Low-Cost Mutual Funds

A number of mutual funds allow opening an account with a $50 or $100 minimum investment. Other fund families allow these low initial investments if you sign up for an AIP (automatic investment program) that allows the fund company to withdraw your monthly investment from your bank account until you meet the fund's minimum purchase amount.

One benefit of this strategy is that you'll never "forget" to make that monthly investment, and, as with the DSP plans we just talked about, you'll gain the advantages of dollar-cost averaging because you're automatically investing every month!

Among the many fund families that waive the initial minimum investment if you participate in their AIP plans are Invesco, T. Rowe Price and Twentieth Century.

Dolan Straight Talk Tip: There is a terrific web site that allows you to search for low-minimum mutual funds that meet your investment criteria. (See our article called How to Pick the Best Mutual Fund.) It's the Mutual Fund Education Alliance at www.mfea.com. Simply click on "Fund Selector" in the upper left hand corner of the home page or click here to go right to the page. It's VERY helpful.

Exchange-Traded Funds

Have you heard about exchange-traded funds, or ETFs?

ETFs are essentially baskets of stocks that are designed to mirror well-known indexes like the S&P 500 or the NASDAQ 100, or to track securities specific to a particular country or industry. These baskets enable us as investors to track more than 300 domestic and international indices such as healthcare, energy, gold, China, oil - even dermatology! (Read our primer on ETFs here.)

ETFs resemble mutual finds that also track indexes, but they have two advantages: 1) They trade like a stock, meaning you can buy shares on the open market anytime during the trading day; and 2) they generally charge much lower fees than a traditional mutual fund.

Among the most popular index ETFs are:

• SPY -- tracks the Standard and Poor's (S&P) 500 index.
• DJIA -- tracks the Dow Jones Industrial Average.
• QQQQ -- tracks the Nasdaq 100
• ONEQ -- tracks the Nasdaq Composite Index

Here's one way you can invest in the ETFs of your choosing:

If you can spare $75 per month, split it three of the above ETF's. For example, you could invest $25 into SPY, $25 into QQQQ and $25 into OOOO. Equal parts of your investment would then track the S&P 500, the Nasdaq 100 and the Dow Jones Industrial Average. That's a nice balance of large, well-known companies and special sectors such as biotech and tech stocks

Get Started Now!

We hope you see how important it is to get started today, even if you only have $12.50 a week to invest. Direct Stock Purchase plans, low-minimum mutual funds and ETFs are all ways you could put that $50 to work, depending on your risk tolerance.

Even if you're not quite ready to start investing $50 a month, at the very minimum. you should BEGIN SAVING and BEGIN LEARNING about investing. We have tons of articles to help you at dolans.com, and as a valued reader, you have access to all of them. We recommend you start with the Invest Wisely section.

Happy investing! And don't forget to let us know how it's going. Email us at dolans@dolans.com .

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