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Investing 101: What's the Minimum Amount to Invest?

March 1, 2024
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Hisa App

The biggest problem people face is how much money they need to invest.

Investing is important. Investing is particularly more important when you dont have a lot of money. One of the biggest problem that keep people away from investing is the misconception about just how much money they need to start investing. So you ask: how much do I need to invest? Well, how much money are you ready and willing to part with?

When it comes to investments and fees, there are constants and variables. How much money you need will vary from one investment type to another. Investments like real estate may need huge investments, while stocks may not take a lot of money from you. Remember, you should only invest money that you are willing to lose. And also remember that investing should come after you have clearly set out your financial goals and have saved or set up an emergency fund.

Brian Feroldi, recently shared these 15 very important timeless investing principles with great visuals.

You will have a clear idea of what types of investment are suitable with your level of income and how much risk you are willing to take with these investments. In this comprehensive guide, we will help you dissect how much money you need to invest.

What Fees Do You Pay When Investing?

Here are some of the investing fees you need to be aware of when you get into any particular investment below.

Minimum deposit

This is also called the initial deposit. It is the amount of money that is needed to open up your investment account. You need to find out how much money is needed as a minimum deposit before you can start investing. This deposit gives the required balance of your investment option.

Transaction fees

These are the fees that you need to pay every time payment has to be processed between the seller and the buyer. Transaction fees are going to be charged based on the amount of money being processed.

Brokerage fees

Brokerage fees are fees that a broker will charge you to give you special services or carry out transactions on your behalf. If you have a broker, you need to include these fees as part of the total of how much money you should invest. These fees only apply to those with brokers. There are online brokerage companies like Hisa App that charges no brokerage fees and is a convenient way to trade in US stocks from Kenya.

Advisory fees

This is money you pay at the beginning of your investment journey to a professional investment advisor, to get advice on matters relating to investments and finance. These advisory services are important for you to make the right decisions with investments.

Other fees that may be charged for other types of investments include consulting fees, account fees, surrender charges, front-end loads, etc.

Tip: If you want to cut down the amount of money you should invest, you can opt for group investments, pay off debt, build an emergency fund and make a budget.

Whats the Minimum Amount of Money to Invest in:

Nairobi Securities Exchange Stocks e.g Safaricom

To invest on any company listed on the Nairobi Securities Exchange for instance Safaricom, one would need to purchase at least 100 shares.

Safaricom is the leading telecommunications company in Kenya. There are a lot of people who want to buy Safaricom shares, and with good reason. The average stock price for Safaricom shares is Ksh.30.25 as at Friday 15th July. This means that you will require a minimum investment of Ksh 3025 plus any brokerage fees to invest in Safaricom. 

Global stocks e.g Tesla, Amazon, Apple

Investing in global stocks with Hisa App is ideal for Kenyan investors who want to diversify their portfolios with US stocks or ETFs. The minimum amount of money you need to invest via Hisa is $5. The app offers access to over 6000 stocks and ETFs listed on the New York Stock Exchange and the NASDAQ. Besides stocks, users can also invest in over 1200 ETFs from all the major issuers including Vanguard, Blackrock, Cathie Woods ARK, Charles Schwab and many more.

Real Estate

Real estate is one of the long term investment that can get you high returns. Some of the real estate investment fees include property purchase fees, agency fees, maintenance costs and closing costs. You also have to pay tax. Real estate generally has a large initial down payment. On average, you can start expect to invest in real estate from Ksh. 100,000.

Tip: To avoid losing any money to real estate scams always ensure you work with reputable registered agents or companies.

Treasury bills and Treasury bonds.

For anyone who would like to buy these government securities, you should know that they are a good investment option, for both the short and the long term. With treasury bills, you need a minimum investment of Ksh. 100,000. You will get your initial investment plus interest within a period of 3 to 6 months, since it is a short term investment. Treasury bonds are purchased for a minimum of Ksh. 50,000. Bonds are a long term investment and the maturity can go up to 30 years.

In our previous article on what to invest in, we gave a step by step guide of investing in treasury bills and bonds.

Takeaway

Most people assume that to get started with investing you require thousands if not millions of shillings. This is not correct. On average, you can get started with as little as $5. The most important thing is getting started then building the investing habit.

Remember to decide how much money you are willing and ready to give away for investments and to always choose an investment that meets your financial needs and preferences. Before you start investing, list down your financial goals, write down all the fees that you will be charged and the minimum investment requirements. Once you have all this clearly articulated then you can proceed to start investing.

I hope this guide has clarified any doubts you had about what is the minimum amount you need to start investing. Good luck!


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