How Much Money Do I Have to Invest for It to Be Worth It?

How Much Money Do I Have to Invest for It to Be Worth It?

Anyone who wants to strengthen their financial position should know that investing is vital for making the most of your money. 

Over time, returns from investments typically outperform both inflation and interest rates of savings accounts. Investing enables you to make money from money.

But how much money do you need to invest for it to be worth it? With figures floating around on the web ranging from $1 to $5,000, it’s no wonder you’re looking for answers.

What’s the minimum you should invest?

Depending on your investment goals and needs, most financial institutions recommend starting with a minimum of $500. Mainly because of fees associated with purchasing and selling shares, which you would do via an institution that trades on your behalf on the stock exchange.

Fees typically range from $10-25 per trade. Therefore, if you only invest $100 in a company, you can pay up to 25% of your investment’s value on top of your share’s value. 

In this case, your investment would have to grow by 50% to break even (considering the broker fee subtracted when both buying and selling the stock).

On the other hand, if you invest $1000, even a high broker fee of $25 would only represent 2.5% of your investment. As such, the value of your share would only have to increase by 5% to break even and start earning a profit.

In the past, investing in the stock market wasn’t accessible to everyone – only to those with lump sums of cash readily available.

However, this isn’t the case nowadays, with no-fee trading platforms providing investment options for those who can only afford to invest a little at a time. Budding traders can deposit cash into their trading account and start purchasing shares, the value of which should increase over time.

For this reason, anyone can begin investing with as little as $1, though to significantly impact your financial position, you should aim for higher.

Is there a benefit to using brokers over trading platforms?

When we hear about ‘no-fee trading,’ it sounds too good to be true.

While trading platforms are a no-brainer for those who can only spare a small amount of capital to invest at a time, it might be worth weighing up both options for those with more.

No-commission trading platforms reap the bulk of their earnings from a concept described as ‘payments for order flow’. Traders pay slightly higher prices for the stocks they buy and similarly sell them for a slightly reduced price, with the trading platform making a profit from the difference.

Suppose you intend to invest significant amounts of capital at once. In that case, it might be worth weighing up whether paying a brokerage fee – or buying and selling stocks at a disadvantaged rate – will detract the most negligible value from your portfolio.

Is there a minimum amount you should invest?

Though you can invest with as little as $1 – and it’s still a better idea, in the long term than keeping your capital in a savings account – to make the most from your investments, you should aim for higher. Even $10 a month will grow and make your effort worth it over time, as long as you begin early enough. 

You can more significantly influence your financial position by starting early than by waiting and saving until you have a lump sum to invest.

The sooner you begin investing, the more time your investments have to grow – which, on average, they do. When your investments make money, you can also reinvest what you earn and watch this evolve. Over time, this compounding effect can significantly impact your financial position.

Though investing smaller amounts is still worth it, investing $100 each month will incredibly affect your financial position over time.

By investing $100 per month for 30 years – assuming a 10% rate of return – your total investment contributions would equal $36k. Still, your portfolio would be worth $228,033 at the end of this period, thanks to the effect of compounding.

So, how much should you invest?

There’s no limit to how little or much you should invest per month for it to be worth it. After an initial $100 contribution, even a monthly addition of $10 to your investment portfolio can turn $3,600 contributions into over $24k after a 30-year investment period.

However, to make a significant difference to your financial position, aiming for a monthly contribution of $100 or more is an achievable goal that can make a massive difference to your finances.

If you have the capital to make an even larger initial payment – before beginning your monthly contributions – you should. The more time your investments have to grow, the more profit you’ll earn, and the greater the compounding effect will be.


Money Matters 22 February 2024

Guy Foster, Chief Strategist, discusses UK economic growth data while Janet Mui, Head of Market Analysis, examines US and UK inflation data. Last week was

Money Matters 1 February 2024

Guy Foster, Chief Strategist, discusses end-of-month market performance and recent central bank policy announcements, while Janet Mui, Head of Market Analysis, looks at the latest

Money Matters 25 January 2024

Guy Foster, Chief Strategist, discusses global market performance following the S&P 500 surpassing its previous all-time high, while Janet Mui, Head of Market Analysis, analyses

Money Matters 18 January 2024

Guy Foster, Chief Strategist, discusses the risks of escalating tensions in the Red Sea, while Janet Mui, Head of Market Analysis, analyses the latest US