Do you think that you need a fortune to get started? You’re
wrong. Many fund companies have a $250 minimum investment
requirement. Others with $2,500 or $10,000 minimum
investments waive those requirements if you’re willing to
invest $50 or $100 each month or even each quarter.
Individual Retirement Accounts are another way to steer
around high minimum investment requirements because
many mutual fund companies allow you to start an IRA with
$1,000. (A few companies accept $250 as a minimum, but
that is becoming more rare.) Almost all mutual funds offer
this service to investors in an attempt to capture assets that
the funds hope to hold on to for years — until the investors
retire. Make sure, however, that you really can use an IRA
and aren’t just looking for a way into a fund. You can’t tap
the money until you reach age 59 1⁄2 without paying income
taxes and a 10% penalty. If you’re investing for retirement,
fine. If you’re investing to pay for your child’s college tuition
or a beach house and expect to require the funds well before
age 59 1⁄2, find a fund that fits your needs.
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