20 dollars in a month

[larryetc]

Hi,

I'm new to the stock market. In fact I've never traded a single stock, so please excuse what may seem like an ignorant question:

How much would one have to invest to make 20 dollars in a month's time?

I know there are a great number of variables to consider . . . I'm just curious what your thoughts are on obtaining such a goal.

Thanks!

[MDZ]

Hey,

Welcome to the site, and there is no such thing as a bad question, so feel free to ask all questions you may have. You hit the nail right on the head when you say that there are numerous factors to consider.

Applying simple math and the assumed average return of the market of around 10%, you would need to have $2,400 invested to recieve $20 a month. Obviously, if to become active day trading, or become good at making picks, this number could be much smaller and you would still make your $20 a month.

Hope that helps you some, and I look forward to seeing you around the forums.

Mark

[gijoe9]

Hi Larry, Mark is right about the numbers. But......... If you need absolutes the rate that a bank will pay you is say around 3% (gets out calculator) meaning you would need a balance around $8k to get $20 a month. With stocks the thing is you could make far more than $240 in fifteen minutes with a couple thousand invested or lose it pretty quick as well. I know of a stock that pays a monthly distribution and you could have bought this stock for about $17.50 a share last year. If you invested $2400 in this one you would receive about $20 a month plus it is now up $3 a share. Trading options is not for the faint of heart or for shallow pockets IMO but if you are good at it and manage the risk well you may be able to make large sums of money from small sums in an extremely quick fashion you could also end up broke about as fast.

I thought I'd lay out a couple of scenarios for making $20 a month the safest way being banks and high quality bonds stocks and other instruments in the middle and options being the riskiest. This by know means is a complete list of ways to skin a cat
Joe

[larryetc]

Thanks for the welcome and quick replies!

All that information is great. You've helped me put some things in perspective. I suppose the old saying "it takes money to make money" holds true, concerning the stock market. I don't have much to invest, and wouldn't feel comfortable doing so, seeing as I am not an experienced trader. The appeal of the stock market to me is the ability to take something modest and turn it into something more (accepting the risk of loosing, of course). Sounds like it may take longer than I had hoped, but that's alright. I just started working with a simulator, and will continue searching for resources online. Thanks again!

[MDZ]

"it takes money to make money"

I personally feel that this is usually a true statement, but not always. A important thing to keep in mind that it can be someone elses money that you are profiting from. But just getting started, I would say it is likely that you will be using your own money.

It sounds like you are motivated, and that is really the key. Try not to get impatient, and learn all you can before you try with real money. When you do start making actual trades, start small and learn from your mistakes. I am not an expert on all brokers, but I know that you can open a Scottrade account with only $500 and not be charged anything for inactivity.

Talk to you later,

Mark

[gijoe9]

Hi again Larry,
Just a thought for you to look into is a company like share builder or the money paper. They will hook you up with companies that do DRIPs (dividend re-investment plans) for say $100.00 you could own shares of a company and send them cash monthly/quarterly directly no or small fees. I have a friend who did this for about five years and for a total investment of about $2k he ended with a value of about $7k. No guaranties but a DRIP is built for someone who has low cash and or cash flow but can make regular deposits for more shares. DCA (dollar cost averaging) allows you to buy more shares when the stock price is down and less shares when it goes up ultimately lowering your average cost per share. A well executed drip takes more footwork on your part and a lot of discipline it is also not nearly as exciting as the ups and downs of trading through a broker where things can happen very fast. Good luck!
Joe

[gijoe9]

Larry,
Here is a link for the The Moneypaper Inc. offers DRIP stocks --- Dividend Reinvestment Plan This is what my friend and I used. They will want you to join their outfit but this is not needed to start a DRIP the fee they charge for non members is higher. They have a learning center that will give you more info but remember they are trying to sell you something so back up the info from another source Dividend Reinvestment Plan - DRIP Is a good place to start as well a third party not interested in selling you anything related to a DRIP. ShareBuilder: Build Your Future here is the sharebuilder link I know very little about them but again they are selling a service so caveate empitor.
Good luck
Joe

[aquaswim47]

I think doing some practice is great. I can afford to lose $600 so I created a Scottrade account and picked two stocks: GME and JNPR. So far so good. Still haven't made back my commission ($28 in commissions thus far for the first 10 days, darn trailing stop order on CBH). I wish I had sold CBH by choice today and exchanged it for TXN or had waited to buy TXN at the next available opportunity via a limit order. I would have bought it with a limit price of $30 per share. Oh well, no use crying over spilt milk. Adding $14 (almost $2 per share to that cost isn't worth it).