Investing from scratch

If a lack of cash has kept you out of the market, here are three low-cost ways to get in

Excuses, Excuses, Excuses. When it comes to getting into the stockman, there always seems to be a hurdle or two in the way. Maybe you think it takes too much money to get started, say a lump sum on the order of $10,000. If not that, perhaps you’re under the impression can with a checking or savings account. Or (come on–you can own up to it) ma be it just seems too inconvenient to pick up the phone and arrange a trade with your broker every month or so.

If you’ve kept up with BLACK ENTERPRISE over the past, year, you’ve seen us draw up a basic investment scheme most anyone can adopt. At its foundation is a safety fund, three to six months’ worth of salary stowed away in a money market mutual fund where it can earn about 5% in interest. That way, in an emergency –say you leave your job for one reason or another — you’ll have enough cash to cover expenses like the mortgage, food, car payments, etc. Then there’s the stock market to conquer, the wealth-building vehicle par excellence that has historically rewarded investors an average annual return of over 10%. For first-time investors, mutual funds are a great entry point into the market. They offer instant diversity via portfolios of company shares handpicked by professional managers. And to top it all off, we haven’t neglected stocks. After all, there are wonderful opportunities to save toward your dreams locked away in corporate shares, if you take the time to do a little research.

Which leaves one question we haven’t yet answered. Say you’re someone who hasn’t got a crisp $7,000 to $10,000 at your fingertips, the minimum investment you’d need to get in the average money market or equity (stock) mutual fund and buy a few shares. Just how in the world do you even get started on one, let alone three projects?

Well, in the past, it was easier to revert to the excuses we listed above. But, in the interest of breaking through the obstacles lying between you and the Dow Jones Industrials or financial well-being for that matter, we’ve come up with three low-cost ways of starting you on your way. In the pages ahead, you’ll see how as little as $50 can get you directly into the stock market. You’ll learn how regular, steady savings build in mutual funds. And, you’ll also see how, over time, you too can pack away enough cash to have a reliable cushion no matter what the future may hold.

STOCK BY STOCK
We’ll start with what for many people would seem to be the most intimidating investment around: stocks. At first glance, taking a stake in a company by owning shares would seem to be a convoluted, rather expensive process. After all, you have to contact a broker, who buys shares for you, but at a sizable commission-anywhere from $19 to $60 for 100 shares. Factor in the expense, and you’d really need about $2,500 up front to make

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