How much money do you need to start investing in the stock market?

A lot of people don't think they have enough money to invest in the stock market. This is a common complaint in the investing world which is why there are some different investment strategies out there to help these individuals. People that often cannot afford to participate in the purchase of individual stocks normally opt for mutual funds. A mutual fund allows you to pool your money with hundreds of other investors that also cannot afford the individual stocks. This way you all get a certain percentage of the earnings and it is easier for everyone to make a profit.

If you want to invest on your own, you may be wondering exactly how much money you need in order to participate. This all depends on the broker you use. Depending upon the broker and the type of investment strategy you use, you may need to provide them with $5,000 or $10,000. If you use a full-service broker, you will be paying more for all the services so they will require a large amount. Then there are some smaller brokers that only require a few hundred dollars to get started. Check for online brokers, they normally require a small amount to get you started and then you can start investing more.

The benefit of an online broker is that you can get a lot of free services like stock tickers. Online brokers can really help out the people that don't know much about investing because they provide access to chat rooms and discussion boards. This will help you decide if you have a smart investment strategy or if you need to change it up a little bit. There are some downsides to online brokers because they tend to nickel and dime you for some of their services.

When you use a broker, you will need to pay transaction fees. These fees are used to cover the costs of the stock ticker and other tools they provide you with. A full-service broker will always be more expensive, so you may want to consider going with a smaller amount. People that trade on a regular basis should avoid the brokers that have higher transaction fees. If you only trade a couple times a year, you should be just fine. If you only have a small amount to invest and you aren't sure how to get started, choose an online broker or a low-fee broker. This way you won't be paying 10 percent or more in transaction fees.

So really you can invest whenever you want. Even an investment of $500 is bound to make a little money. The big misconception with investing is that you need to buy 100 or more shares at a time. This is absolutely not true because you can make just as much money when you buy a few good stocks. When you invest a small amount, it will take longer to build up to a larger amount like $10,000, but eventually you will start to see your small investment pick up and grow.

Using online brokers, you will be able to invest in some small-cap stocks that have a pretty large growth potential. Even investing in 3 or 4 of these stocks will have a nice return over time. Depending upon the stocks you pick and the amount you start with, you should start to see a profit in a few weeks. If you get a profit on some of the small-cap stocks, it is a wise decision to sell when you are ahead and take a small profit. Then you can begin to invest in some larger funds. The nice thing about small-cap stocks is you almost instantly see a profit, which will give you some hope about your investment strategy.