I want to invest $2500 in a few different mutual funds, but a lot of the ones I want have a really high min.?

Question

I was planning on investing $1000 in domestic small cap funds. I was planning on investing another $1000 in foreign funds, preferably Indian or Chinese real estate. I was planning on putting $500 in domestic blue chip stocks.

A lot of the fidelity mutual funds and etfs I was looking at require a minimum investment of $2500 or have a high expense ratio. Any suggestions on what mutual funds I can invest my money in? I'm a college student and totally new to this!

Thanks!

Answer 1

Now is a tough time to get in a mutual fund. The market is volatile and you could get crushed.

ETFs are going through a downturn at present due to foreign markets following the recessionary trend of the US - and they are behind us.

Some say China will be cranking up the demand once the Olympic "shut down" is over.  I don't know if Beijing (which has little industry as a percentage of the Chinese economy) is truly going to make a big difference.  Market stimulus might - but how much, know one really knows. The reason many gave for the runup pre-Olympics was Chinese preparation.  Now we're being sold the same rationale for post-Olympics??  Not sure if the timing is there yet.  This may make it a good time for your real estate focus - but I have no expertise there.

ETFs are far more liquid, trade like stock, and don't have all the fee barriers mutual funds do.  

Answer 2

You really should consider just putting your money in one mutual fund. The point of buying a mutual fund is to be diversified, but by purchasing 3 you are becoming a mutual fund of mutual funds.

Anyways, you should look at vanguard if you want low expense ratio index funds, they're generally cheaper than fidelity. Try looking at ishares.com as well for ETF's, they usually don't have an investment minimum since they trade like stocks.  

What you could do if you want global exposure to developing countries (india, china) is put a small amount of money into a foreign etf, and then simply put the rest into an index fund or etf.

Personally I like S&P 500 index funds/etf's since they track the performance of the overall market.

Answer 3

One thing you can look into is forming an investment club. That's where a number of people each put in a smaller amount than what's required by a particular investment fund and pool their money together to come up with the minimum amount required. The amount you invested as a percentage of the overall investment is the percentage amount of the fund that you own.

A friend of mine was in this kind of club with a bunch of friends a few years ago. Everybody was assigned a couple of investments to research and present them to the club. The club then voted on which investments they would put their money into. They would then meet every month at a bar or someone's house to discuss their progress, any new investment opportunities, and whether they should drop any of their existing investments.

One thing they did require, though, was that everyone put another chunk of money into the kitty every month (like $100). That way, they were all contributing to their savings/investment fund and having it grow each month. And, if someone wanted out at any time, they could cash out their percentage ownership in the fund.

Answer 4

You can set up an account at online brokers, without putting any money in. This will allow you to use their quotes and research  services, and also "paper trade" using dummy portfolios. They don't mind- they figure you'll become a customer later. Paper trading is good practice, but doesn't simulate the greed & fear problem of actual trading.

     There's ETFs, and there's also closed end funds. A closed end fund has lower expense ratios than open end funds, because they don't deal with customers. You buy them like an etf, same commision as trading a stock. Instead of getting your money back, directly from an open end fund, with a closed end you can only get it back by selling to someone else. Closed ends (and etfs) don't have the problem of customers forcing them to sell when prices are low - the average open end underperforms the market because they often have to sell at bottoms, to meet customer redemptions. Closed ends often sell at a discount to the value of their assets, so you can hope for gains as the discount decreases, when the market improves. I like covered call -funds: they pay good dividends, and their net asset values are more resistant during bear markets. Their market value often takes an extra whack, as markets bottom, allowing an entry at a higher discount.  Covered call funds NAV underperforms in bull markets, though- but discount might decrease. discount equals  net asset value / market value.

    This link describes many etfs and closed ends.

http://www.etfconnect.com/select/FindAFu...

P.S. I'm leary of small caps - large caps can better tolerate the increased cost of regulation and taxes, in a democrat administration.