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Q & A

What's the minimum amount of money I need to start investing. And should I get an adviser or invest on my own?

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Real Questions from Real Subscribers

Q: What's the minimum amount of money I need to start investing. And should I get an adviser or invest on my own?

A: Dear Subscriber,

There is no definitive answer to the question of funds needed to begin investing. But here’s somewhere to start:

Suppose you pay $8 per trade, a reasonable fee for a discount broker. At that rate, you could purchase all 29 stocks on our Buy List for $232. That equates to 1% of a $23,200 portfolio. Investors should probably avoid paying much more than that in commissions, which means if you have less than $20,000 to invest, you probably won’t want to purchase all the stocks on our Buy List. But if you can invest more than $20,000, feel free to allocate the funds according to the target weights presented in the table on page 7 of our newsletter. The more you invest, or the lower your trading commission, the less those commissions will eat into your returns.

As for whether you should invest on your own, the fact that we publish a newsletter designed to assist individual investors suggests that if you have the interest, you shouldn’t be afraid to do it. We know that few people have the time and inclination to develop genuine expertise on the stock market. That’s why you subscribe to a newsletter like Dow Theory Forecasts, after all. We also know that some people aren’t comfortable making their own buys and sells, or even owning individual stocks at all. Such investors can benefit from using a professional adviser. But if you wish to own stocks, don’t mind opening a brokerage account, and have access to a trusted source of investment advice, then you possess all you need to manage your own portfolio.

Thanks for your interest,

Bob Sweet, CFA
Managing Editor, Dow Theory Forecasts

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