Investing small amounts at regular intervals while minimizing fees?
"It is difficult to find investment banks that offer both low fees and low minimum investments. If you google around for ""no-fee low-minimum mutual funds"" you can find various articles with recommendations, such as this one.  One fund they mention that looks promising is the Schwab Total Stock Market Index Fund, which apparently has a minimum investment of only $100 and an expense ratio of 0.09%.  (I've never heard of this fund before, so I'm just repeating the info from the site.  Be sure to look into it more thoroughly to see if there are any hidden costs here.  I'm not recommending this fund, just mentioning it as an example of what you may be able to find.) Another possibility is to make use of funds in an existing brokerage account that you use for yourself.  This could allow you to make use of Craig W.'s suggestion about ETFs.  For instance, if you already have a brokerage account at Vanguard or another firm, you could add $100 to the account and buy some particular fund, mentally earmarking it as your daughter's." You can open a 529 plan for your child. The minimum contribution for my state is only $25. You can setup automatic deposits, or deposit money only a few times a year; or both. You can save money on state taxes, and the money grows tax free if the money is used for educational expenses. They generally have age based portfolios, but some also let you pick from a variety of portfolios. I was going to comment on the commission-free ETF answer, which I agree with, but I don't have enough reputation. TD Ameritrade has a list of commission-free ETFs and has no minimum deposit required to open an account. Another idea is to keep gifts in cash until a certain threshold is reached. For instance, $100 for birthday, $100 for Christmas, $100 for next birthday, $100 for next Christmas, now execute the trade. Sharebuilder has $4 scheduled trades, so you'd be at about 1% overhead for that. If other people give money, you'll reach the threshold faster of course. For what it's worth, I do something similar for my 2 nieces. I combined their account and prepay Christmas plus birthday, so I do 1 trade a year. I have my account at Sharebuilder because my idea predated the commission-free ETFs that are now pretty popular. I should really transfer the account... hm. I think your best bet would be commission-free ETFs, which have no minimum and many have a share price under $100. Most online brokerages have these now, e.g. Vanguard, Fidelity, etc. Just have to watch out for any non-trading fees brokerages may charge with a low balance. You could just commingle your funds.  That way, she also learns how to keep track of things and how to figure things out, rather just learning to have the guy at the brokerage hand her an account statement which she blindly accepts. It might cause some tax problems though if the money grows to be substantial. Keep it simple: mutual funds (preferably index, low fee or ETF linked funds) do make a nice start for your little princess college fund.  You dont need a real fortune to offset the trading cost of an online broker but if your really going to take advantage of dollar cost averaging, you might want to invest into a trusted fund company.  Do your research, it is worth it. Ignore what the investment salesman is saying, he works for his wealth, not yours.  A good DIY strategy, either joint with your own retirement account agregate or on a low cost index fund will make wonders.  Keep in mind to be resilient: you will cash out when the princess will be in college in 20 yerars. Make sure to make proper time horizon investment and allocation.  Cheers, All the best. Feel free to edit I am not sure whether this hold in all countries, but at least in the Netherlands my bank allows for investment in funds without charging transaction costs. The downside is that these funds charge an annual fee of about 1%, but for the amounts you are talking about this definitely sounds more attractive than the alternative. As an alternative, you could ofcourse just take care of the transaction costs. That way your child can see their funds develop as you put it into different stocks without being distracted by the details. Of course you feel the 'pain' but I believe the main lesson stands out most this way.
"Vanguard's Admiral shares are like regular (""investor"") shares in their funds, only they charge lower expense ratios. They have higher investment minimums, though. (For instance, the Vanguard Total Stock Market Index Fund has a minimum of $3,000 and an expense ratio of .18% for the Investor Shares class, but a minimum of $10,000 and an expense ratio of .07% for Admiral Shares). If you've bought a bunch of investor shares and now meet the (recently-reduced) minimum for Admiral shares, or if you have some and buy some more investor shares in the future and meet the minimums, you will qualify for a free, no-tax-impact conversion to the Admiral Shares and save yourself some money. For more information, see the Vanguard article on their recent changes to Admiral Shares minimums. Vanguard also offers institutional-class shares with even lower expense ratios than that (with a minimum of $5 million, .06% expense ratios on the same fund). A lot of the costs of operating a fund are per-individual, so they don't need to charge you extra fees for putting in more money after a certain point. They'd rather be competitive and offer it at cost. Vanguard's funds typically have very low expense ratios to begin with. (The investor shares I've been using as an example are advertised as ""84% lower than the average expense ratio of funds with similar holdings"".) In fact, Vanguard's whole reason for existing is the premise (stated in founder John C Bogle's undergraduate thesis at Princeton) that individuals can generally get better returns by investing in a cheap fund that tracks an index than by investing in mutual funds that try to pick stocks and beat the index and charge you a steep markup. The average real return of the stock market is supposedly something like 4%; even a small-looking percentage like 1% can eat a big portion of that. Over the course of 40 years waiting for retirement, saving 1% on expenses could leave you with something like 50% more money when you've retired. If you are interested in the lower expense ratios of the Admiral share classes but cannot meet the minimums, note that funds which are available as ETFs can be traded from Vanguard brokerage accounts commission-free and typically charge the same expense ratios as the Admiral shares without any minimums (but you need to trade them as individual shares, and this is less convenient than moving them around in specific dollar amounts)." Vanguard might be the top provider of no-load mutual funds around.  Attempting to do better than 0.13% in fees is just as likely to cost you more time than the money you're attempting to say.  You're in your first job out of school--you've got better things to do with your time. First of all, I agree with both the conclusion in the question and Ganesh’s answer – avoid funds or stockmarket based instruments, given the short timescale and need to draw an income. However I think looking at savings accounts only is missing a trick. At the moment there are several current accounts that pay >2% interest on balances the size of which you’re proposing. The list of which accounts are offering which rates / conditions at which point in time will vary, so here is a link to a good source of regularly  updated information: https://www.moneysavingexpert.com/savings/savings-loophole  There are some conditions, but the best interest rate on offer (that isn't limited to one year) appears to be 3% – much better than the leading instant access savings account. Even straight index funds grow at about 6-7%. on average, or over long periods of time.  In short time periods (quarters, years), they can fluctuate anywhere from -10% to +20%.  Would you be happy if your bank account lost 10% of its value the week before you had to pay the bill for the repairs?   Is it appropriate to invest small amounts for short periods of time? In general, no.  Most investments are designed for long term appreciation.   Even sophisticated financial companies can't do any better than 1 or 2% (annualized) on short-term cash reserves. Where you can make a huge difference is on the cost side.  Bargain with suppliers, or wait for sales on retail items.  Both will occasionally forego their margin on certain items in order to try to secure future business, which can make a difference of 20% or more in the cost of repairs. If you are making regular periodic investments (e.g. each pay period into a 401(k) plan) or via automatic investment scheme in a non-tax-deferred portfolio (e.g. every month, $200 goes automatically from your checking account to your broker or mutual fund house), then one way of rebalancing (over a period of time) is to direct your investment differently into the various accounts you have, with more going into the pile that needs bringing up, and less into the pile that is too high. That way, you can avoid capital gains or losses etc in doing the selling-off of assets. You do, of course, take longer to achieve the balance that you seek, but you do get some of the benefits of dollar-cost averaging. First, I want to point out that your question contains an assumption. Does anyone make significant money trading low volume stocks?  I'm not sure this is the case - I've never heard of a hedge fund trading in the pink sheets, for example. Second, if your assumption is valid, here are a few ideas how it might work: Accumulate slowly, exit slowly.  This won't work for short-term swings, but if you feel like a low-volume stock will be a longer-term winner, you can accumulate a sizable portion in small enough chunks not to swing the price (and then slowly unwind your position when the price has increased sufficiently). Create additional buyers/sellers.  Your frustration may be one of the reasons low-volume stock is so full of scammers pumping and dumping (read any investing message board to see examples of this).  If you can scare holders of the stock into selling, you can buy significant portions without driving the stock price up.  Similarly, if you can convince people to buy the stock, you can unload without destroying the price.  This is (of course) morally and legally dubious, so I would not recommend this practice. I'd recommend investing in a mutual fund that diversifies your purchase across a number of stocks (and bonds, depending on the fund). Vanguard has some of the lowest fees around, and have a large number of funds to choose from. Take a look at their offerings for a data point if nothing else. Remember that unless you participate in the actual fund that these individuals offer to the public, you will not get the same returns they will. If you instead do something like, look at what Warren Buffet's fund bought/sold yesterday (or even 60 minutes ago), and buy/sell it yourself, you will face 2 obstacles to achieving their returns: 1) The timing difference will mean that the value of the stock purchased by Warren Buffet will be different for your purchase and for his purchase. Because these investors often buy large swathes of stock at once, this may create large variances for 2 reasons: (a) simply buying a large volume of a stock will naturally increase the price, as the lowest sell orders are taken up, and fewer willing sellers remain; and (b) many people (including institutional investors) may be watching what someone like Warren Buffet does, and will want to follow suit, chasing the same pricing problem. 2) You cannot buy multiple stocks as efficiently as a fund can. If Warren Buffet's fund holds, say, 50 stocks, and he trades 1 stock per day [I have absolutely no idea about what diversification exists within his fund], his per-share transaction costs will be quite low, due to share volume. Whereas for you to follow him, you would need 50 transactions upfront, + 1 per day. This may appear to be a small cost, but it could be substantial. Imagine if you wanted to invest 50k using this method - that's $1k for each of 50 companies. A $5 transaction fee would equal 1% of the value of each company invested [$5 to buy, and $5 to sell]. How does that 1% compare to the management fee charged by the actual fund available to you? In short, if you feel that a particular investor has a sound strategy, I suggest that you consider investing with them directly, instead of attempting to recreate their portfolio. What is your investment goal?  Many investors buy for the long haul, not short-term gain.  If you're looking for long-term gain then daily fluctuations should be of no concern to you.  If you want to day-trade and time the market (buy low and sell high with a short holding period) then yes less volatile stock can be less profitable, but they also carry less risk.  In that case, though, transaction fees have more of an impact, and you usually have to trade in larger quantities to reduce the impact of transaction fees. Dollar-Cost averaging will allow you to reduce your risk while the stock prices falls provided: You must invest a fixed amount $X on a fixed time scale (i.e. every Y days). By doing this you will be able to take advantage of the lowering price by obtaining more shares per period as the price falls. But at the same time, if it starts to rise, you will already have your pig in the race.  Example: Suppose you wanted to invest $300 in a company. We will do so over 3 periods. As the price falls, your average dollar cost will as well. But since you don't know where the bottom is, you cannot wait until the bottom. By trying to guess the bottom and dumping all of your investment at once you expose yourself to a higher level of risk. Many mutual fund companies (including Vanguard when I checked many years ago) require smaller minimum investments (often $1000) for IRA and 401k accounts.  Some also allow for smaller investments into their funds for  IRA accounts if you set up an automatic investment plan that contributes  a fixed amount of money each month or each quarter.  On the other hand,  many mutual fund companies charge an annual account maintenance fee ($10? $20? $25? more?) per fund for IRA investments unless the balance in the fund is above a certain amount (often $5K or $10K$).  This fee can be paid in cash or deducted from the IRA investment, and the former option is vastly better. So, diversification into multiple funds while starting out with an IRA is not that great an idea. It is far better to get diversification through investment in an S&P 500 Index fund (VFINX since you won't have access to @JoeTaxpayer's VIIIX) or a Total Market Index fund or, if you prefer, a Target Retirement Fund, and then branch out into other types of mutual funds as your investment grows through future contributions and dividends etc. To answer your question about fund minimums, the IRA account is separate from a taxable investment account, and the minimum rule applies to each separately. But, as noted above, there often are smaller minimums for tax-deferred accounts. Wealthsimple lists their prices as follows: Those are the fees you pay over and above what you pay for the underlying ETFs' management fees. But why not just invest in the ETFs yourself? The Canadian Couch Potato website shows some sample portfolios. The ETF option has an average Management Expense Ratio very similar to that of the ETFs used by Wealthsimple, but without the additional management fee. Rebalance once or twice a year and you cut your fees from approximately 0.57% (if investing mid-six-figures) to 0.17%, for very little work. Is it worth it to you? Well, that depends on how much you have to invest, and how much effort you are willing to put in. Wealthsimple isn't particularly unreasonable with their fees, but the fees do look a bit high once you are in to the six figures of investing. On the other hand, I often recommend Tangerine's mutual funds to my friends who are looking at investing for retirement. Those mutual funds, last time I checked, cost 1.09%. That's about twice what Wealthsimple is charging. But they are easy to understand and easy to invest in; a good choice for my friends looking to invest $1,000 - $50,000 in my opinion. So, and understanding this is just my personal opinion, I think Wealthsimple fits in a niche where Tangerine mutual funds carry too high a cost for you, but you don't want to do all the management yourself, even if this is just an hour or so of work, a couple of times a year. I wish they were cheaper, but their pricing makes sense for a lot of people in my opinion. Do they make sense for you? If you are looking at investing less than $10,000, I'd stick with an option like Tangerine, only because that's an easier option. If investing more than $100,000 or $200,000, I think you are paying a bit much for what they offer. But, many people pay much, much, much more for their investments. "I'd also look into index funds (eg Vanguard) as they have low management fees. you can buy these as ETFs as well - so you can buy in at a very low starting amount. An index fund can also be a talking point for your kids about what an industry index is and how it relates to the companies that fall into it. Also about how mutual funds try to ""beat the market"" - and often fail." If you have a lump sum, you could put it into a low risk investment (which should also have low fluctuations) right away to avoid the risk of buying at a down point.  Then move it into a higher risk investment over a period of time.  That way you'll buy more units when the price is lower than when it's higher. Usually I hear dollar cost averaging applied to the practice of purchasing a fixed dollar amount of an investment every week or month right out of your salary.  The effect is pretty minimal though, except on the highest growth portfolios, and is generally just used as a sales tool by investment councilors (in my opinion). Loads of financial advisors advise holding index funds they may advise other things as well, but low fee index funds are a staple portfolio item.  I can't speak to the particulars of Canada, but in the US you would just open a brokerage account (or IRA or SEP IRA in the case of a small business owner) and buy a low cost S&P index ETF or low/no fee/commission S&P index mutual fund.  There's no magic to it.   Some examples in no particular order are, Vanguard's VOO, Schwab's SWPPX, and iShares' IVV.  There are also Canadian index equities like Vanguard's VCN and iShare's XIC.