Believe it or not, investments can actually begin with just $100. True, there are plenty of stocks available for less than a penny, but investing $100 in stocks may not always provide investors the diversity that mutual funds can assure. Moreover, risks associated with penny stocks are much higher.
On the other hand, there are low-cost mutual funds with decent returns where investors can invest just $100. These funds are even offered by prominent firms like BlackRock Inc. BLK and Charles Schwab Corp. SCHW . Mutual funds are an affordable option for diversity as well as a safer investment bet.
Investing in Mutual Funds
Mutual funds are great options for investors looking for a relatively less risky way to earn at least more than what fixed income instruments offer. Money from individuals and even organizations are invested in stocks, bonds, or other assets covering diverse industries globally.
One of the benefits of mutual funds is that it allows a small investor to invest in a basket of securities at one go. Investors need not worry about investing a large chunk in securities separately. Moreover, these are less risky than any individual asset class as underperformance of a security gets mitigated by outperformance of others in the portfolio. In addition to the asset diversification, mutual funds also provide liquidity, economies of scale, and are professionally managed.
A $100 investment cannot make an investor rich. This can only be to get someone started with investments, with the actual returns coming when an investor decides to invest a certain amount of money for a considerable time. So, this can double up as a great retirement plan as well.
3 Best Bets Now
A $100 bet will make more sense when the bulk of that amount is invested and no charges are paid from it. Funds that carry no sales load and have relatively low expense ratios should be preferred. It is also important to look at the performance track record.
The following funds hold either a Zacks Mutual Fund Rank #1 (Strong Buy) or Zacks Mutual Fund Rank #2 (Buy) , as we expect the funds to outperform its peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but the likely future success of the fund.
Laudus U.S. Large Cap Growth Fund LGILX seeks long-term capital appreciation, and invests at least 80% of its net assets in equity securities of U.S. large cap companies. Additionally, up to 20% of LGILX’s assets may be invested in foreign equity securities.
Its advisor defines large cap companies as those with a stock market valuation of at least $3 billion at the time of investment. The fund’s top three sectors include technology, finance, and health, while its top equity holdings are currently e-commerce giant Amazon AMZN , and tech leaders Alphabet GOOGL and Microsoft MSFT .
The minimum initial investment for LGILX is $100, with a minimum subsequent investment of $0. The fund has an annual expense ratio of 1.22% and carries no sales load.
The Zacks Mutual Fund Rank #1 (Strong Buy) fund has returned nearly 20% in the past one year.
Schwab Core Equity Fund SWANX seeks to assemble a portfolio with long-term performance. To pursue its goal, the fund primarily invests at least 80% of its assets in equity securities of U.S. stocks. SWANX annually offers dividends and capital gains.
The fund’s top weighted sectors include technology, finance, and non-durable, and its top three equity holdings at the moment are iPhone maker Apple AAPL , Microsoft, and Alphabet.
The minimum initial investment for SWANX is $100, and it has no minimum subsequent investment. With no sales load, the fund has an expense ratio of 0.73%.
SWANK is a #1 (Strong Buy) on the Zacks Mutual Fund Rank, and has gained about 12.4% in the last one-year period.
BlackRock Equity Dividend R MRDVX seeks long-term total return and current income. Under normal circumstances, the fund invests at least 80% of its net assets in dividend-paying common stocks that yield more than the S&P 500.
The fund emphasizes investments in large companies, and in addition to common stocks, MRDVX also invests in convertible 22securities, non-convertible preferred stock, and debt securities. Dividends are distributed quarterly.
Its top weighted sectors are currently finance, technology, and industrial cyclical, while the fund’s top three holdings are all big banks: JPMorgan Chase JPM , Citigroup C , and Bank of America BAC .
MRDVX has a minimum initial investment of $100, and no minimum subsequent investment. It has a higher expense ratio of 1.28 but no sales load.
The fund has gained just 2.4% in the last year, and is a #2 (Buy) on the Zacks Mutual Fund Rank.
About Zacks Mutual Fund Rank
By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank in our Mutual Fund Center .
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