In order to become a trader, you would have done a lot of research on the type of stocks, the market variants, how to calculate the movement, how to keep the risks minimum, etc. But one point that people often forget thinking or researching about is the amount of capital they should invest at the initial level in order to begin the trade. This is one of the major aspects to focus on in the trading strategy and therefore this article would give you a few tips around how much capital you should trade within the share market. To know more about it, keep on reading.
Calculating the brokerage fund
Apart from just keeping min your money for investing in the shares, you also need to understand that you will have to pay commission or brokerage for share trading to the broking firm that you choose. It is seen that commission is a major aspect and thus you should always look for plans where you are charged the minimum brokerage. These days you are getting a variety of options for online trading as well and therefore using free tools and software in the process of trading can help you cut down on your trade capital
The amount of money you would want to invest would also depend upon the duration you want to invest for. Although there is no harm in taking your money out whenever you want, the returns would always be better when you have fixed time frames for investment. Also, keep in mind the frequency you can invest for. You can either decide on a fixed amount to invest every month and take out the returns as or when you get profits or either make a lumsum investment at one go for a few years
Consider your income
Your age and income are the major factors that would help you decide the amount you should invest. People often say that you should start the process of money management from a very young age and stock investment is a great way to do it. You need to see how much you earn, what your expenses are and what share of your savings you can put at risk. Although you should always keep some money invested at those places where the returns are guaranteed, take a small sum out to invest in the stocks.
The age of the trader is a major factor as if you are young, you would have more time to take risks and invest some good amount. In contrast to this, if you are a retired person with limited pension amount, you should invest small sums of money and that too with the companies where the risk is minimum
Last aspect that you should focus on while investing is to keep in mind your goals. The money you put in the share market would widely depend on this. So ensure that you know what you expect from your investments and then fix a certain amount.