Q: I recently graduated from college and am looking for good ways to invest.

Are there any index funds I can invest in without the fees or minimum starting balance? Are there any index funds I can directly use without going through a broker? I would like to be able to do monthly deposits into the fund and let it grow over time.

A: I'm glad you are thinking about investing for your future, but you'll need to set some priorities first. As a recent college graduate, your primary asset is you. That means nurturing you freedom to make choices, negotiate your salary and move your life forward.

All of that requires cash, so focus on having a good cash reserve before you start to invest for a more distant future.

After you've done that, you can start with small investments in a low-cost exchange-traded fund (ETF). With a minimum investment of $1,000, for instance, you can open a brokerage account at Charles Schwab.

Once open, you can buy shares of Schwab's commission-free exchange-traded funds.

The Schwab U.S. Broad Market ETF, for instance, has an expense ratio of only 0.06 percent. This is less than the 0.07 percent cost of the Vanguard Total Market Index ETF and one-third the expense of other competing ETFs.

If you are secure in your job and can understand that a market decline is an opportunity for a young person, not a disaster, a simple start would be to go "all-in" in the Broad Market fund.

It is important that your account start with no-commission ETFs. Here's why: Even a small discount broker commission, such as the $8.95 charged by Schwab, can be a burden.

Q: What are the trade-offs to buying a life annuity at younger ages versus older ages? And is there a rule of thumb regarding the most appropriate age to purchase an annuity?

My wife and I will retire in a few years. In addition to Social Security and 401(k)s, and some additional savings, we both have defined-benefit pensions. Should we consider a life annuity?

A: If the combination of your Social Security and defined-benefit pensions covers a significant portion of your spending, it's hard to get enthusiastic about adding another life-income tool.

My own rule of thumb — and it is just that, a rule of thumb — is that if your Social Security and pension income covers your "core" expenses — shelter, transportation, medical, household and related income taxes — then you have no need for a life annuity. This may be your situation.

But many have no pension, and Social Security may cover a small portion of their core spending. So changing their portfolio to include a life annuity is very attractive.

At what age you should buy a life annuity is a long discussion. Most advisers suggest buying multiple life annuities over a period of years, letting the increase in age work in your favor to bring higher monthly payments.

Questions: scott@scottburns.com