How to Buy Stocks on a Budget

Video Transcript

"Hi, there. I'm Cathy Pareto, the founder of Cathy Pareto and Associates, certified financial planner, here in Miami, Florida. In this clip, we're going to talk about how to buy stocks on a budget. Now, what does that really mean? In my mind, that means how can I acquire some equity exposure if I'm on a budget and have limited funds -- say, maybe 50 dollars or 100 dollars a month? I would probably suggest to you that you not consider necessarily buying individual stocks on a drip...a dividend reinvestment. Instead, if you're on a limited budget and you want as much diversification as you can, I would go directly with the fund family -- something like Vanguard or Fidelity -- and get yourself on a regular monthly dollar cost averaging program, where you're buying, according to your budget, say, 50 dollars worth every month. But buy one mutual fund -- hopefully a no-load mutual fund -- that has thousands of companies in it at once. And again, you're not then subjecting yourself to individual stock or company risk. So if you're on a budget and there's...you know, the dollar only goes so far, and you want to start investing, that's how I might do it. Spread your risks as far as you can through a monthly investment program directly with the mutual fund, which should bypass any transaction fees. So that's a little bit about how to buy stocks on a budget, and this has been Cathy Pareto in Miami, Florida."