Where Should I Invest $500 Into Mutual Fund?

Question

I have a little amount of money. I want to start invest. Please help me. Are there a lot of risks in mutual funds?

Answer 1

Two things to consider:

1) Look for an index fund. This is a fund based on the DOW, NASDAQ or even the S&P 500. This will give you a diverse portfolio with low risk.

2) Many institutions require a lump sum of cash to start investing in their mutual funds from $500 and up. I would consider T. Rowe price. They allow you to invest a small amount (as little as $50 a month) and allow you to grow your investment over time.

I attached a link with mutual funds with $500 minimums.

Best of luck!

Answer 2

It obviously depenends on the type of Mutual Fund. If you invest in a commodity only mutual fund then you are going to be taking a sizable amount or risk. Howver, if you invest in a a very diversified type Fund of Funds then your risk is going to be significantly lower.

There are many different types of Funds. The best would be to find one that appeals to you and has an amount of risk that you feel comfitable amount. As an example, there are some "sin" funds that invest only in alcohol, tabacco, guns and other related industries, although atractive for some this might be a fund that many would not find atractive regardles of the risk/return tardeoff.

That is why reading the fund prospectus and understanding their investment goals and restrictions is so important. Many people only flip to the fee section of the prospectus and many others don't even look at the prospectus. That is a shame...

As for helping you find a good fund, try www.mornistar.com they evaluate many of the funds out there and write some good reviews about them.

As an alternative, you should think about ETF (Exchange Traded Fund). They are "passive" type of investments (mutual funds can be active or semi-active, ie. someone makes the investment decision and buy/sells assets over time). ETF invest in a pool of companies and don't make investment decisions, some try to track an index or a market. The benefits of an ETF is that you only pay a fee to buy it (9.99 for most on-line brokers) and then nothing ever again. For mutual funds you usually pay 2% of your assets and 20% of your return per year!!! In can be very cotsly....

Best of luck with your investment decisions, and don't get discouraged by all the information out there. Make a decision a go with it, the only thing worst than buying an underperforming diversified fund is not saving a dime at all!!!

Cheers,

Answer 3

After reading the answers you already have, I thought you could use a little more help.

1st Fidelity requires a greater minimum investment, about $2500.

There are mutual funds that do have a lesser minimum investment. American Funds is one. It does have a 5.75% front end load. But for a person who wants to start out with $500, it is an excellent choice.

You other options are as one responder alluded to is to invest in EFTs or closed end funds. You open a brokerage account with Scottrade for example that just happens to have a $500 minimum to open an account and then buy $500 worth of an index fund or a closed end fund. They are traded like stocks.

Here are a couple of links where you can do some research. Good luck.

http://www.americanfunds.com/default-home.htm

http://www.etfconnect.com/

Answer 4

There isnt a lot of risk, but there isnt much upside either. A mutual fund is a mix of hundreds, sometimes thousands of stocks, which spread out will have a small gain. There may be a few in that mix which gain 20% or more, but also some which loose 20% or more, so your net gain is going to be low. However, there are places you can turn like economicinvest.com that is good at identifying the 20% gainers, so you can grow your money at a better rate.

Answer 5

not much risk in a mutual fund. look into vanguard. they have an excellent selection of funds to choose from. i am 27 and plan to retire in or around 2045. they have a fund that will invest your money properly each year, starting out agressively in the beginning and becoming more conservative as you start to near retirement.

Answer 6

Call Up Smith Barney

Answer 7

Call Fidelity Investment in Boston, Ma., or Lincoln, RI. You can find them online.

Answer 8

Fidelity Midcap, is the safest way to go right now. Last year, they had a 19.03% return.

Answer 9

There is always risk

Try UMREX

Answer 10

Put it in the QQQQ (NASDAQ) and let it ride.