How to invest in the S&P 500 with little money

ByABC News
January 18, 2012, 8:11 PM

— -- Q: What's the least amount I can invest in the Standard & Poor's 500 index?

A: One of the biggest changes for individual investors is just how small they can be. You don't need much money, $200 or less, to invest to get started.

Just a few years ago, most mutual funds and brokerages required investors to bring a decent sum of money to the table just to get started. Minimum deposits of $500 if not $1,000 were pretty standard with even leading discount brokerages not long ago.

Investors with less money to start with face yet another hurdle: fees. Even if a brokerage charged just $15 for a trade, smaller investors could get chewed up in a hurry. Even a seemingly small $15 a trade commission can be pretty steep for an investor just looking to buy $50 or so of stock at a time.

Both of these hurdles to smaller investors, account minimums and commissions, continue to erode away. You'll just need to find a brokerage that offers accounts with no minimum balance that will allow you to invest in the S&P 500 with no or low trading fees.

Keep in mind, with this approach you'll need to pay the commission each time you invest more money. The $5 a share commissions can add up over time. You will also need to pay the commission when you sell.

The bottom line is that if you have less than $200 to invest, then yes, you can buy into the S&P 500 or something very similar and still keep your costs very low. If any readers have any other suggestions, feel free to share them in the comments section below.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies and Fundamental Analysis for Dummies. He answers a different reader question every weekday in his Ask Matt column at To submit a question, e-mail Matt at Follow Matt on Twitter at: