Low-cost investing

Q: I am engaged to be married, and we want to invest in stocks. Is there any way that we can start with a small amount of funds, say $25?
–Lavita Durant, blackenterprise.com

A: This is a question that we have been often asked. As part of our Black Wealth Initiative, we have been encouraging couples like you to get started now. First, one of the easiest ways to get started investing is through your employer’s 401(k) plan or other company-sponsored retirement plan. You can have the money deducted from your paycheck and have it grow tax-deferred by investing in a range of mutual funds or stocks. Employers usually match some portion of the dollars that you have contributed to the fund. (Your maximum allowable contribution on an annual basis: $10,500.)

Another means of investing is through a process called dollar cost averaging, in which you set aside a certain amount per month, like the $25 you mentioned, and invest in mutual funds or individual stocks. To invest in equities, you will have to do so through a direct stock purchase plan in which you can buy fractional shares in a company without going through a broker. You can also buy stocks on the cheap through dividend reinvestment plans (DRIPs) but you will first have to buy shares of a given company through your broker. You may want to visit the Direct Stock Purchase Center at blackenterprise.com, where you may find out information on such programs. The site offers investors the opportunity to purchase shares in as many as 1,600 stocks.

Mail your finance questions to Ask B.E., black enterprise, 130 Fifth Ave., New York, NY 10011, or send an e-mail to dingled@blackenterprise.com.

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