Depending on where and how money is invested, different account minimums may be required. Typically, investors purchase stocks and bonds through a broker and the minimum investment is outlined by this firm. Mutual funds also carry investment minimums, but there are ways to bypass minimums.
A broker firm may have a minimum investment requirement to open an account. Some online brokers do not require minimum investments and any number of stocks can be purchased, but there is a brokerage fee. Some brokers waive the minimum investment if the investor holds a savings account with this firm.
Some companies offer direct investment plans, which allows the investor to bypass investing through a stock broker. This eliminates the brokerage layer of fees but many companies require a minimum account balance, the amount of which will vary.
Mutual funds are designed to be investor-friendly, and while there are account minimums, these amounts are often meant to be low and non-inhibiting. Despite low minimum requirements, investors do not always understand the fee structure of mutual funds and without proper due diligence may be surprised by unexpected charges, according to an article from The Associated Press.
- investment image by Kit Wai Chan from Fotolia.com