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Can you invest with Minimum Wage?




As you surely already know, if you want to invest in stocks the first thing you need to do is set up a brokerage account. There are many low cost brokers available on line. E-Trade or Charles Schwab are a couple. Then you will send them a check to fund your account.

While you're getting all that set up, do some reading on how to invest in stocks and what to look for. Usually you'll need to start with the basics of stock price, PE ratio, and recent earnings reports. You can find this info on line through Yahoo! Finance, or on your brokerage account. I suggest looking at stocks whose companies you are familiar with, and who you hear about in the news. It's easier to keep in touch with what's going on that way.

Many brokerages offer paper trading accounts so you can play around with fake money before your putting your real money on the line. I suggest doing that for a few months to get familiar with how the stocks move, how the brokerage site works, and how to get in and out of trades.

With $500, I would look for stocks with lower prices so you can buy several shares. You don't want to put all your money on a stock that will cost you $500 for one share. Always diversify. Look for companies whose stock sell in the range of $10-$20/share. That way you can buy 10+/- shares of two or three companies. Once you decide on what company or companies you want to buy, unless you have a good friend to show you how to place trades, I'd call customer service and tell them you're new to this and you'd like their help placing the trades the first time.

For the amount of money you're investing, I recommend keeping your money in the stocks for at least a year or more. If you get in and out of shares a lot, the commissions will eat up any profit you might make. Get in and stay in for a while. If you choose good companies, with low PE ratios, and those companies are generally doing well and have good outlooks, you'll most likely do fine. You'll learn that stock prices go up and they go down too. Don't panic and sell at the first down turn. Wait it out a few days or a week or more and see what happens. Stocks that have a big down day often bounce up the next. I have invested with a rule that any time a stock went down 8% or more, I sold out. As long it was above that, I kept it. That rule has gotten me out of some bad stocks and kept me in good ones.

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