I have written articles in the past about how to start buying stocks with as little as $50. I listed all of my favorite options for purchasing individual stock which includes direct stock purchase plans, dividend reinvestment plans, and discount brokers. All of these are great options when you are beginning investing. There is another way that a beginning investor can buy more than 1 or 2 shares of just 1 company with a small amount of money.
The easiest way for a beginning investor to get involved in the stock market is by buying a mutual fund. I always like to think of a mutual fund as a collection of stocks. You can own shares in companies like Nike, Costco, McDonald’s without having to buy every stock individually. Mutual funds diversify your risk and are often a cheaper alternative to buying shares of a company.
Best Mutual Funds
There are a small number of high quality funds that will let you start investing for as little as $50. The only catch is that you normally have to sign up for an automatic investment plan in which you agree to invest $50/month until your account reaches a certain balance. If you cancel the plan, nothing happens. You won’t be taken to court or tied up and shot. Your account will remain the same and you can always mail in a deposit if you have the cash.
These $50/a month mutual funds were how I started investing in the stock market back when I was in college. I had $50/month automatically withdrawn from my checking account every month.I put the money in a growth fund with a 4 star rating by Morningstar. Over time my balance grew to a few thousand dollars. This money ended up being quite useful to me as I used it for a deposit on my house.
It may not seem like it but small amounts like $50 a month can really add up over time. Just be sure to pick the right mutual fund and sit back and watch your money appreciate.
If you have no clue of where to start in mutual fund investing, pick up a copy of my best mutual funds ebook.