How do I Raise Investment Money?

Investments should be made with money you don't expect to need in the foreseeable future. That's because the securities markets fluctuate over time and if you need to access that money to pay bills or purchase a car, you may be forced to sell out of your investments at a market low, losing money. It is not easy to save money to start a serious investment portfolio. It involves keeping a careful budget and putting away a small amount weekly or monthly until you have enough to invest. Alternatively, use services such as Sharebuilder.com, that allow you to invest a small amount in stock at regular intervals and grow your portfolio through these "odd-lot" purchases over time.

Step 1

Make a list of your monthly fixed expenses and a list of your quarterly, semi-annual and annual expenses. Compare these to your income. A bookkeeping program such as QuickBooks is useful for analyzing your income and expenses because it shows percentages spent on various categories of expense. Your bank may have such a service.

Step 2

Analyze where you spend your money. Chances are you will be surprised at how much you spend beyond your fixed expenses for rent, utilities and commuting. You can't cut back on the fixed expenses, but it is likely that you can trim enough out of your discretionary expense to save 5 or 10 percent of your income for investing.

Step 3

Set up an automatic withdrawal from your bank account. This can be done easily online or through your bank branch, and the money can be deposited in a savings account, in a bank investment account or with an outside brokerage firm.

Step 4

Accumulate your money in a brokerage firm that allows you to purchase odd-lots of stock or put your cash in a money market account. Check the fees involved, particularly for the purchase of odd-lots, as they can be quite high at some firms while others charge you a small fixed transaction fee.

Step 5

Make use of dividend reinvestment plans (DRIP). It is always a good idea to start out investing in conservative, dividend-paying stocks such as utilities and certain corporations. They will allow you to automatically have your dividend income reinvested in more shares of stock for little or no transaction fee. Over time you can painlessly accumulate a large amount of stock.