How to Fund Your Account?

If you plan on buying stocks via a retirement account like an IRA, you might want to establish a monthly recurring deposit. For example, the 2020 contribution limit for an IRA is $6,000 for anyone below age 50, and $7,000 for anyone 50 or older. If your goal is to max out your contribution for the year, you might set a recurring deposit of $500 per month to meet that max limit.

If you’re buying stock through an employer-sponsored retirement plan like a 401(k), you’ll need to indicate what percentage of your pay or a flat dollar amount you want to be deducted from each paycheck.

For all other types of investment accounts, establish clear investing goals and then decide how much of your monthly budget you want to invest in stocks. You can choose to move funds into your account manually or set up recurring deposits to keep your stock investment goals on track.

Here are a few things to keep in mind as you set your investment budget and fund your account:

• Mutual fund purchase minimums. Many stock mutual funds have minimum initial purchase amounts. Be sure to research different options—Morningstar is a great resource—to find ones with zero or low minimums to start investing in stocks as soon as possible.
• Trading commissions. If your brokerage account charges a trading commission, you might want to consider building up your balance to purchase shares—especially individual stocks—until the commission only represents a small fraction of your dollars invested.
• Mutual fund fees: When buying a stock mutual fund, be sure to review what the “load” is on the shares you’re purchasing. Some mutual funds have an upfront or back-end sales charge—the so-called load—that’s assessed when you buy or sell shares. While not all mutual funds have loads, knowing before you buy can help you avoid unexpected fees.