We've all heard of it, but we rarely decide to go ahead and actually do it. Let's say your investing limit is $200. You'll find yourself asking questions such as: Where do I begin? What investment vehicles should I start with? Will I need a broker? These are not easy questions to answer, but the good news is that everything is up to you.

The first thing you should consider is diversification. This is the art of spreading your money across different stocks or investment vehicles, reducing the risk of losing all of your money in just one investment. You also don't want to spread your money so thin that it doesn't actually grow--with only $200 it's definitely a balancing act.

Here's the breakdown on what all those investment vehicles are and what the acronyms mean:

Stock is a kind of security that represents partial ownership in a corporation. Stock is broken into shares, or portions of the company that you own. For example, you buy four shares of Target (NYSE: TGT) and it goes up a dollar, then boom, your investment is now worth four dollars more.

If you're going to buy individual stocks, you need to do a lot of research on individual companies before you buy. Start at finance.yahoo.com and fool.com for pricing, info and advice.

These plans take the money you make (cash dividends) from your initial stock purchase and reinvest it back into the company for more stock. The only downside is that you are in a long-term relationship with the company, so if the company's value decreases so will the value of your investment.

ETFs are funds made up of stock and/or bonds. You buy shares of the fund and the shares are traded like individual stocks on the stock exchange.

Mutual funds are another very common fund option, but minimum investments usually fall between $1,000 and $10,000, so they're not an option with only $200.

You don't buy IRAs, but they are a type of account that lets you invest in stocks, funds, bonds, etc. IRAs work on the principle of compounding, which means that your gains are reinvested along with your initial and subsequent investments -- this grows your money exponentially over time. To learn about IRA options and restrictions on deposits and withdrawals, search "IRA Center" at fool.com.

For more detail on investing and specific requirements for individual stocks, DRIPs, IRAs, and ETFs, check out fool.com and investopedia.com.

Let's say you've decided to invest in a company or fund. How do you buy into it? First, visit your financial institution and meet with the financial advisor about setting up an investment plan. They can help you get connected with a stockbroker or brokerage firm.

With $200, you're probably going to want to use a discount broker. They usually offer a narrower range of services than full-service brokers, but their fees are lower. Discount brokers typically charge $5 to $25 transaction fees, don't do the research for you, and are paid on salary rather than on commission. Check out websites such as sharebuilder.com and firstrade.com, which don't have minimum balance requirements and make it possible to buy and sell stock online.

In the end, remember that with stocks, high potential gain often entails high risk too. If you can't afford to lose that $200, you should step back and consider your options before betting the farm.

Sources: money.cnn.com; fool.com; moneycentral.msn.com; investopedia.com; bankrate.com; investorwords.com; finance.google.com