Start Investing with Just $100

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Only have $100 to invest? That's not a problem. You only need enough to buy just one share of your company of choice. Here's what you need to know to get started.

Opening a Brokerage Account

You've saved your money and picked out the company you want to invest in. Now all you have to do is open a brokerage account and "buy, buy, buy."
## Setting up an account online can be relatively simple and depending on the brokerage firm you choose, you can be ready to trade within 30 minutes.

[InvestingAnswers Feature: 6 Low Commision Brokers That Make Our Cut ]

While every application process is different, most online accounts require the same basic personal information, including your name, date of birth, address, social security number and bank account number.

Once you've completed the application process, you're ready to pull the trigger. Most firms charge around $10 every time you place a buy or sell order, so you'll want to keep your trading activity to a minimum while you get going (especially if you only have a small amount to start with).

Be sure to check whether the firm offers benefits for new investors -- bonuses like waived fees for the first month or an extra $50 are not uncommon.

Buying Your Stock

Log on to your brokerage account. Search the company's stock ticker. Enter the number of shares you'd like to purchase. Press buy.

Voila. Now you're an investor.

Adding Shares the Hassle-Free Way

One you hold shares in a brokerage account, there is a low-cost way to keep adding more investment dollars and acquiring more shares without incurring annoying transaction costs .

It's called a dividend reinvestment plan (DRIP) and it allows you to receive additional shares in lieu of cash dividend payments. The beauty of DRIPs is that they help a portfolio grow faster through compounding -- additional shares lead to more dividend payments which then purchase more shares which lead to even more dividend payments, and so on.

DRIPs are offered directly through the company, so you don't have to deal with expensive transaction fees from your brokerage account. You can go to any company's website and see if it offers a DRIP (not every company does). For example, this link takes you to Coca-Cola's ( KO ) DRIP page where you can download forms to get started.

If you're looking to open DRIP accounts with several companies, the process can start to get cumbersome. To ease the paperwork, check out sharebuilder.com , which offers a wide range of options to mimic the best features of a DRIP without so much paperwork. (If you transfer an account to Sharebuilder, they'll even toss in an additional $100 to your account).

Discipline and Persistence

Now that you've got $100 invested, it's time to start planning ahead. It will be hard to turn that $100 into real dough, so you'll need to keep adding funds to the portfolio. Many investors stick with a fixed plan, i.e. $25 a week or $150 a month. The amount of funds to invest will rise in tandem with your expanding knowledge base.

By now, you'll be tracking your first investment while starting to research the next one. But there's no hurry. Watching and waiting before jumping into a stock can be more fruitful then the "shoot first, ask questions later" approach to investing.

A number of websites such as Yahoo Finance and Google Finance allow you to create hypothetical portfolios that you can track. As these stocks move up or down, click on the news to see what's driving them.

In time, you'll notice clear patterns emerging. For example, if a stock rises on good news and then falls right back, and this happens repeatedly, it may be a sign that some investors know that all is not as rosy as it seems. This is the kind of stock you want to sell when it surges, since a subsequent pullback has been the pattern in place.

Stock Tips: Caveat Emptor

As you search for stocks to buy, you'll hear of "great ideas" from various financial media outlets. That's not an invitation to blindly follow their advice. Instead, it's simply a chance to do more research yourself.

Learn more about the company, its recent past, its competitive environment, and most important, figure out if the stock appears inexpensive in relation to its profits or assets. (You'll find plenty of articles here on investinganswers.com that can help build your skills in this area.)

Know that stock tips always start somewhere and by the time they've been passed on to you, they've already become stale. So take all stock tips with the view of a skeptic. For every stock you end up buying, you should be passing on several other ideas.

Also, be sure to add companies to your portfolio that bring exposure to disparate parts of the economy . Owning both Ford and GM isn't really wise, as both companies are subject to the same economic factors, and are likely to trade in a similar fashion. Instead, focus on Ford or GM and then look for companies in banking, high-tech, retail, energy, etc. An ideal portfolio has exposure to all of these areas.

The Investing Answer: Many first-time investors like to wait until they have amassed a few thousand dollars before wading into the daunting world of investing. That's a mistake. You can get going for as little as $100, and the earlier you start, the faster your skills will build.

Of course many investors will park their funds in mutual funds and index funds and avoid making any major investment decisions. But if you go this route, you'll never accumulate the knowledge you'll need when a lot more money is in play.

So why not jump right in and buy stocks? Once you own shares in a particular company, you'll pay much closer attention, getting a hands-on education about why certain stocks make money while others fail to do so.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Basics

Referenced Stocks: KO

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