Once you know what companies you want to begin investing in for real, consider dividend reinvestment plans -- better known as "Drips" -- if you don't have a lot of money to invest (and in many cases, even if you do!). Drips are direct investing plans offered by hundreds of major companies. They permit you to buy shares of a company's stock directly from the company or its agent, bypassing brokers (and broker commissions!). They've been growing in popularity in recent years and hundreds of major corporations now offer them, with more companies introducing them every day. Better still, these plans make it easy to invest small sums regularly, so you might end up sending $15 to Coca-Cola every month, along with $20 to General Electric and $25 to Home Depot.
With traditional Drips, the company expects you to already own at least one share of its stock before you enroll. The share must be in your name, so if you're not already a shareholder, you'll have to buy at least one share through a broker, paying the commission. In addition, you'll have to specify that you want the share(s) registered in your name, not the brokerage's name, as is typically done. Then you can open a Drip account with the company, and buy additional shares directly through the company (or its agent).
Note: When a stock is registered in your name, that means you'll be sent a stock certificate. These days most shares of stock are registered in your brokerage's name to simplify record keeping. That means that you don't get a copy of the certificate, but you most assuredly still do own the stock. (Not holding the certificate can actually be an advantage, as it means that when you're ready to sell, you don't have to mail it back in.)
A new variety of Drips, direct stock purchase plans (DSPs), operate in much the same way, except they don't require you to own at least one share before enrolling. You can buy your very first shares through these plans.
One terrific aspect of Drip plans is that they let you have any dividends reinvested in additional shares of stock. And they permit you to buy fractional shares of stock, too. So if you send in $15 to Coca-Cola one month and the shares are trading for $60 each, you'll get 0.25 of a share.
There's a lot more to know about Drip plans, so read up on them at http://www.netstockdirect.com/, www.moneypaper.com, our online Drip info area, or check out our book, Investing Without a Silver Spoon: How Anyone Can Build Wealth Through Direct Investing.
These are attractive options that Foolish investors should consider. They permit you to get started investing with as little as $20, and they have some advantages over traditional Drip plans. With Drips, it frequently takes weeks and some paperwork before you can buy or sell stock. Last time we checked, BuyandHold was ex