Start a retirement fund with fifty bucks (it’s that easy…)

… thanks to T. Rowe Price’s Total Equity Market Index fund (ticker: POMIX.)  Most funds require a few thousand dollars to open an account.  T. Rowe Price lets you open, say, a Roth IRA, with as little as $50 as long as you sign up for minimum automatic monthly contributions of $50 as well (taken right out of your checking account.)  With this particular fund, you get a low-fee, broadly diversified, US stock market index fund.  It’s the kind of thing you can invest in regularly and forget about until you’re within 10 years of retirement.


(If you invested the bare minimum of $50 per month for 30 years at 7% interest, you’d have over $58,000.   Plus, you would only have invested $18,000 of your own money [= $50 * 12 * 30]. That’s an extra 40 grand in your pocket just for 50 bucks a month!)

POMIX’s expense ratio is a low 0.40% (not quite as low as Vanguard’s 0.18%, or Fidelity’s approaching-absolute-zero Spartan fund ratio of 0.10%.  Unfortunately, they generally require $3,000 and $10,000 to open an account, respectively.  If you have at least $3000, or can save it up, I recommend opening a Vanguard account instead, and investing in their total stock market index (ticker: VTSMX.)

UPDATE 11-16-2010: Vanguard now offers a $1,000 initial minimum ‘STAR’ fund that is a balance of 60% stock and 40% bonds.  This is an excellent way to get a ‘foot in the door’ and start building an investment account with Vanguard, my favorite choice for individual investors.  If you’re under 50 and investing for a retirement that’s still 10 – 15+ years away, switch your investment to the VTSMX fund mentioned above when you accumulate over $3,000.

Bottom Line

If you’re not saving for your retirement (or for whatever long-term goal you have), and you don’t have a few thousand laying around to open an account, you can still start with $50 today!

Author: Ward Williams

Ward is an independent financial advisor at Better Tomorrow Financial. He started working as an independent investment advisor in 2009.

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