Stock-Net.com

Teaching kids about investing is a great idea, and what better way than to help them invest some of their own money. Once you have decided to pursue this, however, it becomes apparent that most fund minimum purchase amounts are beyond the reach of an entry level investor. With fund minimum purchases of $2,000 or higher ruled out, what mutual fund options are available for initial purchase below $500? Stock-Net has researched this topic and has several good options for you to explore.

With a minimum investment of $250, State Farm Equity would make a good general purpose fund choice for a beginning investor. This fund is apparently not listed on exchanges yet, so you would need to rely on other means of tracking its performance until its listing. It has returned about 10% annualized over the past three years.

Another option is the Excelsior Value and Restructuring Fund, UMBIX. This fund, which specializes in investing in companies undergoing consolidation or restructuring, has returned 12.3% annualized over the past 5 years. Excelsior Value and Restructuring Fund requires a minimum investment of $500.

Homestead Value fund, HOVLX, has returned an annualized 10% over the past ten years. You can invest in the Homestead Value fund for a minimum investment of $500. If you feel more aggressive, you may want to consider the Hodges Fund, HDPMX. This fund is run by a father and son team, and invests in growth companies of any size. The minimum investment for Hodges fund is $250, and the Hodges Fund has returned an annualized 19% over the past 5 years.

Other options include the Amana Growth Fund, AMAGX, with an expense ratio of 1.42%, which has returned 23% annualized over the last three years.   Also, CD Capital Markets Large Cap Growth, TLGUX, has an expense ratio of 0.77% and a 3 year annualized return of 11%.

New Covenant Balanced Income fund, NCBIX, has a very low expense ratio of 0.15% and posts a 3 year annualized return of 8%.  Finally, the Pax World Balanced fund, PAXWX, has a 3 year return of 12% with an expense ratio of 0.94%.

Picking any of these funds would make a good first investment, and would get your young investor started on a lifetime of learning about investing.

Powered by Gregarious (42)