# minimum amount to invest in equity shares



## pAnTs (31 Mar 2011)

is there any point in investing small amounts say €100 or €200 in equity  shares, the trade itself is inexpensive so it won't eat into profit and it's  my first purchase so I wanted to start small!what would you recommend for a first purchase? thanks


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## horusd (31 Mar 2011)

It's up to yourself but imo the amount is too small really. Costs etc will eat into it, unless you know you can buy the next google at 1 or two cent a share I woudn't waste my time. I seldom invest less than about 2000 -3000. But when I bought my first share, I spend around 1000.


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## pAnTs (1 Apr 2011)

Im pretty sure the website im talking about only charge €4.50 per transaction...


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## StaroftheSea (1 Apr 2011)

what is the website you're talking about?


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## horusd (2 Apr 2011)

pAnTs said:


> Im pretty sure the website im talking about only charge €4.50 per transaction...


 

Well, lets assume you invest 100. That's a charge of 4.5% straight away, and there may be a similar selling commission, making an effective charge of 9% (assuming no price change). You would end up with 91.00 . Plus the shares may fall as well as rise, so there is a risk, and you will forgo * the interest available from a risk-free deposit account of e.g. 4% , so the real cost will be circa 13%. You might pick a winner which will compensate for this, but it will need to be more than the real costs and risk. 

The other potential upside would be that the shares pay a dividend but you will still be at risk of either no dividend or a price fall.  As I say, it's a choice, and maybe you'll enjoy the buzz of it all so these things mightn't matter too much to you with such a small investment.



*Look up the opportunity cost principle of economics.

http://www.investopedia.com/terms/o/opportunitycost.asp


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## Chris (4 Apr 2011)

Personally I do not invest less than €2500 in any one equity purchase in order to keep costs as low as possible. If you are looking at small amounts of a couple 100 then you may be better off paying into a low cost diversified fund until you have accumulated a larger amount.


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## camel (4 Apr 2011)

chris said:


> personally i do not invest less than €2500 in any one equity purchase in order to keep costs as low as possible. If you are looking at small amounts of a couple 100 then you may be better off paying into a low cost diversified fund until you have accumulated a larger amount.



+1


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## pAnTs (7 Apr 2011)

Ye maybe, it's been suggested before that an ETF might be a good idea to start off with, I may just take that advice and try and seek one out, thanks folks


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## Chris (8 Apr 2011)

Yes, ETFs have the advantage of cheaper fees, but you are still paying stock broker fees to buy them.


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