Minimal Investment

**JulieAlbright** · 07-22-2014, 04:12 AM

Investing in small chunks like that, you will likely find more flexibility with ETF (Exchange Traded Funds) than mutual funds. Exchange Traded Funds are very similar to Mutual Funds in that what you are buying is a basket of stocks that are usually tied by some theme (US Large Cap, Emerging Markets �.) but the difference is that you can buy/sell them like stocks during the trading day. I'd suggest you take some time to learn about ETFs.

Most of the large name brokerages (Fidelity, Schwab etc) have a list of ETFs that they will allow you to purchase and sell commission free which is great when you are buying small amounts at a time. I'm not sure what the minimums are to open an account, but they are usually lower the minimums if you will commit to setting up a regular monthly deposit.

**feh** · 07-22-2014, 05:07 AM

Originally posted by T1985 View Post

I understand that most IRAs will allow small monthly deposits. However, taxed accounts seem different. If someone does not have $5K to invest initially I don't see many other options. Do any of you know of any companies (T Rowe, Vanguard, ETrade, etc) that will allow small investments? I would like to invest in mutual funds but it seems I would need a few thousand for each investment. I would like to invest in $500 amounts to start. Any ideas or info out there? I hope my question makes sense. If not I can clarify. Thanks

P.S. I do have an 401K but I would also like investments that I can sell in 5-10 years if needed.

A couple options:

find a fund with a low initial minimum contribution (some are as low as $500)
contribute monthly to the brokerage's money market fund until the balance is large enough to put in a fund
buy ETFs (as mentioned above), possibly exchanging them for a mutual fund when the value is large enough

Note that many brokerages have different versions of the same fund; the only difference is the minimum initial contribution and the expense ratio; the lower the ER, the larger the minimum balance. See VMLTX/VMLUX for an example.

**disneysteve** · 07-22-2014, 05:11 AM

I'm not positive but I think Scottrade also has commission-free ETFs and low account minimums.

I would not advise looking at ETFs as trading vehicles, though. Treat them just like mutual funds. Buy and hold for the long term.

**Petunia 100** · 07-22-2014, 12:48 PM

Scwab will open a brokerage account with $100 and offers free trades on a select list of Schwab ETFs. The list includes many stock and bond index funds, plenty to choose from to build a diversified portfolio.

The drawback with ETFs is you will always have a bit of uninvested cash just sitting there. That won't happen to you with a mutual fund.

**cardtrick** · 07-22-2014, 03:05 PM

I buy stocks in $5000 chunks to minimize the effect of commissions. I wait till I have $5K in savings and then transfer the money to my brokerage account. In the meanwhile, I have a few stocks and prices in mind. When something hits the price level I want and I have the $5K needed, I buy it.

**T1985** · 07-22-2014, 04:46 PM

Thanks everybody for the info. This info should help me get in the right direction.

**kv968** · 07-23-2014, 01:50 AM

Originally posted by disneysteve View Post

I'm not positive but I think Scottrade also has commission-free ETFs and low account minimums.

Scottrade doesn't have commission-free ETF's anymore. Vanguard, Schwab and Fidelity however do.

**disneysteve** · 07-23-2014, 05:52 AM

Originally posted by kv968 View Post

Scottrade doesn't have commission-free ETF's anymore. Vanguard, Schwab and Fidelity however do.

Thanks for the correction. I wasn't sure if they still did.

**JulieAlbright** · 07-23-2014, 07:12 AM

I know Schwab also lets you reinvest dividends back into partial shares on their ETFs - which helps to cut down on the uninvested cash. I don't know if Fidelity lets you do that or not.

Minimal Investment