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The belief that stocks are only for millionaires is probably the most common reason why people avoid the stock market. There is a circular train of thought that says that the reason people believe that stocks are only for millionaires is because everyone who buys stocks eventually becomes a millionaire. If only this were true the reality, however, is substantially different. This
Initial investments in mutual funds currently average $2,500.
Minimum purchases of municipal
A hundred shares of Coca-Cola would cost about $4,400 right now.
Such large amounts are frightening to many people. And, should the average person receive a windfall of $4,400, quite frankly a trip to Disney World would probably precede the purchase of a hundred shares of Coca-Cola.
The irony is that the very people who should be investing in the market are not, for these very reasons, doing so. The investor who can buy a hundred shares of this or that without a second thought is probably so rich that investments are the last thing he or she needs to worry about. On the other hand, the average person on the street ”that is, you and I ”needs to take a very different approach to investing.
This book explains in great detail several strategies for investing minimal amounts on a regular basis. For right now though, consider your beginning investing attempt as filling a bucket under a dripping faucet. The rich person over there is the only person who can afford to pay the water bill this month. As a result, he or she can
One fear is that the stock market is geared to big investors and that the average person doesn't have enough funds to actively participate. Deal with this fear by discovering the many investment options that are designed to accommodate people at any financial level.
Like many of the reasons you and other potential investors have for not investing, the concern of not having "enough" money to invest is not new. Fortunately, the financial market is a place of business, and as such it continually modifies itself to
Frankly, most people don't have a couple of thousand dollars lying around. So, accommodations exist for people who wish to purchase one share of stock or invest the same amount into a monthly stock purchase. Direct deposit programs can ensure that investment amounts are deducted before the balance is deposited into a checking account. Many brokerage firms periodically reduce the initial amount required to
The trick to investing with little money is to begin by
This strategy of small but regular deposits can be really distasteful at first. Once the decision to invest has been made, you, like most investors, will probably want to see progress immediately. Many investors are even disappointed enough by this inertia to abandon their investment careers. But, like the dripping faucet example, the bucket will eventually be filled. Delays in making deposits will only prolong the time needed to fill the bucket.
Finally, be aware that many of these programs and opportunities have, in fact, enticed a number of "average" people to invest in the stock market. Roughly 20 percent of the American population, or 40 million people, currently own stock. And this figure does not even include the people who own stock indirectly through a program such a retirement account. You are not alone in the market, nor are you an inconvenience to those who are already invested. The participation of individual investors is critical to the market's success and, as such, they will be accommodated.
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