Most folks think you need a few thousand dollars to start investing.
If you follow a traditional route, that’s probably true. You’d need that much to fund a brokerage account and start buying a few stocks to start a nest egg.
But there’s a way that you can get started investing for as little as $50. In many cases, it’s more. But the secret is a simple one. Companies that pay out dividends to investors often have a plan that lets you directly invest in their shares. And you can set up recurring payments to add to your stake.
In return, the company will reinvest those shares for little to no fees—a far cry from the fees charged by most brokerage accounts. That’s huge. It provides income investors with an additional benefit that they can’t get from traditional brokerage investing.
This plan, where the company takes on the fees associated with recurring investments, can allow you to get started building a dividend portfolio for less than a nice dinner out for two or a tank of gas. Where it goes from there is up to you, and there is a risk to owning any single stock. But the advantage of getting into investing in high-quality companies throwing cash out to shareholders on a regular basis is too good to pass up.
These dividend reinvestment programs or DRIPs are a secret way to get your investment portfolio started on a budget. Many companies will even throw in some advantages that a brokerage account just can’t offer. For the right companies, this may be the best, lowest-cost way to start compounding your wealth with dividend stocks.