Where to Start Investing When You're Broke

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    Where to Start Investing When You’re Broke

    1. It’s so important for people to know how to get start for next to nothing. Like you mentioned, there are several places to get started. USAA also offers mutual funds with $100 minimums, so there are plenty of options. I’m a fan of starting with a small fund until you reach the point where you can upgrade to a better fund that may have a higher minimum investment.

    2. I hate the minimum balance requirements for trading, but that’s because I hate financial prejudice period. That being said, Motif allows you to trade for a $250 minimum. Also Drive Wealth specifically targets millennials and allows you to trade for a minimum of $50.

    3. Gretchen says:

      OMG, it’s like you wrote this for me! I have to say that I am a huge betterment fan – because I (and they) believe that everyone can save $100 a month. It’s really pushed me to make investing a priority!

    4. Hannah says:

      Sharebuilder 360 would ends up being pretty high fee if you are at low investment levels but its dang simple and connects to CapitalOne360. I use it, but I should probably jump on that Vanguard bandwagon now.

    5. brian says:

      I know that minimums can be a bit of a bummer when you are first starting out, but to my knowledge when you are investing through a 401k at work there are no minimum requirements. For that reason, I don’t think anyone should really be investing on their own outside of a 401k until they have one in place at work and are at least banking the company match. That should get most people around this small problem.

      • Stefanie says:

        I know a lot of millennials who don’t have access to employer 401ks (I’m one of them), which leaves the onus of retirement planning on the individual. Even if they eventually get that benefit later down the career line, taking responsibility for retirement and opening an IRA is a great way to make sure valuable time isn’t wasted waiting for a 401k opportunity that may or may not come.

    6. Right now, we’re just trying to fund our IRA and, next year, a SEP IRA. But once we can do that, I’ll probably trust Vanguard to deal with it for me. I hear it has some of the lowest fees, and it has a good history of reasonable returns.

    7. Good post Stefanie! I always hated speaking with people who had little options of where to invest – either because they did not have access to a 401(k) or had little funds to start with. Thankfully, more options are starting to come out now which makes it great in terms of lowering the barrier to entry.

      I know Shannon already mentioned Motif, and Betterment is a good option. Some other ones to look at are OptionsXpress – they’re targeted at options trading BUT they’re a part of Schwab who has about 100 $0 commission ETFs and OptionsXpress does not have a minimum balance requirement. Sharebuilder is another decent option to look at and then there are newer options like Acorns -or Robinhood – but haven’t taken a serious look at the latter two myself. The key, is to not let the amount you’re starting with hold you back but to actually start. Everything will take care of itself after that with the right mindset.

      • Stefanie says:

        Thanks for the suggestions John. I’m going to have to check out all these alternatives and turn this into a monster resource post. Like you said, don’t let the amount you’re starting with hold you back from starting!

    8. Ashley says:

      I have heard (haven’t verified) that Fidelity will wave the minimum balance requirement if you sign up for automatic monthly investments. I was able to come up with $1000 for the Vanguard account otherwise I would’ve further investigated this option with Fidelity.

      • Chelsea says:

        Yes, Fidelity does waive their $2,500 minimums if you agree to a monthly minimum investment with them. (Some accounts have to be $200/month though, which was fine for me but might not be for others.)

        I started my investing with them, and I’m super happy. Plus their customer service is incredible.

    9. Thanks so much for the great info! I do have a 401k at work, but would like to do something more proactive with my savings. I´ll definitely look into these.

    10. I have been really happy with Betterment and I love the idea behind Motif. There are options out there is you look. Thanks for putting a few in one place.

    11. Brian says:

      Schwab gets over looked a lot, but you can invest in their ETFs (as low if not lower fees than the beloved Vanguard) free and most of their mutual funds are also no Load. I believe the account min is only $1K and it is waived if you just do $100/month transfer, so 10 months in you no longer ever have account fees. You can also sign up for their online checking account which has ZERO ATM fees and ZERO foreign transaction fees which is great if you travel overseas.

    12. lbi says:

      This is a good article that I hope encourages people to invest some money. Even if you don’t have a lot of money, the earliest money you invest will get the highest return since it will potentially be invested the longest.

      But, I think there needs to be some more clarification on the fees, a little more info is here.

      Betterment is more expensive then presented here. The fees that Stephanie mentioned are the account fees. This does not include the fees for the ETFs themselves. The ETF fees still aren’t that bad, from 9- 17 basis points. This means that your total cost for a small investment (under 10K) could be as high as 0.52%. This is still not horrible. Many employer retirement plans charge more than this for typical funds.

      Betterment is providing service where they help you pick out funds. If you don’t know what to invest in, this could be helpful.

      The cost to invest at TD Ameritrade can be a lot lower, but you don’t get specific assistance to pick investments. For younger people I recommend the Vanguard Small Cap Value fund, VBR (expense ratio of 0.09%). The commission free ETF list is about 100 choices. Most of them look like acceptable choices.

    13. I didn’t have a problem with minimums when I got started with Vanguard because my first “deposit” was a 401K I rolled over from an old employer. I’m now hooked on Vanguard because of their incredibly low cost funds, almost nonexistent fees, and perks.

    14. Syed says:

      Just did some research on this myself and Betterment is a great option. Another good one is Acorns, which is a mobile app which invests your “spare change”, similar to Digit. There is so minimum balance fee and it’s a nice way to get into the world of investing.

    15. MeatballYang says:

      Robinhood.io is a new startup brokerage with a modern mobile app, zero commission trades, and no minimum balance. They had a long waiting list, but I think they are accepting many account openings, and have a dead-simple application process. Having worked in a large hedge fund and personally traded for years, I definitely recommend them – it’s no scam, and they are really disrupting the discount brokerage industry. Also just want to say I’m impressed with the Brokeandbeautiful message, and confident that whoever finds it will be better off.

    16. Kelly says:

      Once you find out where you want to invest, I highly recommend an investing newsletter or blog so that you can learn more. The Motley Fool has a good newsletter that will recommend stocks and share why.

    17. My very first investment was just $70 into peer-to-peer lending, and over the years it has paid off for sure. I could have put more into (I had more), but I was more worried about whether it is worth it. Over the years I have increased the amount and diversified.

    18. When I was broke and wanted to invest, I started with a plan and a goal that I could get enough money for me to be able to invest. That was when it brought me to making money online like doing freelance writing and blogging. That experience of mine helped me be an investor.

    19. Mel says:

      The minimum investment held me up for a while back when I opened my IRA. I lucked out that I was working at sea then with a largely disposable income, so the $2,000 to open my account was not impossible to come up with. Several companies though will allow you to skip the minimum investment if you’ll agree to $50 or $100 withdrawals direct from your savings account each month. That made me way more uncomfortable, but could work for people with steadier streams of income.

    20. gg says:

      HI Stephanie,

      it’s actually “taking the REINS”.

      Enjoying your blog, your post about selling on ebay was very thought-provoking!

    21. EC says:

      I got to your blog from auditionupdate and now I’m scanning blog posts and I love what I see already. I have a child who is currently in college for a BFA in MT and I’m a single mom making not much money…AT ALL and this all just scares me. I, myself, have NO savings, no retirement fund because losing my job in 2010 and being out of job for 2 years AND still not being back to the salary that I had when I was laid off has devastated me. I want to do better and feel like I can’t but I CAN start even if it’s small. Thank you for this.

      OH and my child is now thinking of leaving college and heading to NYC for training so I shared posts with her too!

      Thank you!

      • Stefanie says:

        So glad you found it helpful. Big change happens in small steps, keep going and you’ll start to gain momentum toward your financial goals. You are doing better just by reading and learning 🙂

    22. I think the most important fact is actually setting something up with an online broker. Most places will let you establish the account, and you can set up monthly recurring funds held into a cash money market account. After you do that for a few months then you can move over all the money into a index mutual fund or ETF. Most of the options mentioned in the comments are good choices.

    23. congratulations on your book, stefanie! i’m a big fan of berkshire hathaway B shares! they’ve made me a ton of money. also a big fan of vanguard as well.

    24. […] can set up your own retirement portfolio with as little as $100 […]

    25. Tamara says:

      I think the app ‘Acorn’ is great for starting out with minimal investment.

    26. Very Nice Article. Keep up the good work. I will start working on my investments soon. thank you

    27. […] Whatever you decide, remember the value of investment growth. You’re not going to be able to leverage your earnings in checking or savings, and if limited earnings are a part of your financial reality, you’re going to need all the leverage you can get. – Stefanie O’Connell stefanieoconnell…. […]

    28. […] Whatever you decide, remember the value of investment growth. You’re not going to be able to leverage your earnings in checking or savings, and if limited earnings are a part of your financial reality, you’re going to need all the leverage you can get. – Stefanie O’Connell stefanieoconnell…. […]

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