I often read others suggest using ETFs (exchange traded funds) but those usually come with transaction fees to buy. Some brokerages waive transaction fees if you buy ETFs they sponsor, but they may have a "small account fee" that cancels your savings.
$4.00 / $200.00 x 100% = 2.00% !!!
I'd call Fidelity, Vanguard AND Schwab and ask each of them what would be the total cost in each of the first five years to invest $200 a month into their total stock market index fund or a similar ETF. Tell them you are willing to set up an automatic monthly transfer from your checking account to get the lowest fees. After 5 years, you should have the $10,000 minimum to get their lowest cost mutual funds. There is good competition for this type of saver because smart savers usually turn into very large accounts in the long run. (Disclosure, I have large accounts at all three but I am not compensated to recommend them other than they may advertise via Google ads on my web sites and blogs.) Often you can get some fees waived if you can convince them you will move more money to their accounts in the long term and that you will call their competition and go with whomever offers you the overall lowest cost to invest $10,000 over the next five years.
- Common Sense on Mutual Funds: Fully Updated 10th Anniversary Edition
- The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Books. Big Profits)
I do not recommend anyone's newsletter, even mine, until you have at least $10,000 put away in a Total Stock Market index fund and have read these books. Once you have maybe $50,000 to $100,000, then I think it makes sense to try and beat the market with 20% of the money via managed mutual funds or "do it yourself" perhaps with the aid of "Kirk Lindstrom's Investment Letter."
“Actively managed mutual funds? Yes. But only if they are run by managers who own their own firms, who follow distinctive philosophies, and who invest for the long term, without benchmark hugging. (Don't be disappointed if the managed fund loses to the index fund in at least one year of every three!)" “The Little Book of Common Sense Investing”, Chapter 18
“Yes, Pick a few. Listen to the promoters. Listen to your broker or adviser. Listen to your neighbors. Heck, even listen to your brother-in-law.”“The Little Book of Common Sense Investing”, pg 202