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Investing Options:


Investing Options:

Stock Market:

Buy stock directly with Dividend Reinvestment Plans ("DRIPs") or Direct Stock Purchase Plans ("DSPs"). Most plans will require a 10,000/- minimum investment. Look for no-transaction-fee plans, and research any companies that offer such plans. With these you don't have to deal with brokers (or pay their commissions) because you buy stock straight from the company.

Not all companies offer this option. You'll have to search for the companies that offer direct purchase programs.

In most cases you can make a one-time purchase or set up an automatic periodic-purchase plan. The latter is a disciplined and cost-effective way to build up a stock portfolio.

There may be a nominal commission or a minimum purchase requirement.

The main difference between DRIPs and DSPs is that to participate in DRIPs you must already own at least one share of the company's stock. You then collect your dividends in the form of additional shares instead of cash.

Does it have a monthly minimum investment? If so, that might affect your willingness to begin investing with that company.

Does it involve a relatively high fee to sell shares later? That might be an issue if you should prove to be an active trader. In general, you should use DRIPs only to buy high-quality stocks you plan to hold for a long time, so the sales charges will not be so important. If you intend to trade often, you should open a discount stock brokerage account that features low trading fees.




Mutual Fund:

Look for mutual funds with a low minimum-purchase requirement. Some mutual fund companies will allow investors to start investing with small deposits, but you'll have to agree to an automatic investment plan whereby you let them deduct a fixed amount from your bank account every month for the purpose of buying additional stock. Such investments can be as little as 100/-. You may also be asked to start off with a small one-time investment, sometimes as low as 100/-. As noted, this is an easy and relatively inexpensive way to build up a stock portfolio.

Invest in Index Fund:

Invest in an index fund which tracks the broad market. Through boom years and recessions, mutual index funds that track the S&P NIFTY  index have returned about 10% a year. That is a decent return on your money, and there are many non-index funds that fail to make that much for their clients. There are many other indexes you can choose to track that may produce even greater gains. Once you choose an index fund and make your first contribution, you can add as much money as you want as often as is convenient without any additional costs or commissions. You are also free to stop investing whenever you want. Dealing directly with a mutual fund company in this way, you don't have to pay any broker's commissions.