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Saving and Investing on a Shoestring:
Investing With Small Dollar Amounts
Debra Pankow, Ph.D., family economics specialist, and Marina Serdiouk, graduate student
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Types of Investments
Tax-deferred employer retirement plans
IRAs (individual retirement accounts)
Stocks Fixed-income investments UITs (unit investment trusts) Mutual funds
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Tax-deferred Employer Retirement Plans
Federal tax write-off for amount contributed
Tax-deferred growth of principal and investment earnings
Automatic payroll deductions
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Individual Retirement Plans (IRAs)
Tax-deferred growth of principal and investment earnings
Traditional IRA
Roth IRA
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Dividend Reinvestment Plan (DRIP)
Investment clubs Online investing Stockbrokers No-load stocks Buying stocks without
a broker
Stocks
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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
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Ratings Service
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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
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Mutual Funds
Minimum investments as low as $50 a month
Fees vary
Purchased through broker or direct from company
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Other Suggestions
Self-employment plan
Automatic monthly investments
Dollar cost averaging
Never too late to start!
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You can do it!