How much cash beginners need to start investing

how much cash beginners need to start investing

Did you know you could buy 1 share of a company listed on the stock market for less than $100? It’s a lot easier to start investing in stocks these days. But how much money should you really start with?

And if you have a significant amount of savings, what do you invest it in?

We’ll talk about the two markets we know intimately, stocks and real estate. Let’s look at how to get started at each level of savings.

Can you start investing with $100?

Short answer: yes.

How? Open a Wealthsimple Trade account, deposit $100, and buy a canadian stock that costs less than $100.

Questrade can do this too. Although we don’t have any experience with Questrade.

As of this writing, Wealthsimple doesn’t charge anything when you buy Canadian stocks or Exchange Traded Funds (ETFs). It will charge you an extra 15% USD exchange rate, though, if you buy US Stocks or funds.

But there are plenty of Canadian dividend stocks and ETFs that you may find worth investigating.

Also, and maybe most importantly, you can open an TFSA with Wealthsimple, so any profit you make in that account is tax free. Just watch make sure you don’t over contribute to your TFSA for the year, or you pay a hefty penalty.

What can you invest $1000 in?

Stocks and ETFs are still your only real option here.But now you have choices.

How many shares do you want to buy of the stocks you like? Or do you want to buy some of the more expensive stocks? Although companies like Amazon and Google are still out of reach.

If you continue to contribute to your account each month, you can go on little stock shopping sprees. It’s a good feeling when you find “sales” or “deals” on assets that could help you build wealth.

How much interest can you make on $10,000?

With $10,000 ready to invest, you’ve worked hard to save, but you can’t quite do much in real estate yet (unless you’re in a really cheap market).

But $10,000 can give you a decent head start with stocks and and ETFs. Now you have access to some of the most expensive stocks in the market. So if you believe in Amazon and Google, then you might consider adding a couple shares to your portfolio.

If you build a dividend portfolio with an average dividend yield of 3% annually, that’s $300 in the first year.

If your portfolio averages 12% appreciation, that’s $1,200 more value in your first year. Now, obviously you don’t have access to that $1,200 until you sell your shares, but it’s nice to know your money is making money for you.

With this much ready to invest, you could also start “stock hacking.” This is our term for stock option trading. It allows you to generate cash flow in the stock market without even owning stocks.

Or, if you do own some stocks, there are stock hacking strategies that let you generate cash flow on those shares as well.

If this intrigues you at all, check out our Options for Beginners series

Should I wait to start investing until I have $100,000 saved?

Short answer: No, don’t wait.

Time in the market is better than timing the market.

Unless, of course, you’re bound and bent to buy real estate first. Then you’ll need a sizable down payment to start investing. And $100,000 is nothing to balk at.

Although, if you live in the Greater Toronto and Hamilton Area, $100,000 may not even cut it. If you know someone else who has $50,000 – $100,000 to invest, then maybe you can partner on an investment property.

Otherwise, you can do a lot in the stock market with $100,000.

With a 3% average dividend yield and 12% appreciation, that’s $15,000 more value in your first year.

Now, returns are NEVER guaranteed. One year you’ll be up 25%, the next you’ll be down 10%. So it’s safest to invest for long term growth.

And of course, these returns are only augmented if you know how to stock hack. Lee, the instructor of our Beginner’s course, puts out trade recommendations. He made 31 recommendations in 2021. 30 were winners, for a total of 12% ROI on the year.

Stock options can also be used as a hedge against market corrections. But you have to know what you’re doing.

What do I do with this information?

Start with what you have.

Even better, start with fake money. You can open a paper trading account with Interactive Brokers Canada (the cheapest broker we’ve found, and the one we use for stock hacking).

Once you get used to the mechanics of placing trades, then you can fund your account.

Start investing with what you have and deposit cash religiously. Go on stock shopping sprees every month. Find the real deals, weather the corrections, buy the dip, and see where you get in 30 years!

That’s all for now.

Happy trading,

Your fellow Stock Hackers,

🍒Cherry & Erwin
P.S. If you’re struggling to find cash flow in real estate, then this is for you: “How Real Estate Investors Find Cash Flow in the Stock Market.” This new, FREE report collects stories from 5 real estate investors and entrepreneurs about how they compliment their rental portfolio with stock hacking. Click here to get your free copy!

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