How to Start Investing With Little Money

by mark on June 12, 2013

A couple of decades back, the future of investing seems a little bleak – if you were to buy stocks and bonds from a company as a form of security for your money, you would have to spend a lot of money for the brokerage fees. Yes, if you got a hundred dollar check from Dad back in the day, you may not be able to put it into a brokerage account and watch your money grow. However, times have changed. If you have little to almost no money, here are the ways you can start investing.

Before You Get Started

It is recommended that you think of investments like your utility bill – investments are designed that you put in money in order for you to have a seed amount that you can turn into a money tree someday. Before you start on investing, make sure that you can afford to continue putting in money. How do you do that? Make sure that you divide your money and set aside the amount that you need for yourself. Make sure that you have money to pay for your bills, rent, gas, and groceries. If you still have money after you buy the things that you need, that will tell you that you can put something aside to put up an investment account.

In addition, make sure that you will be able to make more money in the future, without having to withdraw the money you plan to invest once in a while. To make you feel a little secure, you may want to start planning your expenses to make sure that you will not be touching the amount that you are going to put aside for your investment.

Get Started in an Online Brokerage Account

The good news of the modern era is that technology opens the market up for a great deal of healthy competition, investment establishments included. Nowadays, you can safely open up a brokerage account online that requires a minimum amount of fees. No, scrap that. You can actually open up an account with no minimum balance.

To help you start looking for the brokerage that will be the best match for your investing style and goals, here are few reviews of the leading discount online brokers:

Get Those Products with the Least Possible Fees

It pays to get your hands on the low-cost stocks that are essentially commission-free. That means if you have invested $100, you would not have to pay commissions that may amount $20 to a broker. In addition, if you have a nifty online brokerage account, they may offer you their preferred mutual stocks that entail no fee. This gets you started on a variety of stocks when you buy into a stock mutual fund.

DRIP or DSP

Enrolling in a Dividend Reinvestment Plan (Drip) or a Direct Stock Plan (DSP) will do you wonders if you have only a hundred bucks to spare, meaning these plans do not have hefty monthly fees. What’s the difference between these two plans? DSP allows you to buy stocks directly from companies, while DRIPs would require you to tap the services of a broker. Generally, they allow you to get shares from companies if only you have at least one share from the company. Once you are in the loop, you can plan on reinvesting your acquired dividends in more shares.

Getting Big

Once you are making money from stocks, you may want to go bigger by getting stock mutual funds. These mutual funds that you can get from your brokerage account, you may encounter those high initial investment requirements, which are most likely to range from a thousand dollars and up. However, some mutual funds resellers may offer you lesser minimum initial investments if you agree to their automatic monthly plans.


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