For most investors, starting out will require building from a small base. That's normal. It takes time to create a large nest egg and you have to start somewhere. But it is important to recognize that starting small doesn't mean you can't build a good stock portfolio. It just means you have to go about it in a slightly different manner. If you have as little as $500 to invest in stocks, this is the index fund you should consider putting it in. Here's why.

With $500 you can afford to buy a lot of different stocks, since many stocks have share prices below that figure. But you won't be able to buy a lot of different stocks at one time. And you won't be able to buy a lot of shares of whatever stock you choose to buy. (Yes, you could buy high-risk penny stocks, which trade for just pennies a share, but that's not a great plan for any investor, let alone a new investor.) Luckily, there's a better way to do it.

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Source Fool.com