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Investing in individual stocks can produce long-term wealth growth. If you do not already have a large sum of money to invest in stocks, a monthly investment plan allows you to start building a stock portfolio. Fortunately, many companies understand small investors can be loyal share owners and offer direct investment plans you can use to set up periodic investments.
Find a stock or several stocks with which to start your monthly investment plan. Companies that allow month investment will offer either a direct purchase plan -- DPP -- or dividend reinvestment plan -- DRIP. Details concerning a specific company's plan can be found in the investor relations section of the company website. For lists of companies offering DPP and DRIP plans, start your research on the websites of amstock.com and computershare.com. These companies administer the stock purchase plans for many companies.
Review the terms and costs of the plans on your initial list. Make note of the minimum initial and monthly investment amounts. Look at plan set-up fees and note if there are any fees charged for additional investments. The lowest-cost plans will probably have an initial set-up charge but no additional costs if you establish a monthly investment program.
Complete the applications for your selected stock purchase plans and send in the initial investment amount plus any required plan set-up fees. The application for most stock purchase plans can be completed online or you can download the forms and send them in by mail.
Establish your monthly investment amount for each stock you have selected. Most plans require no-cost investments to be made by electronic withdrawals from a checking account. You can set up the automatic monthly investments when you complete the initial account application.
Dividend-paying stocks are good choices for monthly investment plans. The dividends will be automatically reinvested into more shares in the plan, boosting the growth of the account value.
A monthly investment plan is not a guarantee of profitable investing. Research your chosen stocks carefully and understand the risks before investing.