Do You Have to Be Rich?
Have you heard the saying "it takes money to make money"? Surely there is some truth in it. The wealthy use leverage to increase their returns. If you want to get into real estate, you'll need capital. Or maybe your plan is to open a retail shop downtown - that takes money.
But it's not completely true.
In recent years we have all seen a drastic reduction in the fees of investing. In the past brokerage firms charged for executing trades, and that is still done today. The assumption would be that the expense of the trade would include some guidance and not simply executing the trade on behalf of the investor. But the market has driven down the cost of investing for beginners.
Here is what you can do now:
1. Zero cost to start.
2. Zero transaction costs.
Now there is a cost of course. There is a difference between the buy and the sell on the investment, so any mutual fund company or stock broker will make money. They are in the busines to make a profit.
But the point to you as an investor is that the spread is not significant. The question is whether you are investing anything at all. So starting small and paying zero transaction costs really removes all the barriers.
Why do mutual fund companies do this? They know that if you start even small and grow, the amount of money they will make over your lifetime is well worth the loss of the transaction fee they used to charge. But it's a win-win.
So there is truth in the old saying. But the novice investor is facing a more level playing field than before. It really is possible to start for $100 a month, or even less. The idea is starting.
Like a lot of things in life, starting is the hardest part.
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