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Lifestyle Q & A Forum

What are some mutual funds that allow an investment of $1000 or less?

by
Dee Lee, CFP, MBA Certified Financial Planner & Author Harvard Financial Educators



Question:
I have a three-year-old and I have been saving her gift money since her birth. I now have a $1,000 to invest for college. I would like to find some mutual funds that allow an initial investment of $1,000 or less.
Answer:
The Strong family (800-368-1030) of mutual funds will allow $500 or less if the fund is held in a custodial account for the child. I went to Morningstar, a mutual fund rating service, and used their computer program, Principia to search for companies that would allow an initial investment of $1,000. Because of the long term time horizon, I looked for a no load growth fund or a growth and income fund, that had a five year return of 12 percent or better and a Morningstar rating of three stars or better.

Gabelli Asset or Gabelli Growth (800-422-3554) showed up on the list. Two good funds with 15 percent five year averages. Neuberger & Berman (800-877-9700) had three funds show up on the list, Focus, Partners and Guardian. All with a 17-18 percent return for the last five years, all good choices for a college fund. Third Ave Value (800-443-1021) a growth fund is rated 5 stars and has returned an average of 18 percent to its shareholders for the last five years. Oakmark (800-625-6275) has an average 25 percent return for the last five years.

This is just the beginning of your research. You need to call and request a prospectus and application from the funds and use that information to make comparisons. You'll want to review fund objectives to see if they match yours, expenses, any hidden costs, ease of getting in and out of fund and look at the performance records of the funds.