Start Investing With Very Small Amounts of Money
By Deborah Fowles
Use Direct Purchase Plans
If you want to get started in investing but don’t have a chunk of change to plop down for a signficant investment, are you doomed to wait until your cash flow improves? No. There are ways for beginners to invest with the amount of money most people spend on soda or coffee every month.
One easy way to get started is through direct investing, a method of buying stock directly from the company without going through a broker. Not only can you invest small amounts (often as low as $25 or the value of one share of stock), but you can find Direct Purchase Plans (DPPs) with fees that are less than those you’d pay to brokers.
You can also enroll in programs to have a fixed amount deducted monthly from your bank account and automatically invested in the stock, even if your monthly deposit isn’t enough for a whole share.
For instance, if you invest $25 per month in a DPP and the stock price is $50, you can purchase 1/2 of a share.
How do you find companies that offer DPPs? NetStockDirect.com is one online service that allows you to research companies by using a searchable database of over 1400 plans. You can view the prospectus of a company you’re interested in online or email the company to have a prospectus sent via snail mail.
If you have specific companies in mind that you’re interested in investing in, use the Stock Finder on NetStockDirect’s home page to see if the company offers a direct plan. Once you identify a stock you want to buy, you can enroll in the DPP online.
Research is easy by searching NetStockDirect’s database by specific criteria, such as by industry or by companies that allow automatic debits from your bank account. Each company’s plan features, fees and requirements, and a company profile are provided. Once you identify a plan you’d like to enroll in, you can use NetStockDirect’s enrollment wizard to sign up in just minutes and become a stockholder in the company of your choice.
Remember, it’s still important to choose your investments carefully. For first time investors, it’s a good idea to choose a company you know–one you do business with regularly and are familiar with. It could be a music company, a chain of restaurants, the maker of your favorite food, or an automobile manufacturer, for example. Before buying, look the stock up at Morningstar, where you can get information and ratings of many stocks and mutual funds.
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