Saving and Investing on a Shoestring:

Investing With Small Dollar Amounts

Debra Pankow, Ph.D., family economics specialist, and Marina Serdiouk, graduate student

Types of Investments

Tax-deferred employer retirement plans

IRAs (individual retirement accounts)

Stocks Fixed-income investments UITs (unit investment trusts) Mutual funds

Tax-deferred Employer Retirement Plans

Federal tax write-off for amount contributed

Tax-deferred growth of principal and investment earnings

Automatic payroll deductions

Individual Retirement Plans (IRAs)

Tax-deferred growth of principal and investment earnings

Traditional IRA

Roth IRA

Dividend Reinvestment Plan (DRIP)

Investment clubs Online investing Stockbrokers No-load stocks Buying stocks without

a broker

Stocks

Fixed-income Investment

“Loanership” investment

Treasury securities: Treasury bills, notes and bonds require $1,000 minimum investment

Exempt from state and local income tax and subject to interest rate risk

Purchased through a Federal Reserve Bank, financial institution or broker

Other types: municipal, corporate and zero-coupon bonds

Ratings Service

Unit Investment Trusts (UITs)

Long-term investment

Minimum investment is $1,000

Less expensive way to purchase bonds

Purchased through a broker

Interest income may be taxable

Mutual Funds

Minimum investments as low as $50 a month

Fees vary

Purchased through broker or direct from company

Other Suggestions

Self-employment plan

Automatic monthly investments

Dollar cost averaging

Never too late to start!

You can do it!