DRIP Investing - My Decision to Start Investing With Less Than $100

A few years ago I opened a brokerage account with Sharebuilder and started stashing what little money I could into my Sharebuilder money market trying to build up enough money to buy anything in the stock market. The very next year I opened a Roth IRA with Sharebuilder with the intentions of doing the exact same thing. I had been reading about DRIP investing and how it could help gain wealth and that anyone could do it, so I decided I was going to do it. My goal was to automatically send money to my Sharebuilder accounts every week after I got my paycheck in order to save up enough capital to start buying stocks.

How I set up my Drips. First and foremost all DRIP investing is is buying stocks that pay a dividend and reinvesting the dividends paid into back into the stock. Sharebuilder is great, although I am sure there are many other online brokers who do the same, because I can automatically buy a stock and pay only $4 however, when dividends are paid out from the stock I can choose to automatically reinvest them into more stock at no cost. This creates a sort of compounding slow money growing strategy.

My simple plan for both my brokerage account and my Roth IRA to set up a plan that automatically takes a specified amount from my checking account every week after I get paid ($15 into my brokerage and $25 into my Roth IRA), and then to automatically purchase a stock of my choice when my Sharebuilder account reaches $104, because I have to pay a $4 commission I add the $4 so I can buy $100 of a stock at a time. Sharebuilder allows the purchase of partial shares so I buy by the dollar amount not the share amount. This is a painfully slow process but over time it is starting to show that it will eventually pay off, in just over 2 years my investments between the two accounts are currently valued at over $6200 (10-8-2009). If I had just put that money into a savings account or CD it would only have amounted to about $5000. Because it is the stock market and stocks rise and fall in value the returns may not be that high in the short term, but increasing my portfolio with long term solid dividend paying stocks I think is really going to pay off. Due not I started investing in a horrible downed economy, however, that has actually really jump started my ability to buy more with less thus far, a solid start. Next year, 2010, I plan to max my IRA (around $96 a week to hit the current $5000 max). I am no financial adviser nor pro stock trader, however, I do research and find what I think is a good stock or fund to invest in one at a time. I keep buying my single chosen stock until I have built a good amount of shares $100 at a time in my portfolio and then move on to the next choice. For anyone who thinks they can't invest in the stock market because it takes money to make money please get that out of your head. I am slowly revolving purchases and building up a small portfolio with great growth potential from nothing. I started my road to investing with less than $100, although I didn't make my first purchase until I reached $100. As I become better at my own money management I will continue to try and increase the amount I send to my Sharebuilder accounts every week in order to increase my investment amounts and recurrences. Don't let your small amount of capital discourage you, anyone can become an investor, and better themselves easily through self guided education, practice, and strictly following a simple plan.