We all remember the film ‘Wall Street’ where a back room clerk gets the chance to mix it with the big boys. He becomes really rich very quickly and is soon a multimillionaire with all the trappings. This kind of rags to riches story is best left in the movie theatres, but maybe you can have a little slice of that pie. If you have some savings available that you can afford to lose, please read on and see if you can’t taste the high life one day.
In years gone by, you were required to have a substantial sum of money before you could open an investment account. Thankfully those rather restrictive terms are a thing of the past. There are a number of ways to get your foot in the investment door and here are some of the options available to the small investor:
Direct Stock Purchase Plans
These are called DPPs for short and they are a great way for you to get started in the stock market business. As the name suggests, these stocks are bought from the company directly. This means you don’t have to pay extra to the middle men brokers, always a good start! Not every business will offer this option and they usually never advertise it either. You need to do some detective work and find out for yourself. The company website will usually have some information pertaining towards these options. You can usually buy some shares for as little as a few hundred dollars investment. Be sure to check the prices and don’t buy the first ones you find.
This option is usually available through investment banks such as ING direct. You can invest a tiny amount like five dollars and keep adding to your portfolio as your available funds become more substantial. This type of investment may attract some fees and restrictions, but overall it is a good way to start investing safely.
This acronym stands for ‘Exchange-traded funds’, they trade like stocks but offer more diversity. They are more attractive than investing in a mutual fund because they do not have a minimum investment limit. You can access them through most brokers and there are no lower limits. The main drawback is the fact that you have to buy whole shares and will have to pay the going commission rate every time you buy or sell. The way to reduce these penalties is by buying large amounts less frequently.
Look for fund companies that are offering low minimum investments. Many will have a three thousand dollar minimum, but these are not for the small investors out there. Do some searching and you will some no-load fund companies that are happy to take your small investment. Some of these will accept as little as one hundred dollars for your first investment. If you frequent the small investor forums out in cyberspace you will see plenty of ways to start off small and hopefully end the day a few dollars heavier!
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