4 Affordable Ways to Start Investing

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At the start of a new year, we often resolve to dedicate more time and effort to our health and wellness.

These resolutions could entail eating cleaner, taking better care of ourselves, and exercising more.

But what about your financial health? Shouldn't you vow to improve it, too?

For example, if you've ever thought about investing, now is as good a time as any.

You don't have to spend large sums of money to start. Discover four affordable ways to start investing.

A Dividend Reinvestment Plan 

Corporations offer dividend reinvestment plans (known as DRIPs or DRPs) in which the investor buys stock from the company itself, not through a broker who would take a commission.

As long as you can afford to buy one share, any dividends you earn on your stock get reinvested automatically into additional shares. This approach allows you to easily increase your holdings.

DRIPs charge few to no fees and practice dollar-cost averaging.

Using this strategy, you can invest a set amount of money on a regular basis, even if that amount is only $20 a month.

Penny Stocks

These affordable stocks, also known as “stocks under $5,” can provide a great introduction to investing on a budget.

With penny stocks, you're not putting much money at risk, and you can afford to buy more shares in a stock than you could larger companies.

If you land on a stock about to take off, you have the potential to see a big return.

To give yourself the best chance at making money, look for penny stocks that are profitable and have good business strategies and management.

Do your research to discover under-the-radar or small companies that are on the upswing, about to launch a new product, or entering into exciting partnerships or acquisitions.

If you're lucky, you'll invest in a hidden gem.

Mutual Funds 

With mutual funds, you're investing in a combined portfolio of many — even hundreds — of stocks.

Mutual funds are a great option for people who are getting their toes wet in the investment world because they allow you to diversify.

Plus, you don't have to worry about choosing which stocks to invest in. Mutual funds are a particularly good type of long-term investment.

While many mutual funds require a big buy-in, you can find some that allow you to invest only a few hundred dollars.

Business Ownership

No, we're not talking about the type of business startup that costs tens of thousands of dollars to make into a reality.

Rather, invest in something you know you're good at and could potentially make money from. For example, if writing is your specialty, consider starting a blog on a topic that interests you.

Promote your dog-walking, car-washing, or babysitting services on forums such as TaskRabbit.

You never know what small idea may explode into a moneymaker with little out-of-pocket expense.

Set aside more time this year to nurture your financial health. Start by investing a bit of cash in one of the options above and watch how your savings can grow.

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