How much to invest?
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Your investment strategy will depend partly on how much money you want to put to work. A few options:
$50 a month or more, with no lump sum
It may not seem like a lot, but even small regular investments in mutual funds or exchange-traded funds can add up.
A lump sum of less than $10,000
You have more options in this range, as many mutual funds have minimum-investment requirements of $500 to $2,500. The key is to make sure all your eggs don't end up in one basket. Invest in five or six different types of mutual funds. If U.S. stocks aren't doing great, your holdings in international stocks or real estate may help keep your overall portfolio afloat.
The trick here is not to jump into the market all at once, potentially putting all your money in just before stock prices tumble. One approach: Put one-twelfth of your money into the market each month for a year, a technique known as dollar-cost averaging.
The one-fund option For some, one mutual fund is plenty to get started as an investor. This is the best option if you haven't got a lump sum to invest. Rather than spend your time cobbling together a full-blown investment portfolio, let a mutual fund company do the work for you. A number of fund companies offer one-fund solutions, which themselves own other mutual funds. Some companies even tailor the funds to your desired retirement age. Want to retire in 2030? You might consider the Fidelity Freedom 2030 (FFFEX) fund, which will keep more of your money in stocks now, when you can take on a little more risk, and put more conservative bonds in the portfolio as you near retirement. Our favorites are the targeted offerings from T. Rowe Price, which have solid performance records and charge reasonable fees. T. Rowe also will allow you to start investing with as little as $50, adding $50 more each month. Our favorites Fund name Ticker T. Rowe Price Retirement 2010 TRRAX T. Rowe Price Retirement 2015 TRRGX T. Rowe Price Retirement 2020 TRRBX T. Rowe Price Retirement 2025 TRRHX T. Rowe Price Retirement 2030 TRRCX T. Rowe Price Retirement 2035 TRRJX T. Rowe Price Retirement 2040 TRRDX
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Choose five mutual funds that will cover all your investing bases.
By investing in different size companies, various sectors of the economy, and other parts of the world, you reduce the chance that problems in any one area will sink your investing goals.
We've built a starter portfolio of funds. Our main criteria: Strong, consistent performance, low fees and a stable, investor-friendly management company standing behind the fund. You can build this portfolio with as little as $10,000 to start.
| Starter portfolio | ||||||
| Fund name | | Ticker | | % of portfolio | | Min. investment |
| Vanguard Index 500 | | VFINX | | 30% | | $3,000 |
| Vanguard Total Intl Stock Index | | VGTSX | | 20% | | $3,000 |
| Third Avenue Small-Cap Value | | TASCX | | 20% | | $1,000 |
| Harbor Bond | | HRBDX | | 20% | | $1,000 |
| Alpine Realty Income & Growth Y | | AIGYX | | 10% | | $1,000 |
