Cheapest Way To Open IRA

How to start saving for retirement with less than $100 in a tax preferred retirement account.

What is an IRA?

An individual retirement account is a tax preferred account that you can contribute a certain amount to each year. The two main choices are a Traditional IRA and Roth IRA. They each have their own features that you can research to decide which is right for you.

IRA Minimums

Many brokerages that offer IRAs either have explicit account minimum balance requirements or the funds they offer have minimum contribution requirements. For example, they may say if you have under $1000 in your account, you’ll be charged a higher annual fee. Or they may offer a no fee account but the mutual funds you can choose from all have minimums of $1000 or $2500.

If you sign up for electronic delivery of forms, you’ll avoid Vanguard’s $20 annual fee on accounts under $10,000.

If you are just starting out on this path, you may not have that much money available to open these accounts. But, if you can pull together $70-130, you can get started!

Vanguard’s ETF Loophole

Vanguard mutual funds also have minimum initial investments to start. However, there is a loophole.

Vanguard offers Exchange Traded Fund (ETF) versions of many of their mutual funds. They also don’t charge a commission if you buy a Vanguard ETF in a Vanguard account.

This means if you can afford to buy just one share of a Vanguard ETF, you can open a Vanguard IRA and start saving for retirement. Here is a list of Vanguard ETFs.

What should you invest in?

ETFs like mutual funds are a collection of investments such as stocks, bonds, and other securities. When you buy one share of an ETF or mutual fund, you are buying a tiny piece of up to thousands of companies.

If you can pull together $130 as of this writing, you can buy one share of VTI, which makes you a partial owner of every publicly traded company in the US. If you have less than $130, sort by price and look at the Stock ETFs section. You really can’t go wrong with any of these in the Large-cap category:


Right now, the goal is to get you started. Every time you can spare $70-130, throw it to your Vanguard account to buy a share of one of these funds. Once you have over $1000 saved here, you can sell your ETFs and pick a particular mutual fund that best fits your goals. Once you are in a mutual fund, you’ll be able to add as little as $50 at a time to the mutual fund and you won’t have any spare change being left on the table.


So there you have it. Even if you only have $70, you can open a retirement account. As that builds up over time just with a little at a time, you’ll hopefully find yourself encouraged pump those numbers up!

Update 11/7/2017

After nibbling away buying one share of VTI at a time, this account eventually had more than $1000 in it. We sold the shares of VTI and used the proceeds to buy a target date fund to set it and forget it. Now that it is invested in a mutual fund instead of ETF, we can contribute any dollar amount as we can spare it and Vanguard will automatically buy fractional shares. That means no leftover cash sitting around not invested. If we have an extra $40 one week, we just sweep it over.


P.S. I am not affiliated with Vanguard and receive no compensation from them.

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