Author Topic: where to start small taxable investment  (Read 3716 times)

grr

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where to start small taxable investment
« on: February 13, 2015, 06:12:39 AM »
Longtime lurker, first-time writer, blah blah bluh blah...

Happily, I'm able to max out my 401k and IRA contributions, and get by on the remainder of my paycheck.  My question is: where is a good place to start a taxable account with small amount of money.  I might have $50-100 dollars to month to contribute, but I don't have the minimum to start a VG account.  Where can I purchase Vanguard or similar low cost indexes with as little sales loads and fees as possible?

(prepares for facepunch)
Additionally, I might like to purchase some oil futures along with the indexes.  Can anyone recommend a fund or ETF that would similarly be available with few fees, for small purchases?

Thanks!

GGNoob

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Re: where to start small taxable investment
« Reply #1 on: February 13, 2015, 06:55:44 AM »
Actually, you should be able to open a Vanguard account and purchase ETFs if you'd like, all commission free. I don't believe they have any minimum balance for that.

humblefi

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Re: where to start small taxable investment
« Reply #2 on: February 13, 2015, 08:04:08 AM »
Quote
My question is: where is a good place to start a taxable account with small amount of money.  I might have $50-100 dollars to month to contribute, but I don't have the minimum to start a VG account.  Where can I purchase Vanguard or similar low cost indexes with as little sales loads and fees as possible?

You can sign up online for a Vanguard account. The funds I have come across have a minimum of $3000 to open an account. But there are funds with a min of $1000 to open the account as well. Please go here: https://investor.vanguard.com/mutual-funds/all-vanguard-funds. You can select the fund parameters here and search funds accordingly.

Hope that helps.


Financial.Velociraptor

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Re: where to start small taxable investment
« Reply #3 on: February 13, 2015, 09:13:24 AM »
Any chance you bank with Wells Fargo?  PMA account holders (25k in total deposits with 10% of loan balances counting as deposits to get this without monthly fees) get 100 "free" equity trades a year.  They have started passing through regulatory fees but they are usually 2 or 3 cents so your frictional cost is extremely small.  And you aren't investing but speculating if you make more than 100 trades per calendar year...

On oil futures?  I doubt WF will allow that.  If you are willing to invest in a wasting asset due to high conviction regarding the price of oil, why not buy one of the double leverage oil or oil company ETFs instead?  I've never traded futures directly.  It makes no sense to me when there are so many ETFs that manage the complicated part for you and let you gain a piece of the action with one click.  See http://www.oilandgasetfs.com/double-oil-etf-%E2%80%93-leveraged-etf-list-for-oil-trading/ for examples.

skyrefuge

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Re: where to start small taxable investment
« Reply #4 on: February 13, 2015, 10:24:08 AM »
Actually, you should be able to open a Vanguard account and purchase ETFs if you'd like, all commission free. I don't believe they have any minimum balance for that.

No; while you can buy single shares of ETFs once you have a Vanguard brokerage account, you need a minimum of $3000 to open a brokerage account in the first place.

To the OP, I wouldn't worry about it, which is essentially what Vanguard is telling you with their minimums. Even if it doesn't seem like it now, $3k is a pretty inconsequential amount of money. If you're maxing your 401(k) and IRA, that means you're already saving $1958/mo. The additional $50 is only 2.6% of that amount. Having 97.4% of your money invested and 2.6% in cash is a total non-issue in terms of your lifetime plans (in fact, depending on what your emergency fund currently looks like, you might want a higher percentage than that in cash!)

Just wait 'til you've collected $3k in cash and then open a Vanguard account.

And for fuck's sake, don't buy oil futures. You've got a great plan to save as much as you can and invest in the market as cheaply as possible. It will work. Don't wreck it by being a dumbass.

capitalninja

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Re: where to start small taxable investment
« Reply #5 on: February 13, 2015, 10:56:50 AM »
Just wait 'til you've collected $3k in cash and then open a Vanguard account.

And for fuck's sake, don't buy oil futures. You've got a great plan to save as much as you can and invest in the market as cheaply as possible. It will work. Don't wreck it by being a dumbass.

+1 Sage advice right there.

Save the 3k, and throw it into something sensible like VTI. If you're feeling froggy, do a split between VTI and VXUS. Not exciting, easy to DCA into and will do much better long term than buying oil futures.

zataks

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Re: where to start small taxable investment
« Reply #6 on: February 13, 2015, 11:21:02 AM »
No; while you can buy single shares of ETFs once you have a Vanguard brokerage account, you need a minimum of $3000 to open a brokerage account in the first place.

To the OP, I wouldn't worry about it, which is essentially what Vanguard is telling you with their minimums. Even if it doesn't seem like it now, $3k is a pretty inconsequential amount of money. If you're maxing your 401(k) and IRA, that means you're already saving $1958/mo. The additional $50 is only 2.6% of that amount. Having 97.4% of your money invested and 2.6% in cash is a total non-issue in terms of your lifetime plans (in fact, depending on what your emergency fund currently looks like, you might want a higher percentage than that in cash!)

Just wait 'til you've collected $3k in cash and then open a Vanguard account.

And for fuck's sake, don't buy oil futures. You've got a great plan to save as much as you can and invest in the market as cheaply as possible. It will work. Don't wreck it by being a dumbass.

Not true.  I opened a Vanguard account with $1000 and my first transaction was $952.  I don't know why I was allowed to or why it says $3000 but I had no problems with less.  Except that once the $1000 showed up I tried to purchase ETF shares immediately and was denied; they called and told me there was a 7 day hold on the funds and would be available on XX date.  Since then I have added money (still less that $3k total) and am able to buy ETF shares without delay.

rpr

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Re: where to start small taxable investment
« Reply #7 on: February 13, 2015, 11:38:37 AM »
Wait till you have $1k and then invest with vanguards star fund. You can add $100 monthly via automatic investing. Once you have the $3k then shift to something else.


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GGNoob

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Re: where to start small taxable investment
« Reply #8 on: February 13, 2015, 12:54:49 PM »
Actually, you should be able to open a Vanguard account and purchase ETFs if you'd like, all commission free. I don't believe they have any minimum balance for that.

No; while you can buy single shares of ETFs once you have a Vanguard brokerage account, you need a minimum of $3000 to open a brokerage account in the first place.

That's what I thought too, but I contacted Vanguard last November asking the minimum needed and got this:

Quote
All transactions clear (or settle) through a Vanguard(R) money market settlement fund. While there is no minimum initial investment that applies to the settlement fund for a new brokerage account, the minimum initial investment for most Vanguard funds is $3,000. Vanguard STAR(R) Fund and Vanguard Target Retirement Funds require a minimum of $1,000 to start.

Otherwise I agree with the others. Save up $1,000 and purchase the STAR fund or a Target Retirement Fund.

zataks

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Re: where to start small taxable investment
« Reply #9 on: February 13, 2015, 02:01:47 PM »
That's what I thought too, but I contacted Vanguard last November asking the minimum needed and got this:

Quote
All transactions clear (or settle) through a Vanguard(R) money market settlement fund. While there is no minimum initial investment that applies to the settlement fund for a new brokerage account, the minimum initial investment for most Vanguard funds is $3,000. Vanguard STAR(R) Fund and Vanguard Target Retirement Funds require a minimum of $1,000 to start.

Otherwise I agree with the others. Save up $1,000 and purchase the STAR fund or a Target Retirement Fund.

Funds do have minimum limits. I suspect this is because with a fund you can buy a dollar amount, essentially fragmenting shares.  With ETFs the minimum purchase is the current price of an individual share but they must be purchased in their entirety; no buying 1.75 shares in an ETF.