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This question pertains to other ETFs and stocks, but I'll start with the S&P500 like this one. I'd like to invest in an ETF predicated on the S&P 500 index, but the funds I am interested in are trading at prices higher than I am able to pay:
http://etfdb.com/2010/closer-look-at-sp-500-options/ http://www.marketwatch.com/story/why-your-choice-of-sp-500-etf-matters-2013-03-19.

I'd still like to invest in such an ETF so what other options or possibilities are there? These two websites also list some other S&P500 ETFs, but they look to be variations and might be too "adulterated." Thank you very much!

Say the (eg S&P500) stock or fund is trading at $200 a share and I want to invest less than $200 per share on something predicated on the S&P500. What can I do? Any other solutions? I should add that, in toto, I do intend to invest much more than $200. I simply may not want to spend $200 on one share.

  • Are you concerned about how to buy a stock/etf/fund when the price of a single share is really high? – Alex B Nov 21 '13 at 17:22
  • Thanks for your response. Yes. Moreover, what else to do in this situation while still eager to buy a share in the same sector/industry? – Greek - Area 51 Proposal Nov 22 '13 at 3:34
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For equities, buy direct from the transfer agent. You have to buy one full share at a minimum but after that dividend reinvestment is free.

There are others like share builder and foliofn that let you buy fractional shares. As the other poster said their roster is limited so you cannot buy every ETF out there.

With your example of not wanting to spend $200 I agree with the others that you should invest in a mutual fund. Vanguard will have every index fund you need and can invest as little as $50, as long as you sign up for a systematic investment draft from your bank. Plus vanguard typically has the lowest fees in the industry.

The most important thing is to start investing as soon as possible and as regular as possible. "Pay yourself first"

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You have a couple of options:

  1. Auto-investing in an open-end mutual fund. Some companies may waive a minimum if you sign up for an automatic investing, e.g. T. Rowe Price will waive its minimum if you agree to invest $100/month. There may be some lower ones out there as well.

  2. Some brokers like ShareBuilder have programs where someone could auto-invest getting fractional shares with each purchase. However, something to consider is what percentage is it costing you to buy each time as it may be quite a bit of friction if you are paying $4 a purchase and only buying $40, this is 10% of your investment being eaten up in costs that I'd highly advise taking the first option.

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    Unless OP chooses an ETF that his broker offers as a free trade, I agree, stick with funds. – JTP - Apologise to Monica Nov 23 '13 at 5:17
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If you find a particular stock to be overvalued at $200 for example and a reasonable value at $175, you can place a limit order at the price you want to pay. If/when the stock price falls to your desired purchase price, the transaction takes place. Your broker can explain how long a limit order can stay open. This method allows you to take advantage of flash crashes when some savvy stock trader decides to game the market.

This tactic works better with more volatile or low-volume stocks. If it works for an S&P500 tracking ETF, you have bigger problems. :)

Another tactic is to put money into your brokerage cash account on a regular basis and buy those expensive stocks & funds when you have accumulated enough money to do so. This money won't earn you any interest while it sits in the cash account, but it's there, ready to be deployed at a moment's notice when you have enough to purchase those expensive assets.

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