When you’re young and juggling lots of financial responsibilities, from repaying student loans to saving up for a down payment on a home, you may have only a few dollars left over each month to put away for retirement.

The problem is, you generally need a lot more than just pocket change to invest in the mutual funds that will help grow your savings.

Today, the average minimum investment for a U.S. stock fund — a core holding in any young person’s portfolio — is $4,000, according to Morningstar, an investment data provider.

Discouraged? Don’t be, because there now are plenty of ways to get around the minimum investment hurdle. Consider the following:

—Start with your 401(k): If you are eligible to participate in a retirement plan at work, such as a 401(k) or 403(b), start there. With these plans, you can contribute as little as 1 percent of your pretax income to mutual funds selected by your employer.

So if you make an annual salary of $40,000, that’s just $400 per year, or about $15 per biweekly paycheck. (Financial planners suggest saving as much as 15 percent of your salary, but you can work your way up.)

You also get the benefit of receiving matching contributions from your employer, if a match is offered.

—Look for low minimums: Although many mutual funds require thousands of dollars to get started investing, some low-minimum options are available.

In November, Charles Schwab lowered the minimum investment for the majority of mutual funds offered through its OneSource platform from $2,500 to $100. In addition, the company dropped the minimum required for subsequent contributions from $500 to as little as $1.

Some 10,000 mutual funds are available through the platform, which does not charge transaction fees, and about 95 percent of those funds now carry the $100 minimum, says Doug Hanson, vice president and head of third-party mutual fund platforms at Schwab.

“It makes the funds a lot more accessible,” he said.

—Sign up with Uncle Sam: If you’re not eligible to participate in a workplace retirement plan and are not sure where to invest your dollars just yet, Jim Saulnier, a financial planner in Fort Collins, Colo., suggested signing up for a myRA account (myRA.gov).

The account is basically a Roth individual retirement account offered by the U.S. Treasury. It has no minimum investment requirement and no fees. When you make contributions, the money is invested in the Government Securities Fund, which pays interest (in 2014, the latest date available, the interest rate was 2.31 percent) and guarantees to return your principal.

Because the account offers low risk — and low returns — you don’t want to stay invested in it forever. Also, as with all Roth IRAs, you must meet certain income requirements to participate.

“I jokingly refer to it as the Roth IRA starter kit,” Saulnier said. “But while you build up the minimum you need for other investments, it’s perfect.” And once your savings have grown, you can roll the money into another Roth account, with no taxes or penalties.

—Get an app: What if you literally have just spare change to put aside for retirement?

Consider opening an account with Acorns. The company offers an app that will round up your debit- or credit-card purchases to the nearest dollar and invest the extra change in one of five diversified investment portfolios.

The service costs just $1 per month for accounts with a balance of less than $5,000 or 0.25 percent for balances of $5,000 and up. Fees are waived for students who provide a valid “.edu” email address. To get started, go to www.acorns.com.



Carolyn Bigda writes Getting Started for the Chicago Tribune. yourmoney@tribune.com.


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