Want to get around high minimum investments? Can do

Q: Everyone keeps saying Americans don't save and invest enough, so why do investment companies make it so difficult? Even Vanguard requires a minimum investment of $3,000 in most of its funds.

A: You're right. Many of us have an inferiority complex about how much we save, or don't save. And fees, minimum deposits and other barriers only frustrate many people who are trying to get started.

And you're right about Vanguard's $3,000 minimum. Vanguard gets so much right and is a great place for investors to start with and stay with. I highly recommend the book "Enough" by Vanguard's founder, Jack Bogle, who eloquently outlines many of the frustrations investors have.

Vanguard's $3,000 minimum for almost all of its funds is indeed a barrier. Several readers have mentioned it. Maybe the company will reconsider one day.

But, don't get frustrated. Here's a way to get the benefits of investing in Vanguard's low-cost funds with less than a $3,000 initial deposit:

Open a brokerage account with one of the low-cost online brokerages, such as TradeKing, Zecco or ShareBuilder. These brokers' commissions are generally about $5 a trade. After opening the account, you can buy one of Vanguard's low-cost exchange-traded funds (ETFs). For instance, if you're interested in Vanguard's flagship 500 Index Fund Investor Shares (VFINX), which owns all 500 stocks in the S&P 500, you might invest in Vanguard's Large-Cap ETF vv instead.

For just a $5 commission using the brokers mentioned above, you could invest in the same 500 companies that are in the Vanguard 500 Index fund. And the expense ratio, or the annual fee charged for owning the fund, is just 0.07% on the Large-Cap ETF. That's actually half the 0.15% charged by the Vanguard 500 Index Fund Investor Shares.

So, don't let minimum deposits deter you. There's always a way to save and invest.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Click here to see previous Ask Matt columns.

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