Where can I find an IRA with low deposit minmums?

Question

I want to open an IRA but some of the infoI have been recieving requires a $2,500 minimum investment with a $200 monthly investment. I want to get started on this but I can only afford around 50-100 a month right now. Any suggestions?

Answer 1

Forget about everything else you've read here. As long as you have a debt in collections, you concentrate on that first. Then you concentrate on your credit card debt. Every dollar you put toward that debt yields you a tax-free 24.99% gain instantly. You can't beat that.

Then you need to put together an emergency fund. You can save all you want, but if you're one emergency away from ruin, that's not a good thing.

Now, if you work for a company with a 401(k) plan with matching funds, put money into that up to the maximum match. Free money is good. If your company doesn't offer a match, then you can think about the IRA (Roth IRA is preferable if you qualify).

While you're paying down you're debt and putting together your emergency fund, get yourself a basic education about investing. As you can see, your first 3 answers all disagreed with each other. How will you know who is right? And how can any of them tell you what you need to do if they don't even bother to ask about your circumstances? Buy a book about investing, so at least you'll know if their advice (or even a financial advisor's advice) makes sense for you.

Personally, I recommend "The Only Investment Guide You'll Ever Need" by Andrew Tobias. It might not actually be the only guide you'll ever need, but it will give you enough of a foundation to determine if you need to learn more. Good luck to you.

Answer 2

No loads are not always the best option and definitely not for someone who hasn't invested the time to learn what they are doing.

As a statistical fact, investors WITH advisors outperform those that don't but a decent margin!

You can't buy American funds without an advisor. Find your local Edward Jones and talk to the rep about starting. They are one of the few brokerage firms that will take a small account. (fair disclosure: I do not, nor ever have worked for Edward Jones).

A no load alternative with decent funds is T Rowe Price. If this is your first investment, stick with a nice balanced, middle of the road fund. When you get above $10K you can begin to diversify provided you have either learned how to pick an investment or hired a broker to help.

Best of luck.

Any idiot that says "only no loads" without recommending using an investment advisor doesn't have a clue. These days many investment advisors use no loads OR can put their clients into load funds at NAV (this means without ANY sales charge) but then they get paid a fee for their advice which is too high for the smaller investor.

Incidentally, Vanguard has a $2000 minimum that neither T. Rowe or American require and both of the later will take a $50 per month investment.

Plus you can sign a letter of intent with most companies that will give you TIME to hit the minimum, so you can actually open the account with less than the minimum. The letter of intent can also qualify investors for a reduced load on load funds if you plan to buy enough to qualify for a breakpoint within the specified time limit.

Answer 3

Don't follow muncie birder's advice! Never buy mutual funds with a sales load. In case you're wondering, a load is a charge you pay up front when you invest. They take a percentage of your investment right off the top. It really hurts your long term growth. Always look for no-load mutual funds.

Keep in mind, the purchase minimum is not usually a monthly requirement. You can save up your money as long as you want until you have enough for a purchase, so you could purchase once every 2 months, 3 months, or whatever you want. To meet the minimum initial investment, you could open an IRA savings account through your bank. They'll probably have a low minimum. Then when you've saved enough, you can roll the IRA into a mutual fund account.

Try Vanguard (www.vanguard.com) for your IRA. They have some good funds with low expense ratios (that's the money the fund takes out of your assets to pay its expenses, not the minimum purchase).

Answer 4

TD Ameritrade and Merrill Edge, as well as T. Rowe Price have low deposit minimums for IRA accounts.

Answer 5

There are plenty. American Funds has a low minimum. $250 to initiate an IRA. They have a solid record and a number of funds to choose from. It is a load fund, but their record is excellent. Don't sweat the load.