by Daniel Xiao Wang

Created on: December 29, 2008

History has shown that investing in the market for the long term is one of the best ways to grow your money. One of the common excuses for not investing is that would-be investors just don't have the large amount required to establish an account.

While there are many brokerages that require large minimum investments that are some that have low or no minimum investments. These are discount brokerages where you, as the investor, do not require the services of a professional advisor.

Not needing a large initial sum to open the account is only the first obstacle for those that cannot commit large sums to invest. What can someone that can only afford a little bit here and there do to invest and have their money growing for them?

The answer is an investment strategy called dollar cost averaging. Here is how it works:

1) Using your chosen online discount brokerage chose the investments you would like to make on a periodic basis and how much you could reasonably afford to invest

2) Pick a convenient day, your payday works best

3) Assign an automatic transfer into your brokerage account on that day that will invest in your chosen investments

Your investment amount can be almost any amount. Keep in mind that your discount brokerage probably has a fee every time you invest, so investing ten dollars at a time and paying a six dollar fee may not be such a great move.

Your small amount will purchase shares at the then current price, allowing you to slip into the market gradually and spread out your risk. Since you are entering the market gradually at a set dollar amount you don't have to come up with a large lump sum in order to invest. If you invest on your pay dates you are essentially paying yourself first and building real savings.

Also, if you take it directly out of your paycheck you will never see it. If you never see it you will never miss it.

Dollar cost averaging is an excellent tool, even if you are an experienced investor. In addition to allowing you to invest with small sums of money it will spread out your risk, allow you to purchase shares at various prices, and help you accumulate shares quickly.

Having little or no money to invest should not be a road block to investing. Using the dollar cost averaging strategy can help minimize risk while allowing you to invest with small sums of money. All that is needed is a discount brokerage account and the willingness to divert a small portion of your pay, the dividends from these actions could be well worth it.

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