3 Reasons You Should Open a Brokerage Account ASAP – Even If You Have Little Money to Invest

I can admit that I didn’t first open a brokerage account and start investing until I had a few thousand dollars to work with. At the time, I didn’t think investing just a few hundred dollars was worth it.

Now I realize how foolish that thought was. The reality is that many brokerage accounts today do not charge a minimum amount. So you can start investing right away, even if you only have about $100. Here’s why it’s beneficial to open a brokerage account as soon as possible, even if you’re significantly short on funds.

If you want to grow your wealth through investing, the most effective tool you have at your disposal is time. The longer you invest, the more you can benefit from compounding returns in your brokerage account.

Let’s say you only have $200 to invest today. Over the past 50 years, the stock market has returned an average of 10% per year. If your portfolio performs similarly, your $200 could be worth nearly $23,500 in 50 years.

2. You can create a diverse portfolio with partial investments.

In general, it’s not a good idea to invest money in a single stock and call it a day. But if you’re short on funds, you might think that’s your only option.

Not necessarily. Most brokerage accounts allow you to purchase stocks in small amounts. What this means is that you don’t have to buy the entire stock. You can buy one-eighth of the stocks of a certain company, or you can buy one-tenth of the stocks of another company. Fractional investing allows you to own a lot of stocks for less money.

3. You may be less tempted to spend money you should be saving.

Money invested in a brokerage account can be withdrawn at any time. There are no penalties to worry about, but if you have an IRA or 401(k), you may be subject to penalties if you withdraw money before age 59 1/2.

But once that money is in your brokerage account, your brain may view it as off-limits. And that’s a good thing if you want to use that money to save for long-term goals, like retirement or your kids’ college tuition.

Leaving money in your bank account can make you more likely to spend it. But keeping it in a separate brokerage account can change the way you view that money.

Additionally, for better or worse, the value of your portfolio is likely to fluctuate over time. When you see a stock going down, you may be motivated to leave that money alone to avoid losses. When you see stocks rising, you may be motivated to leave that money alone so it can continue to grow. Either way, you can profit.

There is no need to stop opening a brokerage account due to lack of funds. as long as you have part Since you have money to invest, it’s a good idea to get started as soon as possible with the goal of adding to your account over time.

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