Mutual Fund with low buy in

[rizzmo]

Hi I was wondering if any of you savy investors could help me out with a mutual fund selection. Over the weekend my brother asked me how he can start saving for retirement. His current employer dosen't offer any type of retirement plan, so he would be doing an IRA (We would need to discuss Roth vs. Traditional). Here are some requirements for the fund we are looking for.

-Low expense ratio
-Low minimum investment (the lower the better)
-Index fund that more/less follows the DJIA

Initially I was thinking a Vanguard Fund, however it seems all of these funds require a minimum investment of $3k which is a little steep for him at this point, as he is still working towards his emergency fund. His hope was to get the fund set up and then have automatic contributions set up from each paycheck. I'm thrilled he is starting to plan for the future and am really hoping there is a fund that will work for him. Thanks in advance for your suggestions.

[disneysteve]

I believe T.Rowe Price lets you start with a relatively low amount as long as you sign up to put in $50/month automatically.

[ea1776]

I believe T.Rowe Price lets you start with a relatively low amount as long as you sign up to put in $50/month automatically.

That is correct. That's what we do and it works great. T. Rowe has a lot of nice funds, but their index funds aren't the best IMO. You may want to look into Charles Schaub's no-cost ETF's. I'm not sure if they have a minimum or not, but purchasing their no-commision ETF's is a good deal for the consumer.

[JaclynForester]

Hey there! First of all it is very wise of your brother to think ahead. I also think that T.Rowe gives you a great start in this market. The best of luck to you and your brother.

Jaclyn - A strong believer in Forex Trading

[MonkeyMama]

T. Rowe would be best - he can open an account with $0 if he commits to $50 per month contributions. (I don't even think it has to be every month - maybe $50 per quarter?). Last I knew, anyway, when I opened my account. (Or was it a $1k minimum???)

Their Target Retirement funds are very good, in my opinion. I am invested in a Target Retirement fund there. Ratios are a little higher (well under 1%, by maybe high by Vanguard's standards). You can always transfer the money over to some place like Vanguard when you hit $3k.

For Vanguard, you can invest in the STAR fund for just $1k. This is a balanced fund (stocks/bonds). This is a great way to get into Vanguard. Just buy into something else once you get the balance up to $3k.

I've done both. Though I wanted my kids invested more aggressively, it was easiest just to start them in STAR until they had enough cash to invest in other Vanguard funds.

[rizzmo]

Thanks for the responses everyone. It sounds both the STAR fund and T.Rowe Price Funds could work!