Lots of people think they don't have enough money to start investing. But thanks to cutthroat competition in the financial services industry, beginning investors have the ability to make smart investments they never had access to before.

How to invest $100
Until recently, investors with small amounts of money had a couple of good choices. First, they could use direct stock purchase plans and dividend reinvestment plans to buy stock directly from certain companies without using a broker and often with no commission costs. With hundreds of companies offering such plans, you could easily pick several for your budding portfolio. And with some companies accepting as little as $25 to start, you could build a somewhat diversified portfolio fairly cheaply.

The other way beginning investors could get started was through mutual funds. Many mutual fund companies allow new investors to open accounts with relatively modest sums, and some are even willing to waive their normal minimum investments if you can commit to making regular monthly contributions to your account.

What didn't make sense, though, was opening a discount brokerage account. High minimum opening balances and sizable commission costs made brokerage accounts inadvisable for those starting out with only small savings. But now, that's starting to change -- and it opens up a whole new world of investments to beginning investors.

The ETF revolution
In particular, the opening up of new investment options has come from an intense price war among some discount brokers. Charles Schwab (NYSE: SCHW) fired the opening salvo by cutting its commissions on stock trades and offering a selection of proprietary exchange-traded funds to customers at no commission. Vanguard and Fidelity followed suit with commission-free ETF trading of their own.

The upshot of this is that because you can buy ETFs at no commission, opening a brokerage account is economically viable even for the smallest accounts. And brokers are responding in kind. At Schwab, for instance, the normal minimum to open an account is $1,000, but the broker will waive that requirement if you arrange to have $100 per month put into your account. Although minimums at Vanguard and Fidelity are much higher, similar waivers may be the next battle in the brokerage price war.

Moreover, the commission-free Schwab ETFs give you good exposure to a variety of asset classes. Consider:

  • The Schwab US Broad Market ETF owns all the huge companies you'd expect from an index-based fund.
  • For small-cap stocks, Schwab's small-cap ETF gives you exposure to some great performing companies. Zions Bancorp (Nasdaq: ZION), for instance, has soared this year as optimism grows that the losses tied to the credit bubble are slowing. Skyworks Solutions (Nasdaq: SWKS) has its semiconductor chips within the hot-selling iPhone, but it also has its fingers in the pie across the smartphone spectrum.
  • It makes sense to include some exposure to emerging markets in your portfolio, especially for young investors. Brazilian companies Petroleo Brasileiro (NYSE: PBR) and Vale (NYSE: VALE) are well-positioned to take advantage of favorable long-term trends for demand for commodities. Meanwhile, emerging telecom stocks America Movil (NYSE: AMX) and China Mobile (NYSE: CHL) are already dominating their domestic markets as well as starting to stretch their reach into the international arena. All of those and more are at your fingertips through Schwab's emerging markets ETF.

Moreover, a brokerage account gives you the ability to buy individual stocks if you choose. Although it doesn't make sense to pay even a modest $7 to $9 commission if you only have $100 to invest, having that flexibility will prepare you for the day when your savings start adding up to much more substantial amounts of money.

Start smart
So if you're looking to get started with your investing, don't talk yourself out of it just because you aren't rich. Even with modest savings, starting a brokerage account and investing in ETFs is looking more attractive than ever. As a first step on the road to prosperity, your brokerage account will give you access to investments you could never have bought only a few years ago.

Learn more about finding the right broker in our Broker Center.

Fool contributor Dan Caplinger started strong and has never looked back. He owns shares of Schwab's small-cap and emerging markets ETFs. Charles Schwab is a Motley Fool Stock Advisor selection. America Movil is a Motley Fool Global Gains pick. Petroleo Brasileiro is a Motley Fool Income Investor selection. The Fool owns shares of China Mobile. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy starts you off on the right foot.