Each week, one of our investing experts will answer a question from one of our readers in our new InvestingAnswers' Q&A column. It's all part of our mission to help consumers build and protect their wealth through education.
If you'd like us to answer one of your questions, please email us at firstname.lastname@example.org and include"Investing Q&A" in the subject line. (Note: We will not respond to requests for stock picks.)
Q: Do you have any advice for someone with little disposable income and no stock broker to get started in investing? -- Richard H., Tulsa, Okla.
This week's question will be answered by our investment analyst Christian Hudspeth:
A: That's a great question, Richard. First, I'd like to say congratulations on deciding to invest some of your extra cash right now instead of waiting until you have "enough." Too many of us never even get started because we've decided that investing is too difficult or too expensive.
Fortunately, neither of those are true anymore. Opening an online investment
or retirement account with a broker
like TD Ameritrade, E*Trade, Scottrade or Capital
One's Sharebuilder only takes about 20 minutes, and most discount brokers
charge you less than $10 per online trade.
As a buy-and-hold
investor, I prefer Sharebuilder. For those who like to invest on a regular basis
strategy known as dollar cost averaging
), Sharebuilder allows you to schedule automatic trades on a weekly, biweekly or monthly basis for only $4 per trade. It lets you buy partial shares,
too -- just invest a set dollar amount you can afford. (There's no minimum investment
For example, let's say you have $100 of extra cash
per month to invest and you want to buy a stock
. Simply set your monthly schedule, and $100 will
be automatically withdrawn from your bank account each month to buy $100 worth of the stock
you want. If you want to change your stock
choice or investment
amount for the next month, you can edit your schedule to fit your needs.
have made investing
much more affordable and accessible for everyone, which is great for those looking to make serious headway toward larger financial goals. (To learn more, see 6 Low Commission Brokers That Make Our Cut
One more tip: If you're saving
for long-term financial goals, such as retirement or a down payment for a house, consider opening a Roth IRA
or traditional IRA
rather than using a taxable investment
account. IRAs and Roth IRAs can save you thousands in taxes
, and you can still access your money
for certain qualified expenses. (For more on this, see the 5 Safe Ways to Tap Your Roth IRA Before You Retire
Here are some other great articles for those who are just starting to invest: