Ways & How

How to Invest with Little Money

How to Invest with Little Money

Everybody can benefit from applying tips on how to invest with little money. You may think you need to have a lot of money first before you can invest, but such is not the case. You can start investing by saving up as little as one dollar a day. When you have saved up at least $20 to $250, which takes only twenty days to eight months, you will have enough to start investing. There are several options provided here for such investments. So, yes, investing with little money can be done. This guide will show you how. First, though, you need to be committed. Saving up money, investing, and waiting for it to grow requires discipline and perseverance. It also takes a certain level of guts because investing always includes some risk. Investing is not a get-rich-quick-scheme. You need to patiently let the money grow over a length of time. The more you are able to resist cashing in your investment and the more you re-invest dividends, the more your money will accumulate. Over time, your investment will earn, increase, and make more money for you.

  1. For as little as $20 starting capital, you can enroll with various plans that allow investments in small amounts.

    Signing up with ING Direct through Sharebuilder will help you make your own investment plan with which to start a portfolio. That is very little money, which should encourage you to get started. You can also do direct stock purchase or Direct Purchase Plans (DPPs), by which you purchase stock directly from the company instead of going through a broker, thus saving money that would have gone toward fees. Dividend Reinvestment Plans (DRIPs) are another option. However, with DRIPs you need to already own stocks of a company and exchange the dividend for more shares of stocks, not cash. You can find such investment options on the Internet. Try www.equiserve.com.

  2. If you have $100 or a bit more, you can invest in Exchange Traded Funds (ETFs). When you buy an ETF share, you are not buying a share of one company, but a share of an entire portfolio. It is easy to manage; it gives you the ability to have a diversified portfolio while having only one share of stock, or two, again depending on how much you invest. A few good options you can look into are TD Ameritrade, which offers stocks of iShares and Vanguard, as well as bonds. If you invested in Vanguard, you would have to pay a huge $3000 starting fee; however, investing in Ameritrade will enable you to have a portion of Vanguard stock without the fee and the sizeable initial investment. For a little more money, you can check out Firstrade’s ETFs. Charles Schwab and T. Rowe Price are other options; they accept investments for as low as $100 if you have an account with their company.

  3. For $500 or more, you can have more leeway on where to put your money. Index Funds, discount brokerage accounts, and Certificates of Deposit are good options to consider. The above options will still work, though, so you may want to continue with what you started and simply keep re-investing.

There are a couple of things to consider: finding DPPs and the time factor. Companies do not promote their own DPPs because they’re not allowed to. This means you will need to do a little work to find those that do sell DPPs and know how to start. The time factor is important in that most of these investments will charge you heavy fees when you sell. Make sure you are committed for the long-term, so that your returns will offset the fees and still leave you a nice profit from your investment. Beyond that, you can go ahead and get started on how to invest with little money.


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