Start Investing With Very Small Amounts of Money

Use Direct Purchase Plans
If you want to get started in investing but don't have a chunk of change to plop down for a signficant investment, are you doomed to wait until your cash flow improves? No. There are ways for beginners to invest with the amount of money most people spend on soda or coffee every month.
One easy way to get started is through direct investing, a method of buying stock directly from the company without going through a broker. Not only can you invest small amounts (often as low as $25 or the value of one share of stock), but you can find Direct Purchase Plans (DPPs) with fees that are less than those you'd pay to brokers.

Companies are forbidden by law to advertise their direct purhcase plans, so to find them, visit a site like Direct Purchase Plan Clearinghouse and Direct Investing.

You can also enroll in programs to have a fixed amount deducted monthly from your bank account and automatically invested in the stock, even if your monthly deposit isn't enough for a whole share.

For instance, if you invest $25 per month in a DPP and the stock price is $50, you can purchase 1/2 of a share.
If you don't have thousands of dollars to invest at a time, this is a great way to get started in investing and build a portfolio that will allow you to save for your future, pay for college, and fund your retirement.

How do you find companies that offer DPPs? Sharebuilder.com is one online service that allows you to research companies by using a searchable database of over 5,000 stocks and Exchange Traded Funds (ETFs). You can invest any amount you want. There are no account minimums and no inactivity fees. Trading fees are very low, averaging $1 to $4 per trade.

If you have specific companies in mind that you're interested in investing in, use the Stock Finder tab on Sharebuilder.com to see if they offer direct purchase plans and view information about the company.

Benefits of plans like Sharebuilder's include automatic investing with automatic deductions from your paycheck or bank account, a wide selection of over 5,000 stocks and ETFs, real-time information about your portfolia online, and practical investing advice.

Remember, it's important to choose your investments carefully. For first time investors, it's a good idea to choose a company you know--one you do business with regularly and are familiar with. It could be a music company, a chain of restaurants, the maker of your favorite food, or an automobile manufacturer, for example. Before buying, look the stock up at Morningstar, where you can get information and ratings of many stocks and mutual funds.