Get Started Investing When You Don’t Have a Lot to Invest

If you want to get started investing, but don’t have a lot of money to invest it can be difficult to get started investing because many mutual funds have large minimum investment requirements. Fidelity requires a minimum $2500 investment for most of their taxable accounts and many large fund companies require a minimum investment of $2500 to $5000 to invest with them. That can be a lot of money for a small investor to come up with.

One way to get started investing with a little money is to open an IRA. Many companies have lower minimum investment requirements for their IRAs. You can get started with as little as $1000 at Vanguard for several of their target date retirement funds. I have one of my IRAs at T. Rowe Price and they also allow investors to open an IRA for just $1000 for many of their mutual funds.

Opening an account with a discount brokerage is another way to get started with a small amount of money. I have my other IRA with TradeKing.com which has no minimum investment amount. You can also open an E*TRADE IRA with no fees and no minimums. An IRA with optionsXpress requires just a $200 minimum equity balance. Although, you can open these accounts with a low balance you would want to build up your balance before making trades in order to keep your trading fees reasonable.

You can also open an account with a different type of investment company such as Betterment.com which has no minimum investment and no minimum balance requirement. Money you invest with Betterment is invested in ETFs. When you don’t have much money to invest ETFs can be a good option because many of them have very low expense ratios. When yo don’t have much money to invest you can’t afford to spend much of it on expenses.

One last way to get started investing is with an automatic investing program (AIP). I actually started my IRA with T. Rowe Price by making $50 monthly investments through their AIP. Unfortunately, they no longer offer their AIP. Janus funds allows you to use their AIP with monthly investment amounts of $100 and Buffalo funds also allow you to use their AIP for a monthly investment of $100. If that is still too much, the AIP at Ariel funds and Artisan funds let you make a monthly investment of just $50.

These small investments may not seem like much but they are a start. Getting in the habit of investing now can lead to bigger investments as you make more money. If you wait until you have enough money to invest you might not ever get started investing.

4 thoughts on “Get Started Investing When You Don’t Have a Lot to Invest”

  1. Vanguard, to its credit, will let you open an individual retirement account for $1,000 in one of its 12 target retirement funds. Vanguard isn’t alone in offering lower minimum initial investments for retirement investors. T. Rowe Price, for example, drops the minimum on many of its funds to $1,000 from $2,500 for IRAs. Fidelity will let you start an IRA with any amount, but your money will cool its heels in cash until you reach $2,500.

  2. 3. What are the minimum requirements for investing in the company’s funds? What is the minimum you can invest to get into a fund? With T Rowe Price, the minimum buy-in for a regular mutual stock fund account is $2,500. This is somewhat pricey, and deters some from buying. However, there is another great option. You can invest in an automatic investment plan, where a certain amount of money is deducted from your checking account each month. You can deduct as little as $50 per month, and then you only need $1000 to buy into that fund. Once you are in the fund, you can add to it in increments of $100 or more, at any time. With American mutual funds, the minimum amount to invest is only $250, making it easier to get into a fund. Remember, you will need an investment adviser, you can’t just buy in. (You can register your accounts online and then purchase additional shares online however.) You can then purchase additional shares at a minimum of $50 anytime. The automatic asset builder is also available for at least $50 per month, with no up-front amount to be purchased.

  3. You know much of what you need to know by now: that you can turn a little money into a lot of money over time; that for most people, stocks are the best kinds of long-term investments; that mutual funds invest in stocks (and other things); and that index funds are a particularly appealing kind of mutual fund.

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