These are the only two options I will consider at this point, since I was in a very indecisive state, but have managed to narrow it down to these two. It seems that mostly everybody is recommending either Fidelity or Vanguard.

I am a college student who will earn some "official income" money during the spring, but not a lot (very minimal part-time job). I also have about $500~$1000 that I received from relatives and saved up over the years.

As for utilities, emergency fund, transportation, etc, my parents and supportive extended family (we are from a culture where there is no such thing as personal business :D) are saying JUST GO AND START INVESTING YOUR MONEY and do not worry about the other issues. Just focus on excelling at school and start investing NOW for the long-term future; you will need it!

As for a little bit of background of my future plans, I plan on going to get a PhD right after graduating from college, and hope to continue in academia if I can (to become a professor). Thus, at least until my PhD is done, it's likely that I won't be making any money, or very little (I will try but I don't want to be too optimistic when taking things into account)...

With these goals and future plans in mind, does anyone know which is better for someone in my situation, between Vanguard and Fidelity? A lot of people have been suggesting me to just invest in an ETF for now although I don't really know how it works. I just need to know which of the two, Vanguard or Fidelity, is the most optimal decision (for someone living in Texas) who's in my shoes, and also why?

[EDIT]-> Or possibly a mutual fund instead of ETF... I don't know, I'm so confused..... :(

2 Answers 2


The minimum at Schwab to open an IRA is $1000. Why don't you check the two you listed to see what their minimum opening balance is? If you plan to go with ETFs, you want to ask them what their commission is for a minimum trade.

In Is investing in an ETF generally your best option after establishing a Roth IRA? sheegaon points out that for the smaller investor, index mutual funds are cheaper than the ETFs, part due to commission, part the bid/ask spread.

  • Great advice. I don't understand why one would want to open an account directly with a fund company. Schwab gives you access with ETFs that are cheaper than most Vanguard funds with no transaction fees. Commented Dec 24, 2011 at 5:10

Well, a couple things to keep in mind:

  • You can't contribute more to an IRA than you make in "official income" in a given year.
  • Many IRAs will have minimum amounts you need to contribute to open your account. For Vanguard, this is $1000 or $3000 depending on the fund you're investing in (you have a lot more choices at $3000), and for Fidelity, it is $2500 or $200/month recurring contributions.

Even if you have enough to meet the minimum initial amount, you need to have at least that much income in the year you make the contribution.

You'll probably be best served saving up in a savings account so that by the time you have an income (and can thus make contributions), you have enough cash to meet the minimum initial contribution.

  • 1
    Your points are correct, if OP has less than $1000, it may make sense to open a bank CD, or money market fund within the IRA and save there until the funds grow enough to invest for real. Commented Dec 26, 2011 at 4:34

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