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.
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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
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
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
It's called a
dividend reinvestment plan (DRIP)
and it allows you to receive additional shares in lieu of
payments. The beauty of DRIPs is that they help a portfolio grow
-- additional shares lead to more
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
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
, 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
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
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
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
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
. 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
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.