Gyroscopic Investing

Friends,

I'm wondering if you can help me find a PP-worthy stock fund (a single US-based index fund) that has low (or no) minimum investment, with a $25 or less automatic monthly investment. So far, the only possibility I've found is HSTIX (http://www.homesteadfunds.com/FundsPerf ... exFund.htm). I'd appreciate other thoughts

HSTIX's expense ratio is 0.6, which is way too high for a stock index fund IMHO.

All of Vanguard's funds have $3,000 minimums, but after that you can automatically invest any amount on a monthly basis. If that level of minimum investment is a problem, I'd suggest saving up until you have it. Your savings can also double as an emergency fund until then.

Hello Fradika,

There is a tradeoff between low investment minimums, low account minimum balances, and the company's costs.  Low minimum investment + low balance requirements = higher fees (usually)  because such customers cost more to the company.

If you're just getting started, a high fee (less than 1.0%) might be tolerable, as long as you have a no-cost plan for switching to a low fee fund within 12 to 18 months.

1. I found only one for individual investors when I did a mutual fund search screen on TDAmeritrade and Fidelity:

Legg Mason Batterymarch S&P 500 Index Fund Class A (SBSPX)
This one is no load, and with systematic investments, only a $25 minimum on initial and subsequent investments.  For $25, it's probably best to sign up directly with Legg Mason and invest with them, rather than go through a brokerage.

2. This Schab fund has a $100 minimum investment but no minimums on subsequent investments:

Schwab S&P 500 Index (SWPPX)

It might be worth it to wait until $100 is accumulated to do this one.  I don't know whether you have to be a customer with their brokerage to do it; if so, their brokerage minimum ($1000 to open) will apply.

3.  There are a few funds that will allow you to have a low minimum monthly investment, but require a high initial investment, like $2500 or more, like:

Fidelity Spartan 500 Index Fund - Investor Class (FUSEX)
and the Vanguard funds that Pointedstick mentioned.

Best of luck.

FWIW I generally discourage investing in anything other than cash until you have at least $5000 in reserve.

Ad Orientem wrote: FWIW I generally discourage investing in anything other than cash until you have at least $5000 in reserve.

+1