Start Saving with Low Minimum Investment Mutual Funds

I’m a big fan of Vanguard’s low cost mutual funds but they aren’t particularly friendly to the young and new investor because they often have decently sized minimum investments. Most require $3,000 to start, though their STAR Fund requires a mere $1,000, which is a lot when you consider most people are looking to save a few hundred dollars a month. At $100 a month, it would take two and a half years to accrue the $3,000 needed (or 10 months for the STAR Fund), to open a Vanguard fund. While you could always put it in an online bank and earn a few percentage points while you waited, most people want to jump right in – fortunately there are many companies offering mutual funds with a low minimum investment.

To find one, I recommend using Morningstar’s Mutual Fund Screener. You can set the minimum initial purchase to less than $500, no load only, and expense ratios less than or equal to 1% – that will give you a result set of at least 200 (that’s the limit). For even more granularity, you can set the star rating to 5 and narrow it down to a mere 125 to choose from.

That will give you a head start on your mutual fund investing!





One response to “Start Saving with Low Minimum Investment Mutual Funds”

  1. Some fund companies will waive the minimum requirement for IRA accounts and/or if you set up automatic monthly deposits. I believe T.Rowe Price is one of them.