Investing small amounts can add up to large sums of money.

You have been working hard most of your life and tucking those dollars away, has been all but easy. Is a savings account the best place to keep you money? Not likely. If your putting this money away for investments then the answer is simple, start investing. There are a number of excuses people give for not investing, but the number one is “I don’t have enough money”, and my answer to them is, “Not true!”. There are many choices out there for the small investor, and by small I mean 20 to 40 dollars a month. If you can’t manage that then stop reading because you are definitely not ready to start investing. For those that can swing that amount then it’s time to drop the excuses and put your money to work.

Direct stock purchase plans

Just like it would be a whole lot cheaper to get water from mountain springs yourself, then buying it bottled from your local convenient store. You can skip right over the brokerage per trade fees, and go straight to the source. Companies offer direct stock purchase plans (DSPs) also referenced as Drips.

Drips and DSPs vary from company to company, but they are usually very similar. Some charge you a few pennies per share every time you buy; others charge nothing at all (Nothing at all sounds the best). Another option that might be offered is to permit automatic regular purchases, meaning they take the money directly from your bank account.

Dividend reinvestment plans

This is another way you can bypass the broker and go directly to the company, but unlike the direct stock purchase plan, this type of investment requires for you to own at least one share of the companies stock under your name. This share can be purchased trough a broker of your choice or a Drip service. If you use a brokerage to purchase a share or shares, be sure it is put under your name not the name of the brokerage firm.

With a dividend reinvestment plan you are basically buy fractions of the companies stock without paying the brokerage commission fees. Any dividends that are given to you by the company are reinvested, and reinvested dividends can add up. A $1000 dollar investment over a 20-year term can easily become a cool $50,000 with the right blue-chip company. Go ahead ask your bank if they can give you anything close to that return in a savings account over a 20-year period.

It is obvious that both of these types of investment are for the long run, and any stock fluctuation has to be easily dismissed. Your stock position will be built over several years, and the price you pay will be the average between the bull market and the bear market. Meaning sometimes you purchased stock at $50 per share, and others at $30 per share giving you an average purchase price of $40. But if it's the start of your investing endeavor, or you dont have much to invest, both of these are great options.

Banking Bankers bottom line “Saving accounts don’t pay much, and it’s definitely not way to invest.”