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The Least You Can Invest

By Selena Maranjian – Updated Nov 16, 2016 at 5:17PM

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Don't think that you need to buy at least 100 shares.

It's tragic that many people put off investing for years, thinking they're not rich enough to benefit from the stock market. You don't need to have $1,000 or more before you start investing.

Too many people think that they can't invest in a stock unless they have enough money to buy 100 shares of it. With some stocks, such as those of Washington Post Co. (NYSE:WPO) and WescoFinancial (NYSE:WSC) trading for several hundred dollars per share, you'd need tens of thousands of dollars to invest. And to buy 100 shares of Warren Buffett's BerkshireHathaway's (NYSE:BRK.A) class-B shares, you'd need about $300,000. Fortunately, you're not out of luck if your last name is something other than Rockefeller or Gates or Winfrey.

You don't have to buy 100 shares at a time. You can buy 17 shares or nine shares -- or even fractions of shares, using some services.

Why the misunderstanding about 100 shares? Well, the notion is just a little out of date, that's all. Historically, full-service brokers charged very high commissions, with extra charges for purchases that weren't made in what was called "round lots," or multiples of 100. So 100 was viewed as the minimum number of shares you had to buy to avoid incredibly high commissions. Today, commissions from discount brokers are much more reasonable and people can affordably purchase shares in quantities divisible by any number they want... including 1. So if you want to buy 17 shares of Merck (NYSE:MRK), you can. Want 41 shares of Cisco Systems (NASDAQ:CSCO)? They're yours if you have the money.

If you're curious about how you can buy fractions of shares, one way is through "Drips," also known as dividend reinvestment plans or direct investing plans. With them, you buy stock directly from companies, bypassing brokers and broker commission fees. You can also invest very small amounts, such as $20 per month. And if you plunk $20 into a stock that's trading for $80 per share, you'll be buying yourself a quarter of a share.

Take some time to learn more about Drips. Read about the power of dividend growth and the power of Drip plans. Also, check out DripCentral.

Longtime Fool contributor Selena Maranjian owns shares of Berkshire Hathaway -- but nowhere near 100 of them.

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Stocks Mentioned

Merck & Co., Inc. Stock Quote
Merck & Co., Inc.
MRK
$86.78 (-0.83%) $0.73
Cisco Systems, Inc. Stock Quote
Cisco Systems, Inc.
CSCO
$40.66 (-1.19%) $0.49
Graham Holdings Company Stock Quote
Graham Holdings Company
GHC
$535.34 (-1.53%) $-8.32

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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