Last updated: March 28, 2014
Buying high quality companies (not penny stocks :D) is often unsuitable for small investors because trading commissions can crush your returns. Then how could you jump into the investment vehicle? Commissions free ETFs purchases, TD e-Series and pre-authorized cash contribution are the 3 options that you may consider to start investing with very little money.
First option, purchase commission free ETFs. Using some online stock brokerages, you can purchase any number of ETFs without paying trading commission, for example, Questrade offers commission free ETFs purchases and charge a commission when you sell them. There are thousands of ETF products listed on the Canadian or U.S. markets, and beginners may consider buying the ETFs that pay monthly distributions.
- I borrow money to invest in stocks (leverage investing)
- My Net Worth Updates
- My U.S dividend portfolio
- My Canadian dividend stocks portfolio
- Daily portfolio return
Second option, you may purchase TD e-Series index mutual funds using online TD account or TD Waterhouse brokerage account. There are 17 e-Series funds available now, you can buy a fraction of the funds without paying commission, but you are required to hold them at least 30 days. You will be charged commission if you sell them within 30 days. TD e-Series funds are as cheap as many tradition ETFs, and their MERs are 0.33%.
Third option is to enroll in a pre-authorized cash contribution program. Using this option, you can invest monthly without paying commissions and set up a dividend reinvestment plan (DRIP) so distributions are reinvested commission free. For example, iShares offers this program for a limited number of ETFs with partnership with some discount brokerages.
So, you don’t need a big amount of money to start investing. Start investing with as little as $100 and adding additional money monthly basis make you rich in long run.