The Day Tradette

Master the Stock Market


One question I get asked a lot is, “should I invest if I don’t have a lot of cash to put in the market?” My answer is absolutely yes! But you have to be smart about where you’re investing. If you’re not investing in large quantities, commissions and fees can really cut into your returns. That’s why today I’m highlighting a couple of new companies that allow you to invest for free – with minimal cash, no fees, and no commissions.

How to Invest for Free

I strongly believe it’s worth investing, even if you only start with $100. You’ll learn about the market with less on the line, so you’re prepared to invest larger positions, plus you could turn your $100 into even more money. If you assume an average 8% annual return (the S&P 500 average return) over 30 years, that $100 could turn into $1,000.

The major drawback to investing small amounts of money is the large impact commissions have on your returns. Say you pay $10 in commission on a $500 investment. That means you’re already down 2% on your original money, just by placing the trade. And if you only have $100 to invest, you’d be down 10% after your trade!

Instead you should seek out low fee, low commission trading opportunities for your small account, so you can maximize your returns. Luckily, I’ve rounded up two of my favorites for you.

[TDT note: This post was not sponsored by Robinhood or Motif Investing. In fact, they don’t even know I’m writing this. I’m just passing along some money saving investment tips.]


Robinhood is a new investment platform that was released last year (you might remember my early access giveaway for it). It’s a mobile trading platform that lets you trade with ZERO commission fees, unlike the $6-$10 fees per trade that other brokerage firms charge. That means that if you make just 5 trades in a year, you can save up to $50 by using Robinhood.

Robinhood was built specifically for young investors, without a lot of money to invest – aka us! To open an account you just need to be a legal US resident, have a social security number, and be at least 18. There aren’t any account minimums to open an account, so you could start investing with as little as $100.

Granted, when I first heard about Robinhood, my suspicion meter went up. I had two questions, which you might be wondering as well: “How does Robinhood make money?” and “is my money safe?”

Robinhood makes money by collecting interest from customers on margin accounts (that means you borrow funds from Robinhood to trade) and accruing interest from customers’ uninvested cash balances (i.e. the fraction of a percent in interest that you would have gotten if you’d kept your cash in a savings account instead). Robinhood is also sitting on a lot of cash from its many investors, including Snoop, Nas, and Jared Leto.

And just because Robinhood is an app, doesn’t mean your money is at risk. According to the website, “Robinhood Financial is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash).”

Motif Investing

Motif Investing may just be my favorite of all of the new “Fintech” companies that have popped up in the past few years. Motif is based around “thematic” investing – building a portfolio around one central idea. Motif investing’s main product – Motifs- are bundles of up to 30 stocks based around a trend, industry, or investment strategy. For example, one Motif I own is “Biotech Breakthroughs,” which is a collection of innovative biotech companies like Gilead (GILD).

There is no account minimum to open a Motif Investing account, and you can invest as little as $250 in each Motif. The benefit of a motif is that it allows you to diversity among multiple stocks, while paying only one commission and no fees. In contrast, to invest in a mutual find you might need a minimum of $2,500 and pay a 1% annual fee.

Motif Investing also allows you to buy fractional shares of individual stocks, so you could invest in Google (GOOG) even if you don’t have the $6260 the stock was trading for today.

Typically it costs $9.95 to trade a Motif and $4.95 to trade an individual stock (in or out of your Motif). So you might be wondering why Motif is in the free trading post. That’s because there are actually two ways to get around that pesky commission thing.

Motif offers asset allocation motifs called “horizon models,” which invest in combinations of bond and stock market indices. They’re similar to the target retirement date funds you might see in your 401k accounts. You can always trade those commission free.

Motif also often offers discounts on its commissions. For example, today you can trade any stock for $0 in commission. And if you sign up for an account you’ll start getting emails with a “motif of the week.” It’s a featured motif that you can trade commission free for the rest of the week. I’ll generally check out the featured motif every week, and invest $250 if I like the theme. Since I’m invested in quite a few different motifs now, I have a very diversified portfolio (at least in the stock market) without paying any commissions or fees!

Even better? Motif has yet another promotion going on right now. If you create a new Motif Investing account with this link and fund $1,000 in it, you’ll get an extra $100 in your account. That’s an automatic 10% return!

In full disclosure, I’ll get $100 too (not an affiliate link, just a referral link open to any account holder). But since I’m just passing along the info to help you all out, I’ll use my referral fees to host a giveaway – with one entry for everyone who opens an account.

Like Robinhood, Motif Investing accounts are protected up to $500,000 for securities and $250,000 for cash.

Before I sign off for the weekend I have a few TDT housekeeping announcements. First, I’m sorry for the infrequency of posts recently. I’m applying to graduate schools and the process has been slowly taking over my life for the past few months. I promise to be back in full force very soon!

Second, you might have noticed the blog has a new look. Let me know how you’re liking it, and if you have any new feature requests.

Finally, I’ve also heard from a few readers that they’ve stopped receiving emails with the latest posts. I switched to a new email provider recently, so if you aren’t getting my emails, just re-subscribe in the right sidebar.

Have a great weekend!

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