Get a portfolio started with low minimum investment mutual funds

Assortment of $100 bills

Low minimum investment mutual funds allow people to start investing without needing a mountain of cash. Photo Credit: 2bgr8/Wikimedia Commons/CC-BY-SA

Many people might think that getting into investing, like stocks and bonds and so forth, is something for only for dentists, doctors and lawyers. That’s far from the truth, as there are plenty of mutual funds that a person can buy for only a few hundred bucks.

Sitting on a goal mine

When it comes to making investments, one of the most stable investment instruments is a mutual fund. A mutual fund is a mix of investments like stocks, bonds, cash and so forth; the exact composition depends on exactly what fund from what broker. However, like many other investments, there is a barrier that excludes the average Joe or Jane from starting their own portfolio, which is the initial cost of purchasing shares.

Many funds require thousands up front. PIMCO, one of the largest mutual fund companies, requires at least $1,000 up front. Other funds require much more.

[Costs like that would send many running for instant cash loans]

Right now, the reigning king of the cheap mutual funds is GoalMine, according to Fox Business, which allows people to start their portfolio for $25. The idea of the company is to allow the average person to get started at an affordable price point and start building money for goals like a house, a car or sending the kids to college.

Some other low cost funds

There are some mutual funds that will let a person get going for $100 or less, according to SmartMoney. CG Capital Markets, as of 2007, had three funds with a minimum investment of $100 or less. All three were stock funds, which means a mutual fund composed of stock shares. There were also two large cap funds, meaning large companies like General Electric and Apple, and a small cap fund for a minimum buy in of $100.

For those that have a little bit of disposable income available every month, T. Rowe Price allows people to buy funds for $100 per month. According to USA Today, so does Charles Schwab.

The hitch

There is, of course, a hitch, and with low-minimum funds, according to CNN, the hitch is that the fees are usually much higher for the fund. For instance, there are front-load fees, which are charged from the get go. Then there is the expense ratio, or a percentage of the value of the investment the investor has to pay the brokerage every year. There are charges, such as 12b-1 fees, which according to T. Rowe Price are fees that brokerage firms charge to customers for marketing expenses.

However, every mutual fund comes with a prospectus, a document which lays out information about the fund, including all the associated costs and risks that come with investing in it. People looking to jump into investing should carefully go over the prospectus to see if it’s right for them.

Sources

Fox Business

SmartMoney

USA Today

CNN: http://helpdesk.blogs.money.cnn.com/2011/12/23/mutual-funds-that-have-low-minimums/

T. Rowe Price: https://individual.troweprice.com/public/Retail

GoalMine: http://www.goalminefunds.com/home

PIMCO: http://investments.pimco.com/Aboutus/OurCompany/Pages/FrequentlyAskedQuestions.aspx

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