Keep in mind to make money in the market you need to compound your portfolio by reinvesting gains. So the money you put into the market should be money that you won't need to withdraw in the near term.
This question is case-by-case. What you need to know is whether you plan to invest on margin (credit), and/or if you're planning on doing long-term buy-and-holds. If either or both are applicable to you, you don't need as much. However, as I bracketed, margin IS essentially credit, like a credit card, so you do need to make sure you aren't frivolously spending the margin.
Another question to ask yourself is, "How much about the stock market do you actually know?"
If you low little to nothing about the stock market, then money shouldn't matter; you shouldn't even be investing in the first place.
Anyone who is an absolute pro at the stock market can work with any amount of capital, even $1,000 (albeit they wouldn't earn much at the start). If you're trading on margin, the stock market is a bit of an elliptical curve, in terms of profit (if you can consistently gain and compound it). Otherwise, if you're trading on pure cash, it's a linear curve. Of course, this depends on the stocks themselves, and whether you get lucky with some rockets. Some stocks will pay more, some will pay less, depending on how they move.
One of the more important things you should worry about are the commissions. If a brokerage charges heavy commissions, you can't really make much gain with small initial capital, since the brokerage would take a chunk out of your gains.
I will keep this short by saying: You should wait until you're comfortable with investing, and know enough about it. If you don't know how to invest, it doesn't matter how much you start with, you'll still lose money. You just lose more if you have more to begin with.
If this is money dedicated to investing and you know you won't need it for any other purpose, and you plan on holding the stock rather than trading it, there is no advantage to waiting. You can't make enough interest to justify saving up.
The only limitation I see to starting with $2000 is that at some of the better brokers you need more to open an account. So pick a broker that has good educational and research tools and make sure you can meet their requirements.
Jim Cramer from mad money stated that you should invest in stocks only if you have $10,000 to buy stocks with. I have $2000 but want to purchase some stocks. I plan on purchasing stocks in $2000 increments by saving a makority of my paycheck. I know there is ton of research that I should do before I buy stocks; I already have been doing research for the past month on potential stocks I will buy.
Is this a sound strategy? or should I wait until I amass $10,000 to buy stocks?
My opinion: I think its ok to invest with 3k-4k as long as you have emergency money put away. If thats all you have then keep it, you may need that for moving or job hunting, etc. When buying stocks you need to diversify, dont just buy one stock, but with only 3k-4k that limits what you can do.
First,decide how much commission you want to pay.
1. For 2% ,multiply the dealing cost by 50. This will require the investment to rise 4% to reach break even.
2. For 1%, multiply the dealing cost by 100. This requires a rise of 2% to break even.
3. For 0.5%, by 200 ,needing a 1% rise to break even.
This doesn`t account for the effect of spreads and taxes.
