What's the least amount of money that you can invest, if you don't have enough money to buy 100 shares of a company? Well, first off, snap out of the misconception that you need to buy 100 shares of anything.
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. You don't have to buy 100 shares at a time, either. You can buy 17 shares or nine shares -- or even fractions of shares, using some services. That can come in handy when you're interested in a company like Washington PostCo.
Why the misunderstanding? Well, the notion is just a little out of date, that's all. See, 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.
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.
To learn more about investing Foolishly and how the business world works, visit our Fool School and our Investing Basics area. Or check out some of our inexpensive and well-regarded online how-to guides (which feature money-back guarantees).
You can also learn all about brokerages and find one that's right for you in our Broker Center. (Did you know that some well-regarded brokerages are offering commissions as low as $5?)
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