Hello Mustachians! I am new here, and trying to get started on my Mustachian journey. I started to open up a Vanguard account only to find out that $3K is the minimum for the Total Market fund everyone is talking about. I currently have a Roth and a Rollover IRA from Fidelity. Should I just open an investment account with them, or will I be running into the same minimum investment requirement, too?
My goal is to start saving for my first house in the near future, and I was planning on putting $300 a month towards the account to start.
Thanks!
You are looking to open a taxable investment brokerage account, right? That is, this will be taxed and it is not a designated retirement account like a Roth IRA or Traditional IRA.
Yes, most of their mutual funds require a $3K minimum (some even more). I believe the only $1K minimum funds are their "Target Date" retirement funds - an asset allocation weighted based on how many years until this fictional retirement - they pick dates every 5 years. So it starts something like 90 or 95% stocks (the most recent one is Target 2060) and then slowly switches some of that to bonds. You could pick any year you want and start with $1k.
Your other option is to invest in their ETFs. You only need the price of one share.
So you would "open an account" and go through registering - designating it as a "savings" account and it should give you a brokerage account. You then click "Trade Vanguard ETFs." From there, you want to "buy" and enter whatever ETF you want. Research what you want to buy - there are sectors, domestic of all sizes, international, and bond ETFs to choose from.
If you are using this to save for a down payment on a house soon, I would avoid going with entirely stock ETFs - it's very risky in the short term. You could do a single share of mega-cap growth (MGK) for ~$100 and a share of a bond ETF - say, BLV for ~$92.
You could put a limit or stop order in, but I doubt you care about that if you're just getting started. Just select "market" and you will pay the market price at the time you place the trade. You will need the money transferred into a money market or "settlement fund" first - typically an electronic transfer or wire from your bank account.
So that is how you can still invest with Vanguard without paying the $3k minimum on the mutual funds. You can invest in other fund families, but you will have to pay a fee - it might be up to $7/trade now? I'm not sure the exact cost, but just an fyi.
