As a new investor or an investor who doesn’t want to spend thousands, it can seem difficult to find good mutual funds without a minimum, commission, sales charge, and a low expense ratio. If you Google search “the best mutual funds to invest in”, most options are going to have features such as a minimum investment of $2500 or it’s exclusive to people who already own it. Vanguard Investments and Fidelity Investments offer some of the best mutual funds in the market with no-loads, but many of the funds require a minimum investment in the thousands. This is not exactly feasible for beginner, do-it-yourself investors. But, here are some of the best with no minimums:
1. Schwab S&P 500 Index (SWPPX)
This index fund has no minimum initial investment and an expense ratio of 0.02%. If you look at the long-term returns of this fund though, they have consistently had a decent return over the last ten years.
2. Schwab International Core Equity (SICNX)
It is always a good idea to diversify your portfolio by investing in foreign stocks. However, this fund invests in large-cap stocks outside of the United States with no loads and no minimum initial purchase. Compared to other international funds made up of large companies, their long-term performance is very high.
3. Vanguard Total Stock Market Index Fund (VTSAX)
This fund reflects the entirety of the US stock market and makes it a great option to hold. This fund owns around 3,500 stocks from large, medium, and small companies. Apple and Microsoft are the most common companies people invest in. They also have an average ten-year return of 12.81%.
4. Vanguard Value Index Fund Admiral Shares (VVIAX)
This fund invests in large-cap companies in the United States that are undervalued. They have a low expense ratio of 0.05% and a yield of 2.94%. From 1926 to 2018, this fund had an average annual return of 11% for large-cap value stocks and a 9.2% return for large-cap growth stocks. VVIAX also has no loads, a ten-year average annual return of 10.75%, and is a great choice for people who are looking for dividends and long-term growth potential.
5. Neuberger Berman Small Cap Growth Fund (NSRSX)
This small-cap growth fund invests in small companies with innovative products and services and a growing market share. This no-load fund owns more than 100 companies and 55% of their holdings are in healthcare and information technology–two sectors that have done outstandingly well these last few years. With an expense ratio of 0.82% and a ten-year average annual return of 10.59%, this is a great fund to invest your 401(k) or IRA in.
6. Vanguard Mortgage-Backed Securities Index Fund (VMBSX)
This fund invests in U.S. mortgage-backed pass-through securities that are issued by quasi-governmental agencies. Because interest rates are close to zero right now, the prepayment risk of the investor’s principal payments being returned is very minimal. In addition, this no-load index fund is diverse, owning 892 bonds, and currently yields 1.88%. Their ten-year average return is 3.05% and their expense ratio is only 0.07%. Because it’s backed by the government, it’s a great option to safely invest in the fixed income market.
7. Fidelity Contrafund Fund (FCNTX)
This no-load mutual fund invested in large-cap companies with sustained, above-average earnings growth. They invest in growth and value stocks. 91% of the fund is invested within the U.S. while the rest is invested in international companies. Their largest holdings are in healthcare, information technology, financials, communication services, and consumer cyclical sectors. Their expense ratio is 0.85% which is higher than the others, but their returns over the years have beaten the returns of the S&P 500.
8. Schwab International Index Fund (SWISX)
This no-load fund invests in large-cap international companies with the largest proportion of the stocks coming from Japan, the United Kingdom, Frace, Germany, Australia, Switzerland, and the Netherlands. They have an expense ratio of 0.06% and a 3.77% distribution yield and have had better returns than the category average since 2010.
9. PIMCO StocksPLUS Short Fund (PSTIX)
This fund shorts investment positions on the S&P 500. When the S&P 500 declines, this fund makes money. This will help to diversify your portfolio and hedge your portfolio against falling stock prices. You should be aware that when the market does well, this fund will underperform, but it’s a good type of safety net when a bear market comes along with it inevitably. It currently yields 1.99% and has an expense ratio of 0.64%.
10. Fidelity Real Estate Income Fund (FRIFX)
This diversified, no-load mutual fund’s goal is above-average income and capital growth. The fund owns commercial real estate securities like common stock, corporate bonds, preferred stock, and commercial mortgage-backed securities. They are mainly invested in domestic equities and bonds. Their securities span a range of credit quality from unrated assets to U.S. government bonds. Their top holdings are in diverse public real estate investment trusts like American Tower. They have somewhat of a high expense ratio of 0.75%, but there is no minimum investment requirement, and they have a yield of 5.87%.
11. Schwab Balanced Fund (SWOBX)
This balanced fund with no minimum initial investment requirement is a great option for beginner investors because the fund has a diverse mixture of stocks, bonds, and cash. This specific fund is made up of 60% stocks, 35% bonds, and 5% cash. Thus, they are a medium-risk fund for investors and they usually perform above-average.
It is never too early to start investing. You don’t need thousands of dollars to do so. With these no-load funds that don’t require an initial minimum investment, you can invest today and earn money without putting in any physical work. You will then have a good deal of money down the road for retirement or some sort of emergency. If you do your research and pick funds that are best for your current financial situation and long-term goals, investing in mutual funds will pay off down the road.