Investing in your first IRA with $100

If you don’t have the minimum for an investment in Vanguard, how do you get started with a Roth IRA? And what the heck is a settlement fund?

Listener Maggie wrote in with this great question:
“I love your show and it has inspired me to open my own Roth IRA in addition to the 403b account I have through work (which is managed by the state). I just stuck $1000 in my new account (with Vanguard) but then when I tried to actually buy stocks and bonds I got really confused. A customer service person told me I don’t have enough to invest in a traditional total market index fund (like you recommend) and told me to use an ETF instead. What is the difference between those things? Is buying ETF stocks and bonds a good plan until I get the minimum amount in there to buy the regular funds? 

Also, I keep seeing different confusing pieces of information as I’m reading about the “settlement fund.” What is this and what do I need to do with it? And when I add money to my account, do I need to manually invest it every time? I can only afford to put in about $100 per month right now since I’m also still building my emergency fund. $100 doesn’t seem like much when I look at prices of stocks and bond ETFs. 

Any advice you could give would be wonderful. I went in feeling very confident from the info I got on Oh My Dollar, and now I feel like a little kid playing with adult systems I don’t understand. “

We talk about:

  • How to get started with your first IRA investment for as little as $35
  • How to set up your retirement investing so you never have to log in
  • Should you start investing if you’re still building your emergency fund?
  • What is the settlement account and how it is like a lobby with different elevators
  • How ETFs are different than a mutual fund and are different than a target retirement fund – and which one you should choose
  • How to invest in index funds when you don’t have the minimum $3,000 investment
  • Different discount brokers you can choose

Low Minimum Brokers:

  • Ally invest ($4.95 per trade, access to a large # of funds, $0 account minimum).
  • Vanguard ($7.95 per trade, low fee index funds, ETF account minimum is one share~$35, $1,000 minimum for target retirement funds)
  • Merrill Edge ($0 per trade up to 100 trades, $0 account minimum)
  • AmeriTrade ( $6.95 per trade, fee- free trades for 100 days, no account minimum)

We love hearing from you!

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You can always find me on the Oh My Dollar! forums, a friendly, nonjudgemental online community about money. Don’t be afraid, come join us on the forums!

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This episode was underwritten by patron Tamsen G Association. To learn more about being part of the Purrsonal Finance Society and get cool perks like cat stickers, you can visit ohmydollar.com/support

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Transcript (provided by our listener supporters on Patreon)

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Will Romey:
This show is supported by generous listeners like you, through our Patreon. This episode was underwritten by the Tamsen G Association, Warrior Queen, and Chris Giddings. To learn more about ways to support Oh My Dollar! and cool perks like cat stickers and a fancy special icon on our forums. You can visit ohmydollar.com/support/

Lillian Karabaic:
Welcome to Oh My Dollar! A personal finance show with a dash of glitter dealing with money can be scary and stressful. Here we give practical, friendly advice about money that helps you tackle the financial overwhelm. I’m your host, Lilian Karabaic.

Will Romey:
Your other host, Will.

Lillian Karabaic:
So today we have like a listener question that I feel like speaks to a fairly universal issue that a lot of people express- which is that they go from like, they start reading up on financial systems and investing and they they haven’t done anything yet, but they start to feel more and more confident.

Lillian Karabaic:
They’re like “OK, I know what I’m going to do.” And then they actually get to the process of like setting up an investment and they’re like, “oh, my God, I don’t actually know how this works.”.

Will Romey:
Yeah, yeah. All the intensely complicated paperwork or forms.

Lillian Karabaic:
Yeah, or just like the Web site and not understanding what the different things say. So this was actually I think I got this question. The subject line of this e-mail made me laugh, which was “my Roth IRA is so confusing, it feels like a trick. help!”.

Lillian Karabaic:
And it’s from Maggie. And I actually thought, oh, my gosh, Maggie, this was like a perfect way for me- It makes it sound like one. I have listeners, which is great.

Lillian Karabaic:
And two, it’s a perfect transition because I know there are a lot of other people that are probably in the same camp where they’ve decided to start investing for retirement and set up their own investing. And then they’re just like totally confused about how to do it, even though they they know the basics of what they want.

Lillian Karabaic:
Like they’re like, I know I want index funds,.

Will Romey:
What they are.

Lillian Karabaic:
I know I want a Roth IRA, but like the actual mechanics of setting it up are confusing. And so Maggie wrote in, do you want to read, Will?

Will Romey:
Yeah, I love your show. And it has inspired me to open my own Roth IRA in addition to the 4O3B account I have to work, which is managed by the state. I just took a thousand dollars, so my new account with Vanguard. But then when I tried to actually buy stocks and bonds, I got really confused.

Will Romey:
A customer service person told me I don’t have enough to invest in a traditional total market index fund, like you recommended and told me to use an ETF instead.

Will Romey:
What’s the difference between things? Is buying ETF stocks and bonds a good plan until I get the minimum amount in there to buy the regular funds? Also, I keep seeing different confusing pieces of information as I’m reading about the settlement fund. What is this and what we need to do with it?

Will Romey:
And when I add money in my account, do I need to manually invest it each time. I can only afford to put in about one hundred dollars per month right now since I’m still building my emergency fund. A hundred dollars doesn’t seem like much when I look at prices of stocks and bond ETFs. Any advice you give me would be wonderful.

Will Romey:
I went in feeling very confident from on oh my dollar! and now I feel a bit like a kid playing with adult systems I don’t understand.

Lillian Karabaic:
Oh, Maggie, we’re all just a little kids playing with adult systems.

Will Romey:
Matches.

Lillian Karabaic:
Pretty much. But don’t don’t fear you’re in the same camp with a lot of people, and it can be really intimidating to figure it out. So I’m going to try to give some general info, but then I’m going to specifically talk about Vanguard simply because it’s what I use. So it was easy for me to go in and look at the different like menus and stuff.

Lillian Karabaic:
And I know a lot of people have ended up preferring Vanguard because they tend to have a lot of low expense ratio funds. I’ve talked about them before on the show. They’re kind of like a credit union for a brokerage. So I will – I will try to give general advice, but also specifically talking about Vanguard.

Lillian Karabaic:
So the first thing I want to do is – I’m in a kind of work backwards in your questions. The first thing I want to say is do not focus ever on the so-called “price” of stocks or bond ETFs. I don’t want you to focus generally on the price. There is no necessity that you buy full shares of any individual investment. A full share would be like- There’s usually a price for the share, right? So when when you buy a fund of any kind. This could be a mutual fund, an ETF which stands for exchange traded fund. You’ll never need to know that again.

Will Romey:
Exchange Traded Fund. Okay. It does show up a lot in here.

Lillian Karabaic:
Or like a target retirement fund when you buy any kind of fund.

Lillian Karabaic:
What you’re doing is this is a pooled piece of a bunch of different companies. Right? So there are some technical differences between an ETF or a mutual fund. But the most important thing you need to know is that when you buy one share, you’re buying all the tiny pieces of all those other companies that are contained within the fund.

Lillian Karabaic:
And that is true with any fund. You are buying a tiny piece of a bunch of different companies when you buy one share of the fund. However, that price of a share is is mostly irrelevant. Right? Like in general, you want that price to go up over time. No matter what you paid for it. You generally want to buy low and sell high.

Lillian Karabaic:
But it’s not like shopping around at Amazon to find the best backpack price. Right? And so you’re not necessarily looking looking at that price. And you’re also not looking at it as like “it’s something I can’t afford.”

Will Romey:
Cuz you can always buy like a fractional amount -.

Lillian Karabaic:
You can always buy a fractional amount, although there are some some things you do need to consider which are considered “minimum investments.” So what you ran up against is that for a lot of the target funds at Vanguard, they have a minimum investment of three thousand dollars. That doesn’t mean the price to buy is three thousand dollars. And I just want to emphasize that, what it does mean is that you need to find other types of investment vehicles until your portfolio gets to three thousand, which is a confusing sentence, I know.

Lillian Karabaic:
But the first thing I just want you to understand is the price is pretty irrelevant. Like over the long term, you want to make sure you’re making a return. But don’t focus on the price.

Lillian Karabaic:
We do want to focus on that minimum investment number, so that you can pick something that you have enough money for the minimum investment. It’s generally better to think about your retirement account like a piggy bank that you’re storing your extra change in. And then hopefully that change is then getting reinvested and growing and growing inside the piggy bank.

Will Romey:
Just like a piggy bank.

Lillian Karabaic:
Yeah, exactly. That’s how it piggy banks work, right?

Lillian Karabaic:
But you don’t want to think about it like a store where you’re shopping for something and then you’re going to buy something and and then you’ve you’ve exchanged it for that thing, right? It’s more like a piggy bank where you’re putting money into it.

Lillian Karabaic:
So the next thing I want to talk about before we get into the minimum investments is the settlement fund. Not every single brokerage has what’s called a settlement fund. Vanguard does. Most of them do. I was also like as someone who has a degree in economics, who understands how markets work – I was also just confused by the settlement fund when I got started. I was like, OK, I want to set up a transfer for my checking account into my investment every month and I don’t want to touch it. That is the settlement fund. I don’t understand what’s going on.

Lillian Karabaic:
All I can tell is that it’s like an extra account that I was given that I didn’t ask for. So, generally it’s where the money gets held before it’s invested.

Lillian Karabaic:
It’s sort of the purgatory of investment funds, like they’re not yet in the heaven of being invested, nor are they in the hell of your checking account. I don’t know.

Will Romey:
Hell of your checking account. I like it.

Lillian Karabaic:
I’m not really good at religion. So, you know, don’t quote me on that. But there is no reason to have things hanging out in the settlement fund for long. If you were doing a lot of active trading, you might want to keep money in that settlement account, simply because it usually takes a couple days to get stuff from especially- And you will probably have your main money in a different institution than Vanguard because, They don’t have checking funds. They don’t have checking or savings accounts, and so theoretically, you’re probably have different institution. As we’ve talked about, U.S. banking is slow.

Will Romey:
Oh, so that’s so that’s a that’s the sort of a lobby where your money is parked before it goes somewhere.

Lillian Karabaic:
It’s the lobby. And then you’ve got an elevator bank. And your money is like walking into the lobby. It’s hanging out in the settlement fund lobby. And then you’ve got all the different elevators.

Lillian Karabaic:
And if you do it right, you can set it up so that money automatically teleports from your bank into the lobby of the settlement fund. And then it just on its own picks an elevator to ride up into the fund that you’ve chosen.

Lillian Karabaic:
Does this make sense?

Will Romey:
This makes senses.

Lillian Karabaic:
We’re doing a lot of metaphors here. But I’m trying. So the thing that you want to do is like there’s no reason to generally have it hang out on the settlement funds.

Will Romey:
It’s not increasing. Yeah, it’s just sitting there.

Lillian Karabaic:
It’s a money market funds. So you’re getting a little bit of return on your money, but it’s not it’s not the same as having a retirement investment.

Lillian Karabaic:
Right? So, you what you want because you aren’t doing hopefully like a lot of stock and bond trading. What you want to do is you want to automatically have money move in your settlement account and then you want to be able to buy your funds from that account.

Lillian Karabaic:
So I actually I want to tell you, like I very rarely interact my Vanguard account. I actually logged into Vanguard for the first time in months in order to prep for this episode.

Will Romey:
See what it looks like. Remind yourself.

Lillian Karabaic:
Yeah, well, I wanted to, like, find where all the functions were. And I just wanna emphasize, you can be I still have in my, you know, automatic account from my main checking, which is through USAA- goes over to Vanguard every month. I see it get taken out, but I am an anxious person. And so I don’t like to watch the stock market go up and down. So I rarely log into Vanguard.

Lillian Karabaic:
And I hope that we can also achieve that for you – so that you can either be lazy or you can just keep your anxiety away. And so you can get the set up to be kind of automatic.

Lillian Karabaic:
So.

Will Romey:
Cool.

Lillian Karabaic:
The first thing you have to do is you have to buy shares of a Vanguard Fund since you already have like $1000 dollars to invest. You do need to buy shares in that fund so that you can kind of add it to the menu. It’s really stupid, but you’re you’re trying to add it to the menu of those automatic transactions.

Lillian Karabaic:
So the reason that you were suggested ETF, which are like.

Will Romey:
Exchange transfer funds?

Lillian Karabaic:
exchange traded funds, traded ETF. They’re just it’s essentially a mutual fund that can be bought and sold more frequently. So mutual funds- The difference is that mutual funds will be bought and sold at the end of the day based on a price for that day, ETFs can be traded like stocks and bonds.

Will Romey:
Ah OK.

Lillian Karabaic:
The functional difference here is that ETF is the minimum to invest in them with. Vanguard is one share. And like the average ETF share offerings.

Will Romey:
You can’t do the fractional shares.

Lillian Karabaic:
Yes. Well, it’s one share, but then you can do fractional shares for it beyond that. Right. So the minimum is three thousand dollars to do most of their index funds. It’s $1000 dollars to do most of their target retirement funds and then to do ETFs, that look almost the same as their index funds, which it’s one share – and an average share is like about 35 dollars.

Lillian Karabaic:
So you can functionally think of that as the minimum investment right? For an ETF. So the reason that you were recommended this is because you don’t have to reach that a thousand dollars or 3000 dollar minimum threshold in order to invest for an ETF.

Lillian Karabaic:
So if you’re just getting started out and you want to open up your first your first Roth IRA. The Roth IRA, you can have invested then into ETFs and it’s just a slightly different name.

Lillian Karabaic:
It’s a slightly different type of investment, and it does the exact same thing. It bundles different stocks together, just like an index fund would. It’s usually, but the difference is it can be traded like stocks. But you’re not going to treat it like stocks.

Will Romey:
And you can get at it for a thousand dollars, Not three thousand.

Lillian Karabaic:
You can get at it for 35. You can get out of it for the price of one share.

Will Romey:
Oh okay!

Lillian Karabaic:
So whatever the price of that one share is that day, which is like most of them are like 35 to I think some might be up as high as 50 right now.

Lillian Karabaic:
But, it’s so you can buy just one single share and then you can buy fractional shares after that – if you want to do it. Since you have a thousand dollars to invest. What I have done is I’ve used what I initially set up because I hadn’t, I didn’t have that 3000 when I set up my first account. The fund I used was called a Target Retirement Fund and target retirement funds we’ve talked about before, but they’re usually have like a number in them.

Lillian Karabaic:
So it’ll be like 2050, 2055, 2035, and that number is the year that you are expected to retire. Once again, I want to caution, I’ve cautioned before, even if you are angling for early retirement, don’t pick a near date if you are young. And that is because then it will be very – it is invested, essentially the split of stocks and bonds that you’re gonna do in it that (that are automatically done, you don’t have to do anything) That split is based on how close you are to retirement age.

Will Romey:
Is there very soon you’re going to get a bunch of low payout bonds?

Lillian Karabaic:
Yeah, exactly. You’re going to have things that are meant to keep your money secure, not growing. You, if you are on the younger end and by younger end, I mean like under 50. If you’re on the younger end, then you want to have more aggressive growth in your stock portfolio.

Lillian Karabaic:
And so you want to pick a target retirement fund based on your actual year of retirement. And once again, it’s hard to fudge it. The retirement age is kind of a flexible and moving thing, but generally take how the year that you’ll be 65 in.

Lillian Karabaic:
Andthey usually go in five year in increments. So you’ll pick either between that, you know, 2046 and you know, 2050 is the Target Retirement 2050 fund. Does that make sense?

Will Romey:
Yeah.

Lillian Karabaic:
Yeah. So that is what you can use, because you have a thousand dollars to invest, so you can actually just set up a target retirement fund. So for example, I use the Target Retirement Fund, a Vanguard Target Retirement 2050 fund, which is VFIFX.

Will Romey:
Catchy.

Lillian Karabaic:
The downside of these is they do have a slightly higher expense ratio. Expense ratio is the amount that you pay to Vanguard in order for them to invest in you. It’s like the percentage. You like- A lot of funds at Vanguard have almost point .03 percent. Some other funds now are down to actual no fee 0 percent.

Will Romey:
Actually, none.

Lillian Karabaic:
Yeah. And versus a you know, we’ve talked before about like invested actively invested mutual funds can be up in the 2 percent category, which is tens of thousands, even hundreds of thousands of dollars over the course of your retirement portfolio if you’re paying that much.

Lillian Karabaic:
So the downside of the target retirement funds is – the upside, they do all the work for you. They automatically allocate. They’ll reinvest in a percentage of stocks and bonds as you age.

Will Romey:
You can not log in for months and just keep on trucking.

Lillian Karabaic:
It’s just gonna keep on doing that. You don’t have to even rebalance your portfolio, which is what we said, you know, where every like 6 months or a year you go through and you see what the percentage of stocks and bonds are and you buy and sell to keep to your allocation.

Will Romey:
Someone else does that.

Lillian Karabaic:
Yeah. It’s just automatically done. Their expense ratio is still pretty low. It’s like point .15 percent for what I pay for the 2050 fund. So that’s your best option. If you have a thousand dollars to invest, if you do not yet have a thousand dollars to invest and you are going for something like Vanguard, I’m using Vanguard as an example because they have, it’s kind of complex. It feels kind of complicated, but a lot of people do it.

Lillian Karabaic:
So then you have to go for the ETFs and the ETFs. Once again, it’s just a slightly different name for a fund that bundles together different stocks and it’s indexed to a specific market.

Will Romey:
Yeah.

Lillian Karabaic:
So if you wanted to previously buy VTSAX, which is the Vanguard Total Stock Market Index Fund, you are not able to buy that fund until you reach three thousand dollars. However, there is an ETF that does the exact same thing. It tracks the total stock market and you can buy a share of that ETF fund.

Will Romey:
Okay. So that’s the solution for the listener who who didn’t have enough to invest in the overall fund.

Lillian Karabaic:
Exactly. And so the actual mechanics of being able to invest in that fund or in a target retirement fund are – first, you buy a share of a fund and then that fund will get it listed in your like nice little online profile.

Lillian Karabaic:
And then you’re going to go on to – this is like literally what you do a vanguard, but it’s gonna be very similar in a lot of other institutions. You log in to your brokerage, go to the buy and sell tab.

Lillian Karabaic:
And then at Vanguard, there is just a giant thing that said “transfer money to/from your Vanguard Settlement Fund.” Remember how we talked about the settlement fund as a lobby it has to go into?

Lillian Karabaic:
I set up a recurring transaction. The recurring transaction goes from my checking account at USAA on the 17th of each month.

Will Romey:
Which is today,

Lillian Karabaic:
while we’re recording.

Will Romey:
Which – is while we’re recording.

Lillian Karabaic:
It actually happened while I was doing research for this episode, which I thought was really funny.

Will Romey:
Wild.

Lillian Karabaic:
And it goes from the account on the 17th each month. Often it can take a couple days. So just be aware of that kind of wiggle room. In your case, If you want to do one hundred dollars a month, you would take that one hundred dollars and he would set up that recurring transaction to go into the settlement fund.

Lillian Karabaic:
So then you would schedule another transaction from that same tab. That takes a hundred dollars from the settlement fund and buys one hundred dollars of either that target retirement fund or of those ETFs.

Lillian Karabaic:
The reason I recommend the Target Retirement Fund over the ETF- is one downside. If you a vanguard is one downside of Vanguard is that they have higher buy and sell costs per share, because they kind of try to not have you do a lot of back and forth trading- and so buying one fund is going to cost you less in those fees overall, which is why I like the target retirement funds even though they have a slightly higher expense ratio than those ETFs.

Lillian Karabaic:
Because I think over over the long term, not having to do that and not having to make those adjustments for stocks and bonds, right?

Lillian Karabaic:
So, for example, if you were building a portfolio out of ETFs, what you would likely do is you would say if you’re 30 years old, then you would put 80 percent in a ETF that tracks the total stock market and then you would put, you know, 20 percent in something that tracks the total bond market. And you can look through – they have great descriptions.

Lillian Karabaic:
They show you the expense ratios for all of their funds at Vanguard. Most other brokerages will do this. If they don’t list the expense ratios, they’re probably not a discount brokerage, in which case they might not be the best place to do this kind of investing.

Will Romey:
That’s good to know.

Lillian Karabaic:
Yeah, just generally like they love to brag about expense ratios now because everybody became obsessed with them in the past five years. So now most of the big brokerages – ally, all these kind of online brokerages, Fidelity – are really obsessed with showing off their expense ratios. OK, so does that make sense?

Will Romey:
Yes!

Lillian Karabaic:
And I just have those recurring transactions set up. You also can set up a recurring transaction that just goes straight from your checking account into that fund. If you have just one fund set up.

Will Romey:
So that would to be nice.

Lillian Karabaic:
In order to do that, you need to have that. You need to have bought a share before.

Will Romey:
So if you are increasing the number of shares you have, not purchasing new shares, that makes sense why they would automate that.

Lillian Karabaic:
So, you know, it’s like anyway. It’s the same transaction, though. It’s still going to hang out in the settlement lobby for a second and before it it rides on up. And so, you know, and my settlement fund, I when I logged in, I realized I had like 40 cents because it’s a money market. So it did make some money off the money that was hanging out in the settlement fund for awhile.

Will Romey:
So I have like an extra 40 cents.

Lillian Karabaic:
Score.

Lillian Karabaic:
That’s just like hanging out there that I mean, buy yourself a piece of candy. I’m going to buy my new retail here. I’m going to buy myself a tiny, tiny fraction of a share of the Vanguard Total Stock Market Index.

Will Romey:
Or that.

Lillian Karabaic:
Fund. And so that’s just generally the basics.

Lillian Karabaic:
And the thing about as you start to start to invest in this – in this IRA and you gain more money, if you want to buy and sell within the IRA to move up to a different what they call “share type.”.

Lillian Karabaic:
So if you get enough money to invest in, you know, the three thousand dollar minimum that you’ve reached that and you’re able to invest in the Vanguard Total Stock Market Index Fund and you have the minimums for those funds, you can always change it around later.

Will Romey:
Right right and buy into that.

Lillian Karabaic:
So one of your last questions was just quite simply like you’re still building your emergency fund. Should you still put one hundred dollars in into your retirement?

Lillian Karabaic:
This is one of those things where, you know, we talk all the time about like that kind of the tradeoff of building up your emergency fund versus saving for retirement. Generally, I think that you should start. You should always invest up to the match, if you get a match at work. It sounds like you’ve got a 403B. It sounds like maybe you don’t even have control over that, It might just be a pension.

Lillian Karabaic:
But I do recommend if that one hundred dollars is going to make a huge difference in how fast you’re able to build up that emergency fund. And that’s your number one goal. Focus on that for a little bit, before you start focusing on the Roth IRA.

Lillian Karabaic:
But. I wouldn’t put it off forever. And the reason I wouldn’t put it off forever is early investment makes a huge difference in the long term. Early is more important than big when it comes to investing because of the magic of compound interest, because you know that over half of what is located in my IRA at Vanguard is growth at this point. And that is.

Will Romey:
That’s impressive.

Lillian Karabaic:
I’ve had it open for, you know, 14 years because I opened it the second I was old enough to have an IRA. And that meant that even even though I man, it was hard to watch it tank during the recession and just month after month keep putting in my 50 or my hundred dollars, into that IRA and watching the value go down. But that meant that I was buying little bits of the market shares, when the market was down and I was buying low. And then later I was selling high.

Lillian Karabaic:
So I mean.

Lillian Karabaic:
Buy Low. Sell high.

Lillian Karabaic:
Buy low. Sell high.

Will Romey:
You heard it here first.

Lillian Karabaic:
It’s harder to practice. It’s one of those things where, you know, it sounds really obvious, but it’s really hard to do in practice, especially when you’re like don’t when you as as Maggie so smartly put, “you feel like a little kid playing with adult systems.”

Will Romey:
Yeah. Yeah, right?

Lillian Karabaic:
Do you feel like you could confidently do this Will? Yeah. Yeah.

Will Romey:
So I’m pretty good at navigating confusing menus on websites.

Lillian Karabaic:
I will say the settlement fund is probably one of the most frustrating things. And then the other thing is that I tell people that I use Vanguard. They want to go use Vanguard. And then Vanguard is like, oh, you don’t have enough to invest. But that’s not actually true. The real minimum is like is the cost of one ETF share.

Lillian Karabaic:
If you’re frustrated and you don’t want to have to figure out all these, there’s a bunch of different discount brokerages. I’ll try to link to some of them the show notes – that don’t have these like three different paths to invest essentially.

One of the things I do like about Vanguard in addition to their expense ratios, and the way they run their company. (This has not sponned by them By the way.).

Lillian Karabaic:
I just literally that’s what I use –

Will Romey:
Brought to you by Vanguard, Not really.

Lillian Karabaic:
That. That’s what the question about. That’s what I use. And so it was easy for me to go to the forms. There are plenty that would like to get you into a no fee starter fund for your first investment. So please don’t take that as “this is the only place to do it.”.

Lillian Karabaic:
One thing I do like about Vanguard, though, is that they upgrade your shares. So once you reach to a certain. So like once you cross like 10K, then your shares will get upgraded and those have a lower expense ratio. So you like as you get more, you actually pay less in fees, which is just I don’t know is how capitalist that is? But anyway, it’s I do like it because it just kind of happens automatically.

Will Romey:
Yeah. I mean you automatically seems like a good thing with stocks and bonds. You kind of want to set and forget for a few years.

Lillian Karabaic:
Yeah. So things you know about ETF, it’s pretty much the same. It’s just a different kind of fund. And they track different markets, right? So you could buy an ETF that only tracks like I don’t know the metals markets, but that gets closer in to, you know, like retail investing, which we generally recommend much more casual total market investing on the show, simply because you generally can’t beat the market overall, even when you’re trying. So I don’t like to try to play games.

Lillian Karabaic:
If you want to do that with some fun money, that’s kind of fun. But if you go for ETFs, go for the more broad based markets in my in my not so humble mention opinion.

Will Romey:
That makes sense

Lillian Karabaic:
Yeah. Yeah.

Will Romey:
Cool. Well, write in with more questions. Let us know how that works.

Lillian Karabaic:
I want to know if anybody finally got got it together and set up an automatic transaction. I want to count up all the people that’s that started an automatic transaction to their retirement account from the show.

Lillian Karabaic:
Yeah. Yeah. Let us know. Show of hands. Show of e-mails.

Will Romey:
Yeah. All right. Well, that wraps our show for today. We love hearing from you. E-mail us your financial worries or brokerage successes at questions@ohmydollar.com Tweet us @anomalily or @ohmydollar. Our producer is, myself, Will Romey. Our intro music is by Aaron Parecki, and your host and personal finance educator is Lillian Karabaic who is doing a dance as I say that.

Will Romey:
Thanks for listening. Until next time, remember to manage your money so it doesn’t manage you.

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