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Buying a few shares

Chris Farrell Aug 3, 2009

Question: I am 20 years old and am working and going to school part time. My question is, I want to invest a little money, somewhere between 100 and 200 dollars. The purpose would be to buy into some of these historically low stocks in company’s that are still pretty solid. It would be for the personal fun of watching what will happen over the upcoming years since I don’t plan on doing and serious monetary investments for several years. Now to get to the question. Is there an easy way for me to do that myself online? And what sites would that be? And can I even by shares with such a little investment? Thank you for your advice. I really enjoy your program. TJ, Finlayson, MN

Answer: I like your idea and your approach. Investing a small amount of money is a good way to learn about the markets and to have some fun. However, if you could up the amount you can invest a bit it would help. The cost of an online trade will run you about $10 or so. But I don’t want to discourage you. It’s the kind of curiosity and educational opportunity I’d love more young adults to pursue. Its money well spent. I also agree that there are intriguing values in the market.

You can do what you want to do online. One low cost provider is sharebuilder.com. It’s owned by the ING Direct, a U.S. subsidiary of the giant Dutch financial conglomerate.

Another option if you’re going the buy-and-hold route is to purchase stock directly from a company rather than through a broker. “Direct Purchase Plans” are mostly offered by large, blue chip companies. The typical plan allows you to buy stock for small amounts of money, usually the value of a share. You can get more information about companies that offer a DPP option at enrolldirect.com.

There are a number of good options for researching stocks. The major business newspapers and magazines like the Wall Street Journal and Businessweek offer a wealth of detailed information, as do online sites like morningstar.com, finance.yahoo.com, and google.com/finance. Have fun.

I’m curious. Does anyone have a different suggestion or alternative for a novice investor who wants to learn about the markets with a small amount of money?

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