Creating An Investment Portfolio From Practically Nothing

One of the most stubborn myths associated with securities investing is that you need a lot of money to actually be a participant in the activity of the major markets. It is certainly understandable why people have this perception; the popular notion of fat cat investment types, chewing on big cigars and sitting around in cushy, leather chairs reading The Wall Street Journal has permeated the ideas of most casual observers about what it takes to be an investor. The reality, however, is far different; in truth, just about everyone can create an investment portfolio through the use of automatic investment plans made available by some of the most well-known mutual fund companies in the world. Using mechanisms like these, it is possible, in some cases, to start investing with no money up front and making regular, monthly contributions that come out to as little as less than $2 a day.

Take the storied mutual fund company T. Rowe Price, for example. T. Rowe Price has something called the Automatic Asset Builder, which waives normal minimums for their no-load (no commission) mutual funds if you agree to allow your bank account to be drafted each month for at least $50 and have that money invested directly into a T. Rowe Price fund of your choosing. This is a great option, for a few reasons: There is the intended benefit of being able to invest in a professionally-managed investment portfolio for no money up front and very little each month. However, there is also the unintended, but very useful, benefit of dollar cost averaging that is at play when you invest systematically each month into mutual funds. With dollar cost averaging, your overall market risk is reduced because you are purchasing smaller amounts of the portfolio each month, and doing so over a longer period of time. This reduces the risk that you will pay a high price for too many of the shares, because you are not going into the market with a significant lump sum at any one time.

Other no-load mutual fund companies offer plans similar to that which T. Rowe Price offers. T. Rowe Price is cited here not as a recommendation for you, but rather as an example; an example of a professional investment company that has made it quite possible for wishful investors who think they do not have enough money to begin accumulating a quality basket of securities to be proven wrong.