How do I Invest in Stocks With Little Money?

In fact, unless you're really hurting, there is really no reason why you can't invest at least a little money each month. Logistically, the options exist to make it so. And, there are many investment firms and plans willing to take just a few bucks off of your hands on a regular basis.

Step 1

Open an online brokerage account. While some firms require cost-prohibitive minimum initial investments, others use low or no minimums to get an account started. And it's not just the primarily online brokers, some big-name, traditionally brick-and-mortar brokerages let you in with as little as $100.

Step 2

Invest in no-or-low fee products through your brokerage account. If you are only investing $50 or $100 a month, it makes no sense to plop down $5 to $20 in commission each time you buy a stock or other equity. Some online brokerages, however, offer at least some products commission-free. For example, many brokerages have a list of preferred mutual funds, including their own if they run any, that you can get into for no fee. You won't be picking individual stocks; instead, you'll get an assortment of them if you buy into a stock mutual fund. Some companies specialize in small-time investors, charging a relatively small monthly fee to cover a certain number of monthly trades.

Step 3

Enroll in a Direct Stock Plan (DSP) or Dividend Reinvestment Plan (DRIP). These plans allow you to get in with no or a low initial investment and small -- usually between $15 to $100 -- monthly investments. DSPs allow you to purchase stock directly from the company of interest, while DRIPs require a middleman or plan administrator. It's not always the case, however, DSPs and DRIPs generally require you to own one share of the company's stock before getting into the program. You can get this one share through your above-mentioned brokerage account or via companies that specialize in selling you one share of stock to facilitate DSP or DRIP enrollment. Once in, you can reinvest dividends in more shares of the company's stock.

Step 4

Buy a stock mutual fund directly from the fund family. Often, when you go to buy a mutual fund from your brokerage account, you run into high minimum initial investment amounts, often $1,000, $2,500 or more. In some instances, you can go to the mutual fund's website to open an account. Some funds waive or reduce minimum initial investments if you agree to an automatic monthly investment plan.

How do I Invest Money in the Bank?

If you are looking for a risk-free way to invest your money and help it grow, the answer might be as close as your local bank. Banks offer a number of investment options, including insured products like certificates of deposit, money market accounts and savings bonds, as well as more volatile choices like stock and bond mutual funds. Choosing the right options for your needs can allow your money to grow without undue risk.

Step 1

Check the Federal Deposit Insurance Corp. (FDIC) coverage status of the bank by visiting the FDIC website (see Resources). As long as the bank is fully FDIC-insured, your certificates of deposit, savings accounts, checking accounts, money market accounts and other bank instruments are insured up to $250,000. This FDIC coverage does not extend to investment vehicles offered by the bank, such as mutual funds and stocks. Always get a clarification on FDIC coverage before investing in any product offered by your bank.

Step 2

Decide what types of investments you are interested in. Choosing bank products that are FDIC-insured keeps your money totally safe, but the returns will not be as high as riskier investments like mutual funds. Banks sell not only guaranteed investments but riskier ones as well, and it is important for customers to know the difference.

Step 3

Request a rate sheet from a teller at your bank. The rate sheet is a list of all the accounts at the bank, both deposit accounts and loan products. The document lists the current interest rate on all those products.

Step 4

Compare the yield on liquid investments like money market accounts and savings accounts to less-liquid choices like certificates of deposit. The rates on CDs tend to be higher than either money market or savings accounts, especially if you are able to keep your money tied up for a number of years. You need to weigh the benefits of a higher rate against the inconvenience of not having ready access to your cash.

Step 5

Discuss any additional investment options with an account representative at your bank. Ask for full disclosure of any fees and expenses, as well as any commissions involved in the sale. If you are interested in mutual funds, you might be able to find less-costly investment options by working directly with a low-cost no-load mutua- fund company.