How to Invest in the Stock Market on a Limited Budget

You have finally decided that you have to do something more to prepare for your future retirement, but you also do not have very much available money. You have met with the financial advisors, but they want you to commit more money per month than you really have. What can you do? Where should you start?

How about Sharebuilder at www.sharebuilder.com? This investment site allows you to purchase shares in any amount, even partial shares. If you have only $10 a month to invest, you can buy a partial share of some company and then the next month you can purchase another partial share. Eventually you'll have one share and then multiple shares, and then eventually you'll have a lot of shares.

Sharebuilder is a very easy web site to use. After signing up, you can research the stocks you are interested in and place either a one-time or a recurring purchase order in. Sharebuilder also allows you to buy on demand or purchase on a set schedule (weekly or monthly). As with any stock purchases there are set fees that are involved. For the on demand stock purchases, the current fee is around $14.95. However, if you go with a scheduled purchase, they drop the fee to only $4.

Now for an example. Let's say that you decide you have $20 per month that you are willing to use to invest in the stock market. After signing up with Sharebuilder and completing all the required funding information, you research the stock market and have decided to purchase some shares of Alcan, Inc. Their stock symbol is AL and at the time of this article it was trading at around $100. For the sake of this article, we'll use $100 even. After subtracting $4 for the transaction fee, that leaves $16 to actually put towards the share of stock. Sharebuilder then credits your account with .1600 shares of the stock. After approximately 5 months, you'll have accumulated an entire share of this stock. Very few companies allow you to purchase only one share of stock, let alone partial shares.

As the price of the stock goes up, the dollar value of your investment increases. After you've made enough money on the price of the stock going up, you could then sell your shares of the stock for a profit. You could then keep the money or you could roll it over into a new investment. With a little bit of patience and some good research (and maybe a little bit of luck), you can grow your $20 a month into a small fortune for your retirement. Do remember that the stock market is variable and that most professionals agree that you should be in it for the long run. Over time, many investments gain significant value although in the short term they could be very up and down.