A good way to stretch every investment dollar is to lower the cost associated with investing. Any transaction where you buy or sell an asset is going to cost you money. Certain firms, known as full-service brokers, offer research and advising services to their clients, who in turn pay more for their investing transactions. You can often find lower costs at a discount broker or an online broker, but be aware that you won't get the benefit of their analysis and advice, so you'll be making investment choices on your own.
1. Look for online discount brokerage firms,
which generally charge you less for transactions.
2. If you're investing
in a mutual fund, look for one with no load, which
means there's no sales charge.
3. Compare the management
fees and minimum investments of any mutual fund to
find one that fits your budget.
Most mutual funds let you opt
for automatic reinvestment, so that any distributions
you earn on your investment are used to increase your
stake in the fund. You'll never miss the money, and
you'll be gradually building up your investment capital.
Remember, though, unless you own the investment in
a tax-deferred or tax-free plan, you'll still owe
income tax on those reinvested dividends. You might
also want to investigate Dividend
Reinvestment Plans,
or DRIPs, that let
you invest your dividends to buy more shares.
