Buy Like Buffett: Three Easy Ways to Start Investing in the Stock Market

It's easier than ever today to get started investing in the stock market. The rise of traditional brokerages, discount brokers and boutique firms has given investors a number of choices. There may be hundreds of places bidding for your dollars, but there are only a few good options if you want to keep your costs to a minimum.

Let's take a look at the three most cost-efficient ways to invest.

1. Direct Stock Purchase Plans
   
   Did you know that you don't have to go through a brokerage firm to invest in the stock market? You can eliminate the middle man and buy direct! Direct stock purchase plans let investors buy stock right from the company itself and pay very low fees. Most brokerage companies charge fees that range from $10 and up. Direct stock plans only charge a one time small initial enrollment fee. The advantage of these plans is that you don't have to keep paying commissions to a brokerage every time that you buy stock. This helps you to keep more money in your investment account and less in your broker's bank account.


2. Dividend Reinvestment Plans
   
   Dividend reinvestment plans are another great low cost option for investors that want to buy shares of a company's stock. These plans are referred to as DRIPs. DRIPs allow investors to easily reinvest their dividends back into the company's stock so that they buy more shares. They are very similar to direct stock purchase plans with only one glaring difference:  Dividend reinvestment plans require you to be an existing shareholder of a company's stock whereas direct stock purchase plans do not. The good news is that you typically only have to own one share of a company's stock to be eligible to participate in a dividend reinvestment plan.


3. Small Discount Online Brokers
   
   Everyone knows about the larger discount brokers like e*Trade, TD Ameritrade and Scottrade. These brokers offer a plethora of services but require at least $500 to get started investing. Sharebuilder and BuyandHold have much lower minimum and lower trading fees. These brokers have scheduled buying windows each week that let brokers buy as much stock as they would like for $3 to $4 per trade. Opening an account just takes a few bucks to get started. While these brokers do no offer all of the services of the bigger brokerages; they are a great value for the small investor.

The advantage of all of these investment options is that they don't require a lot of capital to get started. Small investors can start buying shares with anywhere from $25 to $50 dollars. So, what are you waiting for? Get started today!

Mark Riddix is the founder and president of New Horizons Financial Management, an independent investment advisory firm that provides personalized investing and asset management consulting. Mark is a regular contributor to Seeking Alpha and has written financial columns for Baltimore and Washington, D.C. area newspapers. Mark publishes his own financial blog, BuylikeBuffett.com and has written the book Your Financial Playbook.