Hey, this is Sasha Evdakov and thanks for joining me here for another video lesson about trading, investing in the stock market.
In today's video lesson what I want to do is share with you another frequently asked question, and one of the questions I get is " Is there a minimum to investing in big companies? Doesn't make it difficult for the working class to invest?"
Here's the thing about minimums is no there aren't minimums when it comes to investing in stocks, you could invest $1, $500, a $1000, $50,000, $50,000,000, it's whatever you want. However, there are broker minimums so for the broker that executes your trade, and there are minimums when it comes to those brokers. More so for, if you set up a margin account.
If we take a look here at Interactive Brokers, this is one of the broker flat forms here, and you can see here since they focus on active traders, their minimum right here is $10,000.
Now, of course, this minimum could be a little bit less if you're in an IRA or if you're a little bit younger you could see that could drop down the 3,000 but in general their minimum right there is $10,000. That's a low minimum for trading with them and opening up and doing trades.
We also have minimum monthly trades that you also have to do in monthly activity fees. They run their business a little bit different kind of internet service where you pay monthly. And if you don't hit those minimums, then they will charge you, but they need you to be an active trader. That's how they make money and keep their business competitive.
If we take a look here at TradeKing and you can see they have it right there in they are frequently ask questions "Is there an account minimum?". No, at TradeKing there are no account minimums at all. Of course, if you need a margin account then yes there are minimums for margin accounts, typically that's what you will find.
If we take a look here at TD Ameritrade you could see that right here you do the drop down. There is no minimum to open an account, so if you have a cash-based account, there's no minimum. However, a $2,000 deposit is required for margin or option privileges.
You can see that certain brokers they do have minimums others don't, and some have it based on the requirements. That is to protect themselves, but in general, you don't have a minimum if your trading stocks themselves if you buy one share, ten shares or a 100 shares.
Of course, it's a lot easier if you trade a nice round lot numbers such as 100 shares because its a lot easier to get in and out if that's what other traders are trading in 100 shares, 500 shares, a 1,000 shares, 10,000 shares. Nice even numbers its more comfortable to do the calculations, it's easier to do your projections and so forth.
Trading in rounder numbers is a little bit better regarding share quantities, even in factors of 10 or 25 or 5 is a lot better in doing like seven shares or 1 share or 3 shares, so that is a little bit better.
The one problem where you do run into minimums or growth limitations as the question asked is when you start building your account, and you try to grow that account for the future. If we take a look here on screen and you see here we have a percentage of return at the top, and then have a starting balance right here, so if I start with a $1,000 and I make a 3% return, let's just say its 3% per month or year, it doesn't really matter
But, if you had a $1,000 and you get 3% return, your ending balance would be right here that $1,030. Your profit which has marked right here would be that $30, pretty simple math. Basically will take that 1,000 multiply it by the 3% and that will be 1,000 back and you'll get that number and this amount of profit its just difference between this numbers. That's fairly simple if you're struggling with this do some basic math, and you'll play around it, and you'll get it so taking that 3% in the percent of return.
If we drop this down to let's say you're investing $200 and you're doing 3% return, your ending balance at the end of the year or the end of the month would be $206. So you all making $6, so the key question I guess you need to ask yourself "Is it worth it to be trading, investing and risking that money for $6?"
Regarding absolute dollar value, $6 doesn't sound a lot. But as your account grow so let's say we take this and we go to $200,000. Now, we're talking about $6,000 at the end of the year, and relatively speaking $6,000 a year could do quite a lot of benefits to your lifestyle if you're doing this on a yearly basis or a monthly basis.
If you bump this up to 15%, of course now your looking at $30,000 but if your down to $300, 15% is still phenomenal when you look at it regarding a percentage of return, but it's only $45 on $300 because the absolute dollar figure doesn't seem as much.
That's why for me when I look at this, and I see a trader that maybe is only trading with $2,000 but getting $300 per month, per week. They're doing 15% that's still fantastic and phenomenal even though it doesn't sound like a lot. Whereas you have another guy, who might be trading let's say a $30,000,000 account and his only making let's say 2% even though he's making a lot more $600,000. The difficulty level is a lot easier cause his using $30,000,000 to make that $600,000.
Anyways, you can trade one share, 50 shares, a 100 shares, it's entirely up to you. There are no real limits behind that, you do have some restrictions when it comes to opening an account, but as far as trading the share amounts, there are no real particular limits to that. Of course if there are no shares available then those are other factors that you'll have to consider because if the stock is only trading 5,000 shares a day and you're trying to buy 5,000,000 shares which are not really possible, because the shares are not out there you'll probably move the stock price quite a bit.
In either case, thanks for joining me in this video if you want to get 101 training with me then take a look at some of my coaching packages right here, or you could continue to watch some more training videos by clicking this thumbnail button. Check it out right here if you want to coach 101 sessions with me through video.
Thanks again for joining me and the end do what you love to contribute to others, but most importantly live life abundantly.