Over the last year, I’ve been following up on e-mails that I have received from young and beginning investors and, by far, the most common question I’ve received is, I don’t have very much money but I’m interested in getting started in the stock market. How do I do this? In fact, if I had a dollar for every time I received that question I’d be a millionaire. Okay, that’s a little exaggeration on my part but it does show that most beginning investors are people who have set aside a little money and would like to see that grow faster than it would in a savings account or CD.Many people wonder if it’s even possible to invest just a little money and it definitely is. You hear stories about these millionaire investment moguls all the time but it doesn’t mean you have to have that much money to invest. A thousand dollars is usually a good number to start with but you can start with less. I doubt it’ll make you the next Warren Buffett but even he wasn’t born a billionaire.

The next step is to decide what kind of account you want to open up. The options usually include custodial, joint, IRA, and regular accounts. Custodial accounts are what you would open up if you are a kid and want to invest or if you are a parent who wants to open up an account for their child. You might consider a joint account if you want the account in both you and your spouse’s name. Individual Retirement Accounts (IRA’s) are excellent ways to save for retirement with tax benefits but you should only open up one of these if you plan on using the money for retirement. Regular accounts are the standard type of account.Once you have decided what fund you want to invest in and what type of account you want to open, all you have to do is fill out the forms and mail them in and relax as your money grows. Since your money is managed by professionals, you probably won’t have to worry about it as much if the market takes a little dip. You can also check how your mutual fund is doing online by entering in its ticker symbol.Investing in Stocks If you feel you have a good understanding of the stock market and want to pick your own stocks, there are a couple ways to go about doing it. You can either invest in them by buying DSP’s or by opening a low-cost online investing account. A Direct Stock Plan (DSP) allows you to invest in a stock with very little commission. They’re good for people who have little money but I don’t recommend them for someone who doesn’t plan to own the stock for at least a year. The reason is because you have to fill out the paperwork for each stock you buy and they are slightly less liquid than a regular stock is.The alternative to a DSP is finding a low-cost online investing account. Finding a low cost online broker is very important when you don’t have a lot of money to invest because higher commissions can eat away at your savings. Some online brokers that allow you to start with $1000 or less and have cheap commissions are Scottrade, Ameritrade, and Sharebuilder.Once you’ve found the broker and have filled out the necessary forms, you’ll be able to invest online. But before you make that first trade, you have to research some stocks and decide which one you want to buy. I personally recommend you invest in companies you know about rather than some strange company that you had never heard of before. Once you’ve picked the stock, just enter the trade and it should be promptly executed.Whether you decide to invest in a mutual fund or in individual stocks, the odds are in your favor that, over a period of time, you will earn a positive return greater than the traditional savings account or CD. If you keep at it, maybe you’ll retire with a few million dollars and a large beach house. If that’s a case, give me a call.