Invest Small Sums Online

Opening an Internet account can be the doorway to financial success

Desmond Keyes was introduced to the world of investing when his father gave him seven shares of a utility company stock as a high school graduation gift in 1979. As his income grew and he started a family, his interest in investing grew, too. By the time Keyes was in his mid-30s, he had ventured into online investing, and he hasn’t stopped since.

Keyes, now 44 and a research fellow at LMI Government Consulting in McLean, Virginia, is considered the investment cheerleader among his family and friends. He enjoys exploring inexpensive investment options on the Web and introducing them to the investment novices in his clan and to others.

Keyes, a resident of Waldorf, Maryland, advocates using online brokerage companies as a quick and easy way to begin building wealth. He likes www.buyandhold.com, a site that allows you to purchase full and fractional shares of stock for as little as $20, along with a $6.99 monthly brokerage fee. “I have seen money accrue over time just from putting a little bit here, a little bit there,” says Keyes, who is passing on the importance of wise investing to his two teenage daughters, Sha-Kara, 19, and Sha-Nesha, 15.

Buyandhold.com’s E-ZVest program allows users to make automatic deposits in their brokerage accounts, from which they can purchase fractions of stocks through dollar cost averaging — buying stocks by investing the same amount of money at regular intervals (monthly or quarterly). With dollar cost averaging, when the price of a stock increases, the investor is buying fewer shares, and when shares are cheaper, they are buying more. Other online Websites, such as ShareBuilder.com, Scottrade.com, Firstrade.com, and Ameritrade.com, offer similar automatic deposit options and have low account minimums and per-trade fees.

Experts say dollar cost averaging is best for people who don’t have a lot of money to invest but who can be consistent with a small monthly investment. “The benefit of dollar cost averaging is that, hopefully, you will eventually own more shares at a lower price on average,” explains investment adviser Martin A. Smith, CEO of Landover, Maryland-based Smith McClure & Co. Wealth Management Advisors.

The drawback to this type of investing is that it may take a significant amount of time to accumulate stock. “Generally, we like a long-term investor, somebody who’s not going to be day-trading,” says Ian Grice, president of Freedom Investments, the company that owns Buyandhold.com.

Buyandhold.com’s easy-to-monitor programs are a great way to pique children’s interest in investing, says Smith. Each month, Keyes invests around $500 for his retirement, puts $25 into each of his daughters’ savings accounts, and invests $60 into Sha-Nesha’s Buyandhold.com account. He’s working with Sha-Nesha to make her the third generation of investors in the family. “I don’t think she understands the true magnitude of what I have her doing now,” says Keyes. “I have a niece I talked into buying Wal-Mart stock years ago, and she was able to use that as a down payment to buy a home. I hope Sha-Nesha will be able to do something

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