The Cheapest Ways to Invest in Stocks

by Walter Johnson ; Updated July 27, 2017

The stock market is volatile. This keeps investors away and into more stable assets like gold or bonds. There are ways to invest in the stock market with little money. Using the Internet is an excellent way to begin investing, as online services are now in competition to get the business of the small investor who no longer wants to deal directly with the major brokerage houses.

Execution Only Brokers

Some stockbrokers serve only as buyers. There is no advice or other normal stockbroker services. This is a “no frills” sort of broker that can be quite effective if you think you are competent enough to research stocks on your own. “Execution only” brokers charge a minimal amount and might serve as an excellent way to invest without substantial brokerage fees.

Mutual Funds

Investing in mutual funds can be a cheap way to get a “basket” of diverse and well-chosen stocks without a substantial initial investment. A mutual fund is a large investment made by a number of people, each investor advancing a small amount of money. This could be a way of entering into the market with a small amount of money, with an eye to building, eventually, a substantial portfolio.

Investors' Clubs

This is almost a “cheap” version of a mutual fund. Investors' clubs are informal gatherings of those who are interested in seeing their money grow in the market and other investments. They research stocks and give advice based on their experiences. Investments can be made together, saving money on brokerage fees and reducing the initial investment in the market.

Direct Purchase

Some major players in the corporate world such as General Electric or Home Depot offer programs for small investors to get their foot in the door quickly with small amounts of cash. This is not a way to get wealthy, since these are very stable stocks with predictable dividends, but serve as a great way to enter the market and begin building a portfolio for little cash.

Online Buying

Online purchasing is usually cheaper because the brokers involved have less overhead, and there are organizations online such as ShareBuilder.com or Buyandhold.com that serve the community of small investors. ShareBuilder has no minimum investment and no inactivity fees. It also serves as an alternative to mutual funds in that it has a “basket” program for small investors to buy into groups of stocks. Buyandhold.com serves the small, but active, investor in that it does charge per purchase, but works by subscription. As of 2010, this service charges a $15.99 fee monthly for unlimited trading.

About the Author

Walter Johnson has more than 20 years experience as a professional writer. After serving in the United Stated Marine Corps for several years, he received his doctorate in history from the University of Nebraska. Focused on economic topics, Johnson reads Russian and has published in journals such as “The Salisbury Review,” "The Constantian" and “The Social Justice Review."