Money Talks - Best Ways to Invest Small Amounts of Cash

With the recent catastrophic events on Wall Street still developing and reverberating around the globe, interest in what is happening in the stock market has increased, even for those who have no idea. If you're a complete newbie at this; or have an idea or experience on how money / stock markets work, this article will try to show you the best way to invest small amounts of money and how that 'small' initial investment can grow and benefit you in the long run, even when you only have $ 20 to save at this time.

$ 20 may not seem like much, but you can use it to buy shares of Johnson & Johnson, Intel or even Harley-Davidson. And there are more than 1,000 options available; and when you have $ 100 or more to invest, your options are even greater. Now let's take a closer look at the mechanics of investing small, large and medium amounts of cash.

Let's start with $ 20. Is it really worth investing a pittance? Well, indeed! And one way to do it, at low cost, is through Dividend Reinvestment Plans (DRP), also known as Drips. DRPs and Direct Stock Purchase Plans (DSPs) allow you to avoid intermediaries, who charge commission, buying directly from the companies in which you want to invest or through their agents. There are more than 1,000 large corporations offering such stock schemes, many of which do not charge a penny, or when they do, usually the rates are low enough to make it worth investing as little as $ 20 or $ 30 at a time. Ideal for those who are starting small amounts to invest, Drips will allow you to buy frequently. In fact, once you are in the plan, you can set up an automatic payment plan without having to buy a complete part each time you make a contribution. If you can only invest small amounts of money each month, Drips can certainly be one of the most secure and consistent ways to accumulate wealth throughout your life.

However, if you have a couple of hundred dollars to invest, you can consider investing them in an index fund that tracks the S & P 500 (which has traditionally returned around 10% annually). Minimum low index funds that require as little as $ 250, usually restricted to IRA (Individual Retirement Accounts) for you to call yourself an owner, will allow you to add all the money you want, as often as you want, after your initial money investment online without additional costs or commissions. It simply buys index funds directly from mutual fund companies, so there are no commissions to pay an intermediary. If you have a few hundred dollars to start, then this is a great low cost way to establish a portfolio of 500 companies instantly diversified.

What can you do with a grand?

What would be the best way to invest $ 1,000 or more? Well, if you open a discount brokerage account, and you can save an additional $ 1,000 per year to add to your original investment; and let's say you're 40 for retirement, if you start with $ 1,000 and you invest an extra $ 1,000 each year, and your money earns 10% a year, when you're ready to retire at age 65, you'll have $ 532,111.07. Do not you think that's worth it? And if you set up a Roth IRA, you will not even pay taxes on that $ 532K when you withdraw it!