Investing 101 How Can I Start Investing in Stocks with Very Little Money? Read the Article Open Share Drawer Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on Tumblr (Opens in new window)Click to share on Pinterest (Opens in new window)Click to share on LinkedIn (Opens in new window) Written by Mint.com Published May 8, 2012 4 min read Advertising Disclosure The views expressed on this blog are those of the bloggers, and not necessarily those of Intuit. Third-party blogger may have received compensation for their time and services. Click here to read full disclosure on third-party bloggers. This blog does not provide legal, financial, accounting or tax advice. The content on this blog is "as is" and carries no warranties. Intuit does not warrant or guarantee the accuracy, reliability, and completeness of the content on this blog. After 20 days, comments are closed on posts. Intuit may, but has no obligation to, monitor comments. Comments that include profanity or abusive language will not be posted. Click here to read full Terms of Service. Recently on the mint.com Facebook page, a reader asked a common question: Any investments for people with very little money to invest? Normally, my response to this is the one nobody wants to hear: put the money in a savings account or savings bond, check out a book about investing from the library, save more money while you read the book, and start investing once you have the $1000 minimum to open an account at a big mutual fund house like Schwab or Vanguard. I stand by that advice. (My favorite introductory investing book is Elements of Investing, by Malkiel and Ellis.) But it doesn’t actually answer the question, does it? Maybe a kid wants to invest a $100 birthday check from Grandma, or maybe you want to get started on retirement savings right this second, before you change your mind. Those are good reasons. Twenty years ago, the answer would have been depressing: you could buy a couple of shares of stock in a company or two, and pay a hefty brokerage fee for the privilege. You’d be down a few bucks from day one (thanks to the fee) and dangerously undiversified. Technology and years of brokerage price wars have changed all that, to the point where, for less than fifty bucks, you can buy a fully diversified portfolio of thousands of stocks and pay pennies in expenses. So I went looking for an online brokerage that treats the low-dollar investor right. These were my criteria: No minimum opening balance—in fact, no minimum balance, period. Access to diversified, low-cost, commission-free stock and bond ETFs. (“Commission-free” means you can buy and sell them without paying a fee.) No other fees. If you’re investing $100 and get slapped with an $8 fee, you’ve just lost 8% of your portfolio. Choice of IRA, Roth IRA, or taxable account. This is a pretty strict list of demands. There are a lot of discount brokerages out there, but this narrows them down to two. This is not to say these are the best brokerages overall, just that they’ll take you in and treat you right if you only have a single Benjamin. Let’s go investment shopping The two finalists are: TD Ameritrade. Offers over 100 commission-free ETFs including top brands like iShares and Vanguard. For $100 you can buy two shares of Vanguard Total World StockETF (VT). When you buy a share of this ETF, you literally own a tiny slice of over 3500 stocks from companies the world over. Want to add bonds? TD offers plenty of good bond funds, too, like iShares Treasury Inflation-Protected Securities ETF (TIP) and Vanguard Total Bond ETF (BND). Bond funds tend to cost a little more per share than stock funds, but still, for under $200, you could buy (prices as of May 2, 2012): VT (2 shares): $95.40 BND (1 share): $83.69 Total: $179.09 (53% stocks/47% bonds) It would be hard to come up with a much better portfolio than that, even if you were investing a million dollars. Firstrade. Offers 10 commission-free ETFs. Sure, TD has ten times as many free ETFs. But it only takes a couple of good ETFs to build a solid starter portfolio. Among Firstrade’s offerings, I like the iShares S&P 500 ETF (IVV), which holds the 500 biggest US companies, and the Vanguard Intermediate-Term Bond ETF (BIV), which invests in high-quality corporate and US government bonds. Unfortunately, the iShares ETF breaks the bank: its share price is over $100. My second choice is the Vanguard Dividend Appreciation ETF (VIG). At only 134 stocks, it’s not as diversified as the iShares fund, but your portfolio isn’t going to be stuck at $100 forever, and VIG is a perfectly respectable introduction to the ups and downs of stock market investing. One warning: when you buy a commission-free ETF at TD or Firstrade, you have to hold it for 30 days before selling or pay a hefty fee. Since you’re putting this money away for the future, and “the future” isn’t going to be here two weeks from now, I trust this won’t be a problem. What are you waiting for? You hear people complain that the deck is stacked against the small individual investor. Well, there has never before been a time when the small investor could get into a fully diversified portfolio for under $200 without paying a dime in brokerage fees. Plus, you can do it all in a few minutes in your pajamas. Guess it’s time for me to update my advice. Do you have a question for one of the MintLife experts? Head over to the mint.com Facebook page and ask away! Matthew Amster-Burton is a personal finance columnist at Mint.com. Find him on Twitter @Mint_Mamster. Previous Post The Difference Between Active and Passive Investing Next Post Tried and True Money Advice From Warren Buffett Written by Mint.com More from Mint.com Browse Related Articles Mint App News Intuit Credit Karma welcomes all Minters! Retirement 101 5 Things the SECURE 2.0 Act changes about retirement Home Buying 101 What Are Homeowners Association (HOA) Fees and What Do … Financial Planning What Are Tax Deductions and Credits? 20 Ways To Save on… Financial Planning What Is Income Tax and How Is It Calculated? Investing 101 The 15 Best Investments for 2023 Investing 101 How To Buy Stocks: A Beginner’s Guide Investing 101 What Is Real Estate Wholesaling? Life What Is A Brushing Scam? Financial Planning WTFinance: Annuities vs Life Insurance