Taking a look at a recent scan of some of our recommended stocks reveals a trend. Take, for example, these recent featured companies: Target ($59.39), Discovery ($83.71), and PepsiCo ($89.17). The price per share of these stocks is high, making it hard for a newer investor to get a slice of the pie. And if you want to invest in your favorite consumer brand? Good luck if it’s Apple ($94.72) or Fedex ($153.29).
Want to get started in stock investing but don’t have a pile of cash to spare? Here are 3 inexpensive ways to get your stock portfolio started.
1. Get started with an index fund.
If you’ve seen our retirement calculator, you’re no doubt aware that you need some kind of investment to have a strong investment saved when you are ready to retire – you can’t rely on bank savings alone. If you can’t find the funds to afford individual stocks themselves (and most advisors would advise against having your entire retirement in one company’s stock), get yourself started with an index fund, such as an S&P 500 Index Fund. This is a fund that just holds investments in the same companies that make up the S&P 500 index. This way, your gains are aligned to match the growth overall market. Index funds often have low minimums; the most popular is Vanguard, but online brokers, such as Fidelity or Schwab, have their own S&P 500 index fund option.
2. Purchase shares direct from the company in smaller amounts.
Did you know that in some cases, you don’t have to deal with trading platforms (with their fees and minimum balances) and instead put your funds to work directly with the company? It’s called “direct investing plans” and there’s a list of most of them right here. Some larger companies, like McDonalds for example, even have online websites where you can view and manage your investment. This isn’t as popular of an option with many investors because you’re quite limited in the number of companies that offer this option, but it’s something to consider.
3. Review our “undervalued” stock recommendations for lower-priced stocks.
Inside our application, you’ll find a recommended stock selection called “undervalued” stocks. These are stocks that are trading at prices lower than their company’s earnings and other data suggest, making these good picks for longer term stock investment. Often these stocks are not quite as expensive – some recent examples include Orbitz ($9.01) or Samina Corp ($23.27 – and a safety score of 97). Our undervalued list does include other higher priced stocks, so you’ll have to review the list to see if there’s something for you.
Now, get those retirement funds going – you’ll know how important stocks are to your long-term investment.
Note: Stocks and stock prices are for example only.