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April 17, 2005

How much is enough to get started investing with? Is $1000 okay?

The right amount to start with is $0. You wouldn’t ride a bike down a steep hill your first day, would you? That could hurt. So can investing your own hard-earned money when you don’t know what you are doing. First you have to get started with training wheels. You do it as if you are using real money for awhile and see what happens when you are making all your own decisions. Then, once you’ve gotten it right 10 times, you can start with $1000 for real. With $1000 you buy one stock and remember Rule #1. With $10,000 you still buy one stock. Keep it focused. If you have $100,000 you own maybe 5 stocks. Meanwhile, read Automatic Millionaire by David Bach and The Millionaire Next Door by Bill Danko and anything by Suze Orman and find places in your life to save a little money. About a year from now you’ll be one of the best investors on the planet AND you’ll have money to invest.

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