small monthly contributions is a smart way to invest. Then as you get more knowledgeable you can start increasing the amount of your investment contributions.

gaye ashworth December 27, 2012 at 11:10 am

When you commission someone to invest, do you need to ask them for their id and if they are registered with SEC or FINRA? Is it safe to put your SS # online? Safety is my worry when it come to investing.

jose luis pedroza December 28, 2012 at 2:18 pm

If I live in Mexico, how can I invest in American shares? How can I open my account with an online broker?

Dylan January 15, 2013 at 4:13 am

To reasonably make a decent amount of money from investing – one would definitely need to have a fair bit more than $25. This $25, though, is a good example to use on your kids to get them into the saving – investing habit.

matt February 8, 2013 at 3:51 pm

Can I ask if there is a way for non-Americans to invest in American markets? Also, any knowledge for Philippine investments would much be appreciated. Thanks!

Joel April 11, 2013 at 3:01 am

Hi Guys!
There are countless investment techniques and depending upon different factors how well they suit each individual.
Very basically it depends upon your risk profile; which describes how comfortable you are with risk in relation to reward.
Higher risk normally equates to higher potential rewards and vice versa.
I can go into more specific detail if required :)

Shuwix April 17, 2013 at 4:52 pm

I’m allergic to “take your capital and put it to work for you”.
That’s really common “business” vision of stupid people that will never do business.

In reality, if you give poor man with average intelligence $10 million, he would get into ANY kind of business or investment and he’ll end with 20% within a year.

NO, capital doesn’t work for you. You have to work your butt off to make something out of your capital.

Feranmi Matt April 23, 2013 at 9:32 am

I will like to invest at Trade King but I don’t have a social security number because I am not from the states. I am from Africa and I would like to start investing now for the future.

VARUN May 23, 2013 at 4:41 am

If anybody really wants to invest somewhere then he/she should invest on himself/herself. :P :)

SAPNA June 11, 2013 at 8:09 am

@Varun you are absolutely right. If someone wants to invest and save money, they can do so by himself/herself.
Here are some suggestions:
1. start purchasing 1-2 shares per month.
2. start investing in mutual funds.
3. you can start a SIP (systematic investment plan).

Don’t trust others with your hard earned money.

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