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You're juggling like a mad woman. You're trying to pay the bills on time, get to work on time, pick the kids up on time, and maybe even have some time for yourself. The very notion of investing is enough to make you freeze like a deer in headlights, and where would that money come from anyway, right?
There are ways you can fit investing into your life that don't have to scare you silly. The strategies can be fairly simple and will make a big difference in your financial health down the road.
Little Amounts Add Up
Financial planner Ginger Applegarth, author of Wake Up and Smell the Money (Viking; April 1999; $23.95), puts it this way.
"When I started to see clients with Starbucks as line items in their budget, for instance, I began to run the numbers to show them the consequences of spending that little extra money on their coffee break. Let's say you spend $3 a day on cappuccino. Now let's assume you give up this small indulgence and invest that money in a retirement plan with a 10 percent yearly return instead. How much would you save over time?
- In ten years, $17,500
- In twenty years: $63,000
- In thirty years $180,000
- In forty years $484,600
Not bad, I say. And you don't need a fortune to get started. Many mutual fund companies, like Vanguard and Fidelity will waive or drop their minimum initial investment requirement providing you agree to sign up for an automatic investment plan.
That means that you let them take a pre-set amount, say, $50 or $200, from your bank account each month that goes straight to your mutual fund holdings. You can select this option by checking a box on the application for the funds and tell them what account to draw the money out of each month. The money goes without you even noticing it, and it grows over time.
Some mutual fund investments with solid track records include: T. Rowe Price Dividend Growth: 800-638-5660, www.troweprice.com Dodge & Cox Balanced: 800-621-3979 Vanguard S&P Index 500: 800-523-2566, www.vanguard.com
There are also a number of mutual fund rating services you can go to on the Internet like Morningstar.com that operate on a star system based on past performance. Remember, though, there is no guarantee of what is to come, but it's a good yardstick nonetheless.
Stocks Direct and DRIPs
In addition, more than 1,100 publicly trade companies now allow investors to buy stocks directly from the company without a broker with little or no fees. Most companies impose a minimum investment, generally between $50 and $1,000, but again if you agree to an automatic investment each month, many will waive that.
A growing number of companies are also making it easier for you to make investing a habit by allowing you to invest in their dividend reinvestment program, or DRIP. The plans take your dividends and use them to buy more stock for you. Some even let you buy the shares with dividends at a discount. That's simple, stress-free investing. Once you are in, you just let it ride.
Here are some sources to get information on companies that offer direct stock purchase programs, including minimum purchase requirements and fees:
No-Load Stock Investor: 800-233-5922, www.noloadstocks.com
Netstock Direct: 888-638-7865, www.netstockdirect.com
The Money Paper: 800-388-9993, www.moneypaper.com
The Individual Investor Revolution: Seize Your New Powers of Investing and Make Money in the Market by Charles B. Carlson (McGraw-Hill $21.96; 1998)