Author Topic: Minimum investment  (Read 1898 times)

settlement

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Minimum investment
« on: June 18, 2016, 03:09:53 AM »
Hi,

What is the minimum you should invest in an etf? I know it depends on broker charge rates and how long you hold the etf  but are there any good rules of thumb?

protostache

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Re: Minimum investment
« Reply #1 on: June 18, 2016, 06:34:51 AM »
I try to keep my brokerage fee less than 0.5% of transaction value. For my Fidelity account that means blocks of at least $1,600 for things that aren't eligible for free trades. For ETFs that Fidelity sponsors I buy whatever makes sense at the time since there are no fees to buy. Most of the other big brokers are similar, including Vanguard.

Heckler

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Re: Minimum investment
« Reply #2 on: June 18, 2016, 08:26:40 AM »
I pay $9.95 per trade, and have set a personal $2500 minimum buy level for stocks and $5000 for bonds.  This approximately has the fee paid for by the first three months of dividends. 

As for minimum value to hold, I planned to have enough in each holding so that the distribution will be enough to DRIP reinvest into another unit without incurring a trading cost.  For example, I had $4700 in one account I wasn't able to add funds to (an old locked in pension), so I selected the ETF that had a higher distribution twice per year instead of quarterly.  That way, ~$27 gets DRIPed for free every six months instead of $14 cash every quarter that I would have to pay $9.95 to reinvest.

seattlecyclone

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Re: Minimum investment
« Reply #3 on: June 18, 2016, 12:49:59 PM »
I suggest investing in ETFs through an account where you don't pay commissions for them. If you have a Vanguard account, you don't pay commissions to buy Vanguard ETFs. If you have a Schwab account, you don't pay commissions to buy Schwab ETFs. If you have a Fidelity account, you don't pay commissions for iShares ETFs. All of these are fine options. This way you don't need to worry about weighing the trading fees against the amount you're investing, you just buy what you can afford to buy when you have the money to invest.

slowsynapse

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Re: Minimum investment
« Reply #4 on: June 18, 2016, 01:03:07 PM »
I have a TD Ameritrade account and they have a variety of commission free funds and ETF's.  I think you have to hold them for 30 days or there can be some sort of redemption fee.  Regardless, it does have the Vanguard VIT which I think is the ETF version of the admiral shares or VTSAX.

http://research.tdameritrade.com/grid/public/etfs/commissionfree/commissionfree.asp