Low-Minimum Index Funds and Commission-Free ETFs for Small Investors

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The deal for small investors is getting better. If someone wants to invest in index funds and ETFs with very low cost, Vanguard is no longer the only choice. Competition is really good for customers.

Schwab has 5 index funds that require only $100 minimum initial investment. The lineup is not as extensive as Vanguard’s, but it’s adequate for a small investor. Although Schwab doesn’t have a bond index fund, customers can buy Treasury bonds at auction or buy new-issue CDs, all for free.

Schwab customers can also buy 8 Schwab ETFs without commission. Because these ETFs are new, my first choice would be the index funds unless the asset classes can’t be covered by the index funds. Here’s an example of a simple portfolio using Schwab index funds and ETFs: » Read more …