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How much money do you need to start investing?

by , 23 June 2016
How much money do you need to start investing?
How much cash should you put into your account to start investing?

Does it even matter?

The amount of money you start out with could be of crucial importance - and if you miss this you could end up losing money from winning shares.

But this doesn't mean you need thousands of rand to start investing though…

Let me explain...
 

What you start out with will determine your success
  

I recently spoke to an investor that just started out. He was unsure about how much to put into his trading account, so he funded it with R10,000.
 
He then went on to buy shares in ten different companies, investing R900 per company.
 
After holding the shares a couple months with growth looking ok at around 10% and some dividends coming in, he’s now breakeven…
 
You see, he didn’t take into account the minimum brokerage fee of R80 per trade he paid.
 
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On the amounts he invested he was ‘down’ by around 8.8% on a share directly after buying, just because of brokerage costs!
 
This needn’t be a problem though.
 

A simple way to know how much to invest…


So, a simple rule of thumb is to take the minimum brokerage costs from your broker and multiply that by 100 to get the minimum amount you should invest in a single share.
 
That means, at a minimum cost of R80 a trade you should invest at least R8,000 per share.
 
A minimum cost of R50 means R5,000 a share and a minimum cost of R120 means R12,000 a share. 
 
 
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Isn’t that a lot of money if I want to invest in five to ten shares?

  
Sure – if you want to invest in five to ten shares you’re going to need to put down a huge amount of money…
 
But that’s where I’ve got another quick solution for you…
 
GT247 has recently launched a new investment platform called EasyEquities.co.za and opening an EasyEquities account could change the way you invest forever!
 
You see, EasyEquities doesn’t charge minimum brokerage costs. So whether you buy one share for R2.50, 100 shares for R250 or 2,000 shares for R5,000 you’ll be able to do so without wasting money.
 
In fact, the EasyEquities platform has gone a step further.
 
So there are no minimum costs right?
 
But you also pay the lowest brokerage cost in the industry! That’s right. Standard Bank, Sanlam and PSG offer 0.5% to 0.9% on every trade. With Easy Equities you pay half of that with brokerage at a rock bottom rate of 0.25%!
 
What’s more there’s no monthly fees either…
 
These monthly fees, amount to R600 a year with many other brokers. So you save some money there as well.
 
Start investing with R100, R200 or R500 right nowSo as I said, there are no minimums to investing on the EasyEquities platform. You can buy only a single shares valued at R1 and pay 0.25% brokerage on that.
 
But that’s a bit silly really, if the share you bought doubled you’d only make R1.
 
But if you’ve got R200 to spare each month that would be a great start to investing…
 
Or, let’s say you have R500 that you can save each month, that means you can invest R250 in two different shares each month.
 
In less than a year you’d sit with a portfolio valued at R6,000 excluding growth.
 
 
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My last investment pointer – what you need to do before you start investing today


The last but very important thing that I tell investors starting out is to sit down and determine your goals.
 
What do you want to achieve?
 
If you want to learn more about the stock market and investing, a tiny amount is all you need.
 
If you’d like to save for a holiday or a deposit on a house you’ll have to start with at least R5,000- R10,000.
 
And if you’d like to start saving for retirement I suggest you put money away each month.
 
Here’s to unleashing real value,
 

Francois Joubert,
Editor, Red Hot Penny Shares



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Comments
2 comments


Mpho Khalo 2016-09-09 23:59:02

I need info on Penny stocks

Thabiso Nkwanyana 2016-06-23 13:43:27

Hi I need info on how to trade forex.
Please send me info or call me on 0783184208