Investing Small Amounts of Money

Most of the people I know, myself included, don’t have thousands of extra dollars hanging around just waiting to be invested. Much of what I have read about investing is aimed at people who have a substantial amount of money to invest. However, limited investing funds should not prevent you from investing. I have come across some great opportunities for investing smaller amounts of money. One valuable resource I have found that is good for both big and small investors is the American Association of Individual Investors. This associaton can help you become informed on topics of your choice and provide you with the help you may need to get started investing. Membership includes numerous benefits, including the AAII Journal, stock reports, and a year-end tax strategy guide. You can find out more about this terrific resource through their website at www.aaii.com.

A great way to purchase stocks with small amounts of money is through Dividend Reinvestment Plans, or DRIPs. You enroll in a plan by first purchasing a single stock in the company you have chosen (many, many companies offer these plans) and then completing the appropriate forms for enrollment. Once you are enrolled, you can make monthly fractional stock purchases with as little as $10, although this amount varies by company. Your dividends, as the name of the plan suggests, will be automatically reinvested for you. After time, your small monthly purchases and your reinvested dividends can add up to a substantial investment. One way to go about becoming enrolled in a plan such as this is through the service provided by Temper of the Times Communications Inc. For a small fee, they will purchase the initial stock for the company you have chosen and complete the paperwork on your behalf to get you into the company’s DRIP. I have used their service and was pleased with the results. It takes 2 or 3 months for the entire process to be completed. You can find out more about this service at the Temper of the Times website, www.moneypaper.com.

Money market funds are another option for investing smaller amounts of money, especially if you are interested in building up your emergency savings fund. A money market fund is a more liquid investment than stocks and earns a better interest rate than the savings account your bank probably offers. Bankrate offers a list of money market funds and compares their different features. You can find them at www.bankrate.com