Effective May 11st, Vanguard has the minimum initial investment on their to $1,000, down from $3,000. Thank goodness, as this avoids having everyone pointing out that the Vanguard STAR fund was the only one with a minimum of $1,000. But seriously, I think this is a smart and overdue move by Vanguard, as it allows investors with limited funds to start out investing in a low-cost, diversified investment that adjusts with age. I put my own mother’s Rollover IRA in a Target Retirement Fund a couple years ago, and I sleep well at night.
(See previous post on the to see how the asset allocation changes over time. I kept my mom’s target date close to their default recommendation, as my dad’s retirement accounts are on the conservative side.)
What if you have less than $1,000? There are plenty of “how to invest with just $100? posts out there, and if I look back I’ve probably done one myself. However, my new advice is this: Don’t bother. Instead, focus your energy on investing in yourself, by either learning about or improving your career and business skills. Put what you have safely in the bank, now once you have $1,000, then stick it in a Target Retirement Fund via a tax-advantaged IRA.
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