Dig out the search tools!
If you've got limited financial resources, finding a mutual fund with a low-cost minimum-entry price is getting harder.
On Aug. 3, for example, Franklin-Templeton, traditionally the first stop for many small investors, will boost its minimum-entry amount by $900 on regular accounts - going from a $100 minimum on equity funds, to $1,000.
"We're doing it because smaller accounts tend to be expensive" in terms of management costs, says a spokesman for the California-based company.
Franklin-Templeton's IRA accounts will also take a hike, from no minimum to $250.
"Fund companies find they need accounts to be large enough to offset maintenance and acquisition costs," says Larry Armel, president of Jones & Babson, which runs the Babson Funds in Kansas City, Mo.
Franklin-Templeton is not alone in lifting minimums. The Midas Fund, a gold/resources fund, recently boosted its entry amount from $500 to $1,000. Most funds, in fact, now require at least $2,000 to open an account. Even Vanguard, the low-cost leader in terms of expenses, requires $3,000 except for its STAR fund, which has a $1,000 minimum.
The Mutual Fund Education Alliance (MFEA), a trade group for no-load (no commission) funds, lists only one fund with a $100 or less minimum: Schwab Retirement Money Fund (800-266-5623).
MFEA also shows a mere 10 funds under $500, including such popular funds as Babson Growth (800-422-2766), AARP Balanced Stock and Bond Fund (800-225-2470) and Strong Total Return (800-368-3863).
Run your own Internet check on low-cost funds via (www.mfea.com).
"Look, if someone sends us $100 we're probably not going to return it," says Mr. Armel, of the Babson Funds. "We'll do everything we can to work with the person if they really want to invest in our funds. Send $10 and you'll probably get it back though," he adds.
Babson posts $500 minimums for several funds, although it reduces that amount for automatic monthly investing.
The Muhlenkamp Fund, a solid performer in recent years, requires only $200 for a minimum (800-860-3863).
Pax World - a popular "good-works" fund that shuns weapons, tobacco, and alcohol firms - is up 10 percent in 1998 and requires only $250. In fact, Pax World (800-767-1729) recently bucked the trend by cutting the minimum on its companion Pax World Growth Fund from $500 to $250.
But investing is no less important for someone who can't afford a $2,500 opener than those who can.
So what are the options for the many people for whom $500 is a stretch?
* Banks. If you want more choices than the funds noted above, save regularly in a bank or mutual-fund money-market account. When you reach $2,000 or $2,500, shift into a stock mutual fund.
* Parents. If you are a young adult earning a salary, ask your parents for a loan.
* IRAs. The dollar requirements are much lower. Fidelity, for example, requires $500 for IRAs but $2,000 for most regular accounts. But don't forget the tax penalties of early withdrawal from an IRA.
* Auto-pilot. Most no-load funds waive or reduce minimums if you agree to invest regularly, as little as $50 a month, says Michelle Smith of MFEA. However, some fund companies charge a small penalty if you don't reach a specific annual amount.
Whatever you do, make the effort to invest, experts say. If you can afford only a $250 entry, then you're probably someone who needs to invest.