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Ask a Fool: What's the Best Way to Invest Without Lots of Money?

By Matthew Frankel, CFP® – Apr 6, 2018 at 12:00PM

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Thanks to modern, low-cost investment methods, you can get a diverse stock portfolio for little money.

Q: I don't have lots of money to invest, and I can't commit a consistent amount of money to an "auto-invest" program. What's the best way for me to get started?

Until recently, commissions alone made it difficult to invest with little money. To get a diverse portfolio of stocks (at least 10), you would need to spend $100 or more in trading commissions, which is impractical if you only have a small amount to invest. Even buying a single ETF could be impractical without a lot of money. Additionally, mutual funds often have minimum investments of $1,000 or more.

Over the past few years, the concept of commission-free ETFs (exchange-traded funds) has really caught on. They're a great way for investors to get into stocks without a large commitment and without excessive fees.

Many of the leading brokers have ever-growing lists of commission-free ETFs to choose from. I use TD Ameritrade, and it offers more than 300 ETFs with no commissions. You can literally get a diversified stock investment for the cost of a single share. To name one example, the iShares Core Aggressive Allocation ETF (AOA -0.88%) is designed as an all-in-one investment portfolio, with exposure to a wide variety of stocks and bonds. It has minimal ongoing fees and is available commission-free, and with a share price of about $54, that's all you would need to get started.

In a nutshell, if you don't have a ton of money to commit, I'd suggest finding a broker with a large selection of commission-free ETFs and buying a share or two whenever you can.

Matthew Frankel has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

iShares Trust - iShares Core Aggressive Allocation ETF Stock Quote
iShares Trust - iShares Core Aggressive Allocation ETF
AOA
$55.45 (-0.88%) $0.49

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