The smallest amount for practical investing

While many Monday Morning Millionaire Program (15.5% annual return since 2012) members are multimillionaires, beginning investors and those at the start of their careers, often wonder what is the smallest amount of money for practical investing.

Following the habits of Monday morning millionaires requires us to invest in exchange-traded funds (ETFs) which parallel the S&P 500.

It is possible to buy one share of any stock, however, it is practical to buy securities in board lots, that is, 100 shares at a time. Investors who are interested in selling puts and calls must do so in board lots. There is no choice.  (Only sell, never buy puts and calls.)

So we need to look for the lowest price ETF that parallels the S&P 500. Please note that the lowest price does not mean the lowest value. Since the ETFs we use in the Monday Morning Millionaire Program mirror the S&P 500, their values, but not prices, are identical.

The best ETFs to track the S&P 500 are:

  1. iShares Core S&P 500 ETF (IVV)
  2. Vanguard S&P 500 ETF (VOO)
  3. SPDR S&P 500 ETF Trust (SPY)
  4. Schwab U.S. Large-Cap ETF (SCHX)
  5. iShares S&P 500 Growth ETF (IVW)
  6. Guggenheim S&P 500 Equal Weight ETF (symbol RSP)

Of these, RSP sells at the lowest price, about$115.00 per share today. So, a board lot would sell for $11,500.00.

Following the habits of Monday morning millionaires also requires us to follow a personal asset allocation regime.

Many Monday Morning Millionaire Program members follow a 50/50 asset allocation with 50% in cash or near-money and 50% in an appropriate ETF. That means the smallest practical amount for investing would be $11,500.00 times two, or, $23,000.00.

Members who don’t yet have that amount of money can buy a small number of RSP shares, as small as one share! However, we feel that the best they can do with what they have is to save it.

Please note that the Monday Morning Millionaire Program contains opinions only. It does not provide any investment advice or endorsements.

With fewer than 400 words, members can read this blog in less than five minutes. Following and studying the links imbedded in the blog could take half a day. How you manage this blog depends on your level of investing knowledge.

Your choice!

Dr. Milan Somborac

The Monday Morning Millionaire Program supports do-it-yourself (DIY) investors which I have been for over 50 years. About my team and me

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