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Massive moves in shares of GameStop Corp. (GME) continue to make financial news headlines. Reddit’s WallStreetBets forum along with Robinhood and individual investors have all been cited for driving the volatility.

There is often more to the story than the sound bites imply. In the case of GameStop, there are likely large trading firms engaging on both sides of the trades. Trading firms utilize bots to gauge what’s discussed on social media and the tone of the conversations. Likewise, not all members of WallStreetBets use Robinhood, have small accounts or have even traded in shares of GameStop.

Many new investors aren’t even trying to turn a quick buck. A study by FINRA (“Investing 2020: New Accounts and the People Who Opened Them”) found that 56% of new investors—defined as opening an account in 2020—listed saving for retirement as a reason for opening an investment account. About 38% said they did so to learn about investing. Nearly two out of five average less than one trade per month.

There are, of course, those who hoped to make a quick buck. Eight percent of new investors averaged four or more trades per month. About 29% of new investors listed “speculating” as the reason why they opened a brokerage account. (The two responses were to different questions.)

Still, there are a lot of new investors who are smartly seeking to invest as opposed to trade.

It’s easier than ever before to get started. None of the major discount brokers require a minimum dollar amount to open an account. Several—including Schwab, Fidelity, Interactive Brokers and Robinhood—allow investors to buy fractional shares. Fidelity and Robinhood also allow fractional share purchases of exchange-traded funds (ETFs). No commissions are charged on stock and ETF trades.

Several mutual funds have long allowed investors with small balances to buy shares. I found over 400 no-load mutual funds with minimum purchase requirements of $5 or less on AAII’s Mutual Fund Screener. All of these funds are open to new investors—regardless of wealth. Most (but not all) discount brokers have a wide range of mutual funds available to their clients on a no-transaction-fee basis.

If you have a dollar, you can start investing.

Those of you who have been investing for a long while will remember that this was not always the case. Minimum balances were required for opening brokerage accounts. Commissions were not only charged but could be substantial relative to a new investor’s balance. When I first started investing, commissions to buy or sell stocks were $12.95. While the amount is a pittance relative to what many of you paid, it was still a significant cost relative to the small amount I started with.

But it’s not just new investors that these changes help. They also help the many people who are making paycheck-related contributions to their retirement savings accounts. Spreading out the maximum annual contribution of $6,000 to individual retirement accounts (IRAs) and Roth IRAs—for those under the age of 50—over 26 pay periods equates to regular contributions of slightly under $231. The pay-period-related contributions made by many are even smaller. So being able to invest small amounts, buy shares in fractional amounts and not pay either commission or transaction fees is extremely helpful to a large number of people.

Some of you reading this are among those who are benefiting from these trends. Other AAII members reading this have been fortunate to accumulate sizeable amounts of wealth. Even if you are in this latter group, the elimination of commissions and transaction fees keeps more dollars in your portfolio.

Last year, we asked a sample of AAII members if they have helped a young person start investing. Almost four out of five respondents (78%) said yes, they have. If you are among those who currently help or are planning to help someone start investing, understand that these trends are very helpful. Considering that many stocks and ETFs have share prices in excess of $100, the ability to buy fractional shares also helps.

For ideas about how to get young investors started, check out Christine Kieffer’s article. Kieffer is a senior director with the FINRA Investor Education Foundation. She gives some great ideas for how to leave behind a passion for investing as your legacy.

April is National Financial Capability Month, making it a good time to start the conversation. It’s also a good time to give the gift of AAII membership. You can do so by contacting member services at 312-676-4307.

Wishing you prosperity and good health,