Investment Plans for Five Thousand Dollars or Less
Getting started with your investment program can be very difficult, especially if you only have a small amount of money to invest. Fortunately, small investors have a number of options at their disposal, including many investments that can be started for less than $5,000.
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IRA Accounts
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Opening an IRA is a good way to save for retirement, and you can get into an IRA for less than $5,000. In fact the most you can put into an IRA for 2011 is $5,000. You can spread your IRA deposit out over a period of months, or you can make the full contribution for the year all at once.
Mutual Funds
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Mutual funds are the perfect investment vehicles for small investors, since these funds pool the money of many different individuals and use the proceeds to purchase a widely diversified basket of stocks, bonds and other securities. Many mutual funds have minimum deposit requirements well under the $5,000 limit. If you agree to set up an automatic monthly investment, you can often get into the account for even less than the normal minimum.
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Certificates of Deposit
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Many certificates of deposit have minimums well below $5,000. In fact, some certificates of deposit have minimums in the hundreds of dollars. Those low minimums allow you to purchase several different certificates of deposit in several different maturities. This can enhance the return on your investment and make it easier to roll the money over at higher rates when they mature.
401k Plans
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If you have a workplace retirement plan like a 401k or 403b, you can get started with a very small amount of money. Your employer allows you to contribute as little as 1 percent of your paycheck to the 401k or 403b, then slowly ramp up your savings as you get more comfortable with investing. If you think you do not have the money to save, a workplace retirement account can be a good place to start.
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References
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