Dear DTA,
How do I get started trading with $20?
-Cliff D.
Hi, Cliff.
Thanks for writing in. Appreciate you taking the time to do that. And we appreciate your readership, too.
That’s a great question.
And I think I’m the perfect person to answer it.
I say that because I also started my investment journey to immense wealth with very little money.
It’s hard to relate to people with six-figure incomes or huge piles of capital.
I never had a six-figure job.
In fact, I found myself broke and unemployed in my late 20s. This was in 2009. During the depths of the Great Recession.
But I turned it around by following the Early Retirement Blueprint.
I went from broke in my late 20s to financially independent and retired in my early 30s!
It wasn’t easy, Cliff.
But I can tell you one thing for sure.
You don’t need to start with a bunch of money.
Twenty dollars isn’t much. But it’s better than $0.
And the fact that you’re even starting puts you far ahead of most people.
My career was actually a service advisor. I worked at a car dealership averaging about $50,000 per year.
After I was able to once again find a job in early 2010, I started saving some money toward my future.
Technically, I started out with $0. Actually, I was coming into things with less than that.
But I had a full $5,000 by the time I finally opened a brokerage account and started investing in the spring of 2010.
And I turned that initial $5k into the FIRE Fund, which is my real-money stock portfolio.
The Fund generates enough five-figure passive dividend income for me to live off of.
There’s an investment strategy that allowed me to do this.
It’s dividend growth investing.
Fellow contributor Dave Van Knapp put together a phenomenal series on what this strategy is, why it’s so robust, and how to successfully execute it.
Check out his Dividend Growth Investing Lessons for more.
This strategy involves buying and holding shares in world-class enterprises that pay reliable and rising cash dividend payments.
The Dividend Champions, Contenders, and Challengers list contains invaluable information on more than 800 US-listed stocks that have raised their dividends each year for at least the last five consecutive years.
Peruse that list for a moment, Cliff.
Notice a lot of familiar names?
Of course you do.
That’s because numerous household names out there are part of incredibly profitable businesses.
So profitable, in fact, that a lot of that profit ends up flowing right back to the shareholders. That largely occurs through cash dividend payments.
And as profit grows, so do these cash dividends.
Many of these companies make up the backbone of modern civilization.
They’re providing the products and/or services that make the world go round.
The electricity that powers your home, the food you eat, the toothpaste you use, the gas you put in your car, the mobile phone you use, etc.
No sense in not profiting from all of this, Cliff.
Now, $20 is a modest start.
But it is a start.
Many people don’t even get to the starting line. That’s your advantage.
But let’s make sure that’s not all there is.
Use that initial $20 as your tangible commitment to a future version of yourself that’s far wealthier and freer than the Cliff that exists today.
However, make sure you’re committing to it in all aspects of your life.
Right-size your lifestyle so that you maximize your free cash flow, which you can then use to plow into high-quality investments for the long run.
You have $20 today. But there’s no reason you can’t have $100 next week. And maybe $1,000 next month.
The journey of a million miles starts with that first step.
But the faster you can move, the faster you get to where you want to be.
It’s great that you’re taking that first step. Build on that.
I will say, that you’re living in an amazing time as it pertains to starting with a modest sum.
If this were the early 80s, you’d be in deep trouble.
That’s because trading fees were ridiculously high back then. It could run $100 or more to buy stock. And you’d often have to buy in big blocks.
But we now have a proliferation of low-cost (or even no-cost) brokerages available to us online.
You can sign up in just a few minutes for free.
And with the way brokerage fees are being driven to $0, you can actually start buying/trading stocks without needing thousands of dollars.
In fact, just this past week, Charles Schwab and TD Ameritrade both announced that they were lowering trading fees to $0.
This is perfect for you!
Some of these brokerages even have awesome sign-up and ancillary offers, like access to certain debit cards and even money when you bring over an asset base.
If there isn’t an offer advertised, call them.
Negotiate. See what you can get.
Everything in this world is negotiable.
Do your homework. Research. Find the platform that’s most advantageous for you. Negotiate.
Once you have everything in place, it’s up to you to get busy.
However, you won’t be alone as it pertains to finding compelling long-term investment opportunities.
Make sure to follow the Undervalued Dividend Growth Stock of the Week series.
It’s a series I personally helm.
Every Sunday, I highlight a high-quality dividend growth stock that appears to be undervalued at the time of publication.
These are stocks filtered from the aforementioned CCC list, and I only highlight quality stocks that have the solid fundamentals and attractive valuation worthy of presentation.
Don’t let modest beginnings hinder you.
We all have to start somewhere, Cliff.
So start today.
I wish you luck and success.
Jason Fieber
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