How much money do you need in order to start investing?

Almost anyone can afford to invest, provided there’s some disposable cash to put away every month.

We ask the experts how to start investing, how much you may need to achieve your financial goals over time, and what to look out for.

Tip: Learn more about savings and investments – they’re essential for your financial health.

Why invest?

The main reason to invest is to grow your money over the long term, says Johann Rossouw, a certified financial planner at Fiscal Private Client Services.

“Investors aim to generate income by purchasing assets that have the potential to increase in value, such as shares, bonds, or property,” he says. 

Although investors generally put money away for retirement, they can also invest for specific goals with different time horizons. 

“This could include buying a new home in a few years, sending your child to university in 15 years, or retiring comfortably at age 65,” says Selma Kruger, an investment consultant at Fairtree.

What’s the investment minimum?

There’s no such thing as having too little money to invest, Rossouw points out. “Some investment platforms allow you to invest as little as R100,” he says.

Kruger adds, “Don’t think of the amount invested as ‘too little’, but rather as an opportunity to take small steps in the right direction.”

Compound interest – the interest you earn on both the principal amount you invest and the interest earned – ensures your funds accumulate over time.

For example, if you receive 10% interest annually, and you invest R1,000, you’ll have R1,100 at the end of your first year. If you earn 10% interest the following year, it will be applied to the full amount of R1,100; meaning, you’ll receive R110 in interest, and have a total investment value of R1,210.

Nilan Morar, vice president of trading at EasyEquities, agrees that you’re better off investing R100 than nothing. “What’s important is the habit of investing, not the amount invested,” he emphasises. 

Where to invest

Many online platforms offer a low-cost entry to financial markets. Before investing, however, it’s important to ensure that the platform you are considering is appropriately registered with the Financial Conduct Authority.

Ryan Winter, a wealth manager at Netto Invest, recommends that you consult a financial planner before investing online. “They can advise you, based on your needs and risk appetite,” he explains.

Even if you’re only investing a small amount, you need to be cautious. For example, it’s risky to put all your money into one company or choose low-cost products that may not be compatible with your long-term goals. 

Note that financial planners may charge a once-off fee, or a percentage of your investments up to a capped amount, so shop around and find the right planner for your goals.

Tip: Struggling to invest in your future due to debt? Investigate debt consolidation.