I want to invest in equities, but I don't have much money. Is there a minimum number of shares I must buy?

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January 2017
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No, in today's world with discount brokerage firms, you could buy as little as one share, but the trade would still be around $8. So, you could first buy a couple of shares of Amazon, ticker AMZN, or Apple, AAPL, and then next time buy a couple of shares of an industrial stock or consumer stock so that you aren't concentrated within one sector, thus rounding out your investments as you go. Your portfolio will be more volatile, but you could easily make more money in the long run. If you chose this approach, I would stick with the best, strongest companies in the world.

Alternatively, you could invest in an Exchange Traded Fund (ETF) and get immediate diversification with one trade. For instance, SPDR S&P 500, ticker SPY, and get all the stocks in the S&P 500 currently $229.50/share or the PowerShares NASDAQ 100, ticker QQQ, which are the largest 100 stocks on the NASDAQ (tech & biotech heavy) like Microsoft, Intel, Google, Apple, Netflix, etc., currently trading at $125.40. This way, you could broad index exposure with just one or two trades. ETFs are like conventional mutual funds in that you get a basket of stocks at once, but like a stock, trade during the day.

Lastly, you could invest in a conventional mutual fund. These only trade at the end of the day and you receive the Net Asset Value, or NAV. This is where they add up all of the stocks within the fund by weight to determine the NAV value. But like an ETF, would provide diversification immediately. Mutual funds typically have minimums of $1,000 or $2,000 initially, but then you can add in $500 dollar increments. In IRAs, the minimums are usually lower. And some funds do have lower minimums.

These are your options to research. Best of Luck, Dan Stewart CFA®

February 2017
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