Investing in the stock market has historically helped investors increase wealth and long-term savings. There are many ways to invest in the stock market, but those with limited investment budgets need to maximize their investment dollars. Prior to investing in the stock market, a new investor needs to be comfortable with the possible loss of the investment. This is the nature of stock investments and something to get accustomed to with small amounts of money.
Establish your investment budget. Perhaps you have saved a bit already, or are looking to invest $10 or $20 every month. The money set aside for investment should not be money you are concerned about needing any time soon.
Open a brokerage account. You can find stock brokers, also known as financial advisors or registered representatives, through banks, tax advisors or online Internet searches. Look for a broker that works with new investors and doesn't require high minimum balances.
Choose the investment you want and can afford. There is a lot of information from brokers, newspapers and financial magazines about investments.
Fund the account and buy the investment. Some mutual funds allow minimum opening balances of as little as $25 plus monthly payments. Other funds or individual stocks may require higher balances, which may require you to keep putting money into the account until you have enough for the minimum purchase.
Monitor your investments and continue to learn and save more money.
- Many online discount brokers charge a flat rate for every transaction. If you have a small balance, this may be more than what would be owed in commission fees if you worked with a full-service broker charging the maximum 2.5% fee.
- Mutual funds pool money from thousands of investors to buy shares in a portfolio of stock to provide the group of investors with market leverage.
- Stocks, bonds and mutual funds are not FDIC insured and involve risk. Consult an investment advisor if you are concerned about your portfolio.
Items you will need
- Brokerage account
- Stock Market image by Paul Heasman from Fotolia.com