Looking for Roth IRA with initial deposit $500 or less

[thomsoad]

One of my tennants (age 22) is really taking an interest to what I do and wants to emulate it. I like the guy and basically told him to invest early in a good low cost S&P 500 mutual fund; make automatic deposits; and just forget about it and dont let the news in either direction sway you.

He is a true novice at this so the last thing Im looking to do is try to get him to time the market and get in over his head. So I was looking for a low initial deposit $500 or less and no loads.

I have already given him books to read so not to be rude ... PLEASE dont waste the thread by telling him what books to read or classes to take. Im honestly just looking for low initial cost Mutual Funds.

Tried the net and couldnt really find anything... any help would be appreciated.

[MonkeyMama]

T Rowe Price. Their Retirement Target Date Funds have been doing very well. You only need $50 or $100 to invest, if you commit to regular contributions (probably monthly, though I think you can set them up quarterly instead of monthly, to same end).

I chose T Rowe specifically for the low initial investment. You can tell him that I put $50 in there in January 2008 and not have $13,000 in the account. Obviously I have invested much since, but you start small and go from there.

Also, Vanguard STAR has a $1,000 initial investment, which is good to get in the Vanguard family. I have also put my kids' money in STAR, some retirement, etc., until we could build up the $3,000 minimum needed for most other VG funds. If he can pull together $1,000, this might be the better recommendation for the long haul. But you can certainly start with $50 at T Rowe and just transfer the money over once you get to $1,000.

Some of this info can be outdated - this was just last I checked.

[dczech09]

MonkeyMama, I use T Rowe as well for my Roth. However they changed the rules recently and now require an initial deposit of at least $1,000 or a rollover. I know this because I tried to set my buddy up with them for his Roth, but they required a minimum of $1,000.

I think most good big name mutual fund companies are going to have this requirement. $1,000 seems to be the norm.

[MonkeyMama]

MonkeyMama, I use T Rowe as well for my Roth. However they changed the rules recently and now require an initial deposit of at least $1,000 or a rollover.

Bummer! At $50, they had by far the lowest minimum for a while.

[jpg7n16]

Now are you sure this 22 year old with only $500 is truly in a position to invest this money??

Just because he can open a Roth IRA, doesn't mean that he should.


I know Fidelity lets you open it if you commit to $200/month for like a year.

https://scs.fidelity.com/accounts/services/content/aoaccountselect.shtml.cvsr

See footnote 2 under 'Roth IRA: Learn More'

[Petunia 100]

Pax is a socially conscious fundshop requiring $250 to open an account. They are not the most inexpensive fund shop, and they do not offer index funds, but they are no load. Their World Balanced fund PAXWX holds foreign stocks, domestic stocks, and bonds and has a decent track record. The expense ratio at .99 is about average.


In addition to Vanguard STAR, their Target Retirement funds also have a 1k minimum.


That is a shame about T Rowe Price changing their policy. Before the change, you could get started at T Rowe Price with $0 if you would sign up for Automatic Asset Builder of at least $50 per quarter. Ah well.

[MonkeyMama]

In addition to Vanguard STAR, their Target Retirement funds also have a 1k minimum.

Whoa - that is VERY new.

I can't keep track of all this stuff.

[Thrif-t]

When my kids had paper routes I was able to open a roth ira for $100 at Scottrade.