Expert: Paul Henneman - 5/14/2007

Question
I have a 12 year old daughter who is interested in opening up a Fidelity Fund.  It obviously would be there for the long-term.  Is there any fund that she can open with a $500.00 initial deposit?
Thanking you in advance.

Michelle Goldenberg

Answer
Michelle,
    Thank you for your question!
    It is truly a great thing that your daughter wants to do this. Most funds do require a one or two thousand dollar minimum investment, unfortunatley I am not familiar with any that have a lower minimum. But I think that they do exist. I would suggest two things.
    First. www.morningstar.com and www.motleyfool.com are two sites that offer a great deal of research on mutual funds. You may be able to find something on those websites. www.Scottrade.com is another, and this site has the advantage that it offers trading services. So you could set up an account in your daughters name and buy the selected fund right on www.scottrade.com . I did find this article online that discusses this very topic, and offers a list of mutual funds that have a $500 or less minimum:

http://mutualfunds.about.com/cs/fundfees/a/lowmin.htm

    Unfortunately I was not able to locate a Fidelity fund for you. This is one of the largest providers of funds, and is a very well respected company. This means that many of their funds will have a higher one or two thousand minimum, but there is the possibility that I overlooked something. I would suggest going to www.Fidelity.com and asking them directly, here is a link to a list of Fidelity Customer service phone numbers:

http://personal.fidelity.com/accounts/services/contact/?bar=c

   Secondly, you could put the $500 into a money market or Certificate of Deposit instead. These are perfectly safe investments in that the amount of returns is set. However, it is true that over time the interest your daughter will earn will be much less than can be achieved in a well chosen mutual fund. For examplel, you could expect a maximum of about 5% interest per year on a CD.  www.NetBank.com is my favorite site for money market accounts or CD's, the interest they offer is very high compared to other banks, and there are no fees.

I hope the above helps! Please do not hesitate to follow up with me if I can be of any additional service,

Sincerely,
Paul Henneman
President
ValuEngine Inc
www.ValuEngine.com