How do I Invest in Stocks With Little Money?

You don't have to be the second coming of George Soros or Warren Buffett to be an investor. 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.

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