You don't have to be affluent to invest in the stock market. For example, you might have as little as $50 to play with, but you want a better return on that money than you can find in a savings account. The markets offer numerous opportunities to invest small amounts of money. Some even allow you to avoid some or all of the brokerage fees that can take a big bite out of your investment dollar.
No Minimum Accounts
A number of brokerage firms offer investment accounts with very low or no minimum requirements. In this case, you can put just $50 into the stock market on a one-time basis or arrange automatic monthly debits from your bank account. Except for the broker’s fees, all your money is invested in the stock you choose. If the share price is more than you put in, your account is credited with a fractional share. For example, if you are investing in Apple and the share price is $500, your account is credited with 0.1 share when you invest $50.
Direct Stock Purchase Plans
Many publicly traded companies offer direct stock purchase plans, or DSPPs, that allow you to buy shares directly from the transfer agent who handles their stock transactions. A typical DSPP does require a minimum initial investment of $250 to $500. However, you can satisfy the requirement with monthly debits of $50 from a bank account. DSPPs also have low transaction fees. That’s a big plus, because it’s less than brokers charge.
Stock Mutual Funds
An alternative to buying individual shares or partial shares is the stock mutual fund. When you buy shares in a fund, it uses the money along with that of other investors to buy a variety of stocks. Although many mutual funds have initial investment requirements of $500 to $5,000, some leading mutual fund firms have programs that allow investments of as little as $50. Taking the mutual fund route can also reduce your investment risk, because your money is used to buy a number of stocks. This diversification means the value of your money doesn’t depend on the fortunes of a single company.
A Gift of Stock
You can also buy single shares of stock for less than $50 to give as a gift. You choose the stock and the recipient receives one share and a stock certificate mounted in an attractive frame. If you are good at picking stocks, your gift might gain a lot in value over time.