One very often asked question, especially by young and new investors is how to invest small amounts of money in mutual funds. Most mutual funds have an entry point that may not be easily reached of a few thousand dollars. Even if you can invest a few thousand dollars, it is diffcult to diversify because each fund will have a similar investment minimum.
There are several ways to overcome this barrier and start investing:
- ETFs at discount Brokers: Accumulate money for a few months until you reach atleast $1000 (to avoid paying too much in the way of commissions) and open an account at a discount broker like Scottrade to buy ETFs (Exchange Traded Funds)
- Retirement Accounts: It is never to early to invest in your retirement. Many fund companies have lower minimum requirements for retirement accounts. In fact if you are willing to invest a small fixed amount every month, you should definitely look at Fidelity‘s Simple Start IRA
- Sharebuilder: You can invest any amount of money for 4$ commissions (trades are made Tuesdays).
- Increase your contributions to your 401K, if you have one