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30 Nov

How Much You Need To Invest? (Hint: It’s Not What You Think)

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Doesn’t it drive you nuts? The excuses people give when putting something off, knowing they shouldn’t be. I hear it all the time from people who tell me, “They’re not in the market because they ‘don’t have enough’ to get started.” Well, I think that’s a pretty lame excuse.

If you don’t know how to put capital to work, what good is a lot of it? Nothing. It’s better to make mistakes with small sums of money vs. large sums. That’s why I encourage folks to start off with as little as $1,000 to test the waters in the stock market.

Now, I’m not saying with a thousand bucks you’ll be able to quit your day job to become a professional trader. Not at all, that wouldn’t be realistic. However, starting small allows you to work on the fundamentals and develop the winning process.

Have you ever heard of the 10,000 Hour Rule? It was mentioned in the book Outliers by Malcolm Gladwell, and he states that at least 10,000 hours of practice is required to become world-class in any discipline. With that said, there is no time like the present to begin your journey into the stock market.

What else?

Well, when you start trading, you go through this process of trying to discover yourself as a trader. There are so many different strategies that you could use to exploit capital from the markets, but you’ve got to find the one that best fits your style. Maybe day trading is not your thing…but you’re more comfortable taking on swing trades. If you don’t get started, how would you know the best investing or trading style for you? You wouldn’t, right?

How are you going to feel when you have a plan, but don’t execute it? It’s very easy to lay out a plan. However, in the heat of the moment are you going to stay calm and remain calculated, or will you be panicky and indecisive?  Again, experience teaches you how to handle these situations better.

At the end of the day, it’s not about what you start out with, it’s about getting the process down. You need to learn how to prepare, review, and develop discipline. Having a large trading account doesn’t mean you get a pass and are allowed to skip these steps. A fool and his money are soon parted.

I know what you’re thinking…but it’s hard to get excited about trading so small when others are swinging tens of thousands of dollars. First, let me say I had to go through a learning curve too, along with the same self doubts everyone gets when they try to do something new and scary.

Now, I don’t want to sound like a buzz kill, but what if trading is not for you? You don’t need a large trading account to figure that out. Bottom line, if you have an interest in trading the stock market, don’t let capital be the reason that stops you from getting started. There are a ton of valuable things that you’ll learn with trading a small account.

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