There are no laws restricting a welfare recipient from investing in the stock market. While there are no income requirements to invest in the stock market, there are income limitations for people receiving welfare or public assistance. Generally, welfare users do not have extra money to invest in the stock market. However, people on welfare can spend their money however they choose, even if that means dabbling in the stock market.

Public Assistance Programs

There is no longer a federal welfare program. Each state administers its own public assistance programs, which usually include the Supplemental Nutrition Assistance Program, Medicaid and Temporary Assistance for Needy Families. You can receive one without the other. In some locations, additional programs are available for low-income households, including the Housing Choice Voucher Program. Program eligibility and income requirements vary. In addition to the income limits, there are also asset limitations. The asset limits range from $2,000 to $3,000, based on the program and the state.

Using Your Income

Eligibility for public assistance is based on the household's gross monthly income. The income cannot exceed a certain percentage of the median area income. Under federal guidelines, the household income cannot exceed 130 percent of the federal poverty guideline. The amount you can receive in benefits will also vary, depending on the state. Since you can have a limited income and resources, a person who budgets well could choose to invest a bit of money each week in the stock market.

Retirement Accounts

For some recipients, there is also a work requirement to receive assistance. If you contribute to an Individual Retirement Account or a 401(k) account housing stocks, bonds, mutual funds or any other investments, you are required to report the account an asset. Even if you cannot access the funds without penalty until retirement, they count towards your asset limit.

Losing Benefits

Even though you are free to buy and sell stocks, keep in mind the assets limits if you are receiving public assistance. Regardless of whether you own the stock or liquidate it, stock and the cash it produces is considered an asset. Once the resource limits are exceeded, you may be deemed ineligible for assistance. Public assistance programs are designed to help low-income individuals and families get on their feet. Self-sufficiency is encouraged. If you exceed the asset limits, it is important to report the change to your case worker immediately.