Too many people never make the first step toward making better investments because they think they don't have enough money. But you don't have to be a millionaire in order to get off to the right start with your portfolio -- and with the right combination of smarts and discipline, you might well become a millionaire before everything's said and done.

The smart start
Last week, I got an email from a reader named Javier asking for some help. Before joining the Fool, he hadn't had any investing experience and didn't understand the importance of saving for the future. But after learning about investing over the past three years, Javier spoke to his 19-year-old son about getting an early start on his retirement. Now that his son has saved $1,000 from his summer job, he's decided to open a Roth IRA and would like to know how best to invest it.

Before getting to investment suggestions, I want to point out what an exceptional move Javier's son has made. It wouldn't even occur to most of us to think about retirement at a time when we haven't even started a full-time career yet. Yet by starting early, Javier's son has a chance to let his $1,000 grow for 45 years or longer before he needs it in retirement, making his eventual nest egg that much bigger. And by using a Roth IRA, he'll enjoy tax-free growth for as long as the money stays in his account -- and he won't have to pay tax on withdrawals when he needs to use it.

Where to invest
At the simplest level, if you want a no-hassle, one-stop place to put your money, I'd suggest looking at target retirement mutual funds. These funds invest aggressively early in your career but then gradually tone down their stock exposure as you get closer to retirement.

For instance, the T. Rowe Price Retirement 2055 Fund (TRRNX) is designed for people who expect to retire around 2055, and it has 88% invested in stocks, 8% in bonds, and 4% in cash. And for an IRA, it has a minimum investment of just $1,000.

Turn up the volume with ETFs
A target fund is great if you want a mostly hands-off approach, but if you want to be more active, you'll want a brokerage account -- and ideally one with access to commission-free ETFs. Fortunately, many brokers offer fee-free ETFs with relatively low or no minimums. Schwab, for instance, has a $1,000 minimum to open an account, but it will waive that minimum if you commit to investing $100 monthly. Vanguard doesn't have a minimum listed on its website, although it charges $20 per year if you don't have at least $50,000 in your account.

With ETFs, putting together a portfolio is easy. For instance, a young investor might create an aggressively diversified stock portfolio simply by splitting his money between the U.S.-centered Vanguard Total Stock Market (NYSE: VTI), Vanguard Emerging Markets Stock (NYSE: VWO) for emerging-economy exposure, and one of Vanguard's several international ETFs to cover the rest of the world. As you get older, incorporating a higher-income approach with Vanguard Dividend Appreciation (NYSE: VIG) and Vanguard Total Bond (NYSE: BND) will round out your portfolio.

Each broker that offers commission-free ETFs has its own lineup of investments to choose from, so before you open an account, make sure the ETFs you want are available.

Get some stocks
ETFs are useful, but for the best investing experience, there's no substitute for individual stocks. I'd suggest taking a close look at three potential starter stocks: McDonald's (NYSE: MCD), Wal-Mart (NYSE: WMT), and Nike (NYSE: NKE). Each of these stocks is dominant in its industry. They won't offer quite as much growth potential as smaller companies, but they all pay dividends, and they'll be more stable than taking a flyer on a small-cap stock. None of them has a ridiculously expensive valuation right now. And both Wal-Mart and McDonald's managed to make money for shareholders during 2008, one of the market's worst years in history. They're not a sure thing going forward, but young investors are familiar with their products, making it easier to use them as a learning opportunity.

There's nothing more satisfying than making your first investment. I wish Javier's son the best of luck, along with those of you who plan to join him in taking the crucial first step toward financial security.

ETFs aren't just useful -- they can be highly profitable too. Click here to read The Motley Fool's special report on ETFs and find out which ones will soar as the economy recovers.

Tune in every Monday and Wednesday for Dan's columns on retirement, investing, and personal finance.