Low cost investment options

You would like to take some of your extra money and use it to invest with. However, you may not have a lot of money to use for investing. This is where some low cost investment options will be good for you to consider.

Some of low cost investment options include mutual funds. Mutual funds can be any type of stocks, bonds and short term money market accounts. Because mutual funds are based off of money from a lot of different people and then pooled together for investments. Transaction costs for many mutual funds are divided among all the mutual fund shareholders making it very cost effective. Mutual funds are best managed by a funds manager for the highest return on your investment. With the wide range of options for mutual funds and the many low cost options that are available this is one of the most widely used investment options.

One of the best low cost investment options for mutual funds is thought to be index funds. These types of mutual funds aim to replicate the movements of an index in any specific financial market. Computers typically generate the index funds and so this is considered a form of passive management. Index funds are a type of low cost investment option because of the lack of active management. This gives the investor lower fees and lower taxes to pay.

There are other options available for a low cost investment option. One of those options is considered as one of the best ways to invest small amounts of money cheaply. This low cost investment option is called Dividend reinvestment plans or DRPs, commonly referred to as Drips. This type of investment along with Direct Stock Purchase Plans or DSPs, allow an investor to bypass the brokers and lets you by stock directly from the companies.

With either of these plans you buy the stock from an agent of the company and will not end up paying any commission to the broker you bypassed. These stocks are offered by thousands of corporations with low to no fees. Many of those corporations or companies offer these stocks options to their employees as an employee stock purchase plan that employees can opt in whenever they want.Because there are few fees associated with these plans it is easy to invest twenty or thirty dollars at a time. The ideal use of Drips is for people starting out with investing and can only invest small yet frequent amounts at any given time.

Drips are thought to be one of the surest and steadiest ways to build wealth over a lifetime. You can set up automatic payment plans to buy the company's stock and your money is then allocated to buy shares. There is not a requirement to buy a full share of stock each time but when there is enough money the share of stock is automatically purchased. When using Drips or DSP's for a low cost investment option you will need to keep good records for tax purposes.
Regardless of the current housing slump many investment brokers are still saying that realty can be a low cost investment option. Perhaps realty is more so a low cost investment now because there are more home foreclosures than ever before. However, buying a home now may have you holding onto the realty investment longer than you anticipate. Be careful before using realty as a low cost investment option. There are deals to be had but if not carefully thought out it could lead to the same problems we are seeing now.