“How much money should you start with when investing?” is a question my team and I get asked all the time. “The answer is inside you. And yet it is wrong,” stand-up comedian Corrado Guzzanti used to say a few years ago while impersonating prophet Quelo. All joking aside, I need to make something clear here: this question calls for a very detailed answer that cannot be boiled down to a single, simple figure. A detailed answer that I have decided to share with you in this new article. Happy reading!

Investing and financial literacy are not just meant for the rich

I get the stink-eye treatment when I say:

“I wouldn’t wish it on my worst enemy to go from having little money to having a boatload of money in the blink of an eye. They would lose it very quickly, and have a tough time of it, to boot.”

How could you even fathom not getting the heebie-jeebies at the prospect of investing 2 or 3 million euros, when you have no clue as to if and how to invest €20,000 or €30,000?

On that note, MJ DeMarco, author of the book “The Millionaire Fastlane,” writes:

“If you can’t manage $1,000, you can’t manage $10,000.

You don’t suddenly learn how to manage money by amassing more and more of it.

This is why so many lotto winners end up broke anyway.

Financial literacy is not a side effect of wealth.

Wealth is a side effect of financial literacy.”

Standing idly by until you come into a lot of money before you start to invest is as foolish as waiting to get drafted by an NBA team before picking up basketball.

If, by some wild chance, that does pan out, just think of how soon they will be given the boot for being a terrible player (case in point: lotto winners).

So, if you think it takes big bucks to start investing, or if you think you should wait until you have more money to get the ball rolling, just know that’s not how it works.

As we explain in the guide, “All you need to know before you start investing,” you have to learn the ropes.

You need to put in practice time.

And when it comes to rope-learning and practicing, you don’t need crazy amounts.

Rope-learning and practicing are not just useful for understanding how financial markets work.

But they are also useful for figuring out your approach and emotions when your money is on the line on financial markets.

And there’s more.

Thinking that merely how much money you have available is going to magically make you more literate, informed, and financially savvy (meaning: it will make you more receptive to figuring out how much and where to invest) is hogwash.

Having more money available simply translates into clueless, financially illiterate people getting carte blanche to get themselves into deeper troubles on account of their greater wealth.

How much money you should start with when investing: let’s talk numbers (and a bunch of prerequisites)

So, it has now dawned on you that you should start to invest even with a small capital, instead of dilly-dallying around until you have €100,000 in your bank account.

And that’s also because, with no experience and no solid financial literacy and personal finance foundation in place, chances are you won’t even hit the €100,000 mark.

It’s just as true that, if you only have a few thousand euros in your bank account, you only need to focus on three things:

• keeping up your saving habits, while learning the only real secret to saving and amassing wealth, and sticking to the 50/20/30 rule for managing your expenses and budget;
• playing defense, by taking out insurance cover (albeit cherry-picking the best insurance solutions) and starting to pick up key skills for your financial growth.
• investing in your human capital, by getting an education and investing in your skills to stay competitive in the job market at all times.

That’s personal finance.

Which is not click, click, I’ll get rich in seven hours with no money.

But it comes down to insurance policies, liquidity, proper money management, and informed investment decisions.

And if you really want me to give you a ballpark figure with which to get into investing (in the long term), €10,000-15,000, plus some extra savings for you to take out the right insurance policies, as well as for your cash drawer and emergencies, may very well be a starting point.

Mind you: am I saying that everyone should start with €10,000-15,000?

No, what I’m saying is that it’s okay for you to start thinking about investing with at least that amount, then again the right amount depends on your combined net worth (and your risk tolerance).

And far be it from me to say that you must invest, even if you don’t have the slightest idea where to start.

If you are going to do random investing, with zero clue as to what you are doing, you had better not invest in the first place.

Here’s to your financial security and prosperity,

Luca