When people say the word “capital” – The first thing that comes to mind is millions of dollars being invested into huge corporations. But this is simply not the case. All the word Capital means is what you are going to invest in a business or market. Generally the more capital you have when starting out the better, but you can still generate healthy return on investments and profits with a small amount. In this post I’ll outline the basics types of investments and why starting capital is so important.
There are multiple types of investments you can utilise to make a profit. These range from very secure 2-5% options, all the way up to more risky ones that can generate you 100%+ a year. It’s just about the amount of risk you want to take. Below is an infographic I find useful to introduce to students when they are thinking about getting into trading or investing but aren’t sure what type to go with.
Starting Capital Amount
As mentioned above, most people think you need hundreds of thousands of dollars to start trading, When in reality nowadays you only need a computer and the knowledge. But saying this there is a starting capital amount for trading I would recommend, and that is $10,000. Anything below $10,000 and you won’t be able to get traction with specific trades you make, and the spreads of each trade (the buy/sell levels) are going to end up killing your profit margins.
Aquiring $10,000 is easier than you think. There are multiple ways to do it. Obviously the best is to simply use savings or save up the money from today and begin once you have this in place, but I understand this might not be possible for some. Other methods can include credit cards, financing, loans and everything else. But when you are a newbie trader I wouldn’t recommend getting into debt before you have even started.
That’s the basics everyone, I hope you enjoyed the post. In the coming weeks and months I will be posting more on the topics of finances and investing so stay tuned. Contact me in the sidebar if you have any questions.