I guess I have been talking to you a lot about penny stocks, and now I wanted to share some ideas based on research that I did about how you can get in the investing game by just putting aside a $100. I think the best way would be to look at minimizing the trading/commission costs involved.
There are some brokers that do not require a minimum deposit such as ShareBuilder, Charles Schwab and Zecco. However, Schwab tends to have higher transaction costs at $8.95 a trade whereas the charge at ShareBuilder is $4 per trade, and Zecco is $4.50. But I want to point out here that the cost to sell shares at ShareBuilder is $9.95.
In addition to Zecco charging $4.50 for all trades, there is also a valuable benefit awaiting once your account value gets to the $25,000 mark. Zecco will give you a generous 10 free trades monthly and this is a great deal.
I think a good way to invest on a shoestring is to put your money in ETFs and the Charles Schwab ETFs that trade commission-free come to mind. Also, I would recommend buying the Vanguard Total Market Viper (VTI). Basically, look to invest in index mutual funds that have zero transaction costs and limit the number of trades you make until you grow your account to a sizeable amount like $2500. These type of investments are great because they keep you well diversified as they track a variety of financial instruments.
I know it can be intimidating to figure out what mutual fund to put your money on faced with a choice of almost 8000, so I want you to check out a list right here. Moreover, there seems to be a way to avoid brokerage commissions as well by buying a stock without a broker.
Even with an investment as small as a $100 dollars there are a lot of advantages such as the fact that it lowers taxes and contract fees. Furthermore, the earlier you start you can gain from the historical projection that it will have a better return than 90 percent of mutual supports over time.
However, the problem is that with such a little amount and even with a $1000 or $2000 portfolio, your basically on your own when it comes to investment decisions. Also, you don’t really have a well diversified portfolio. But it’s a start!