If you picked three....

[Looking Ahead]

My 25 year old son lost his job. Today he opened an IRA account with Fidelity to do a roll-over; thinking he would get into a targeted retirement fund b/c he is a very inexperienced investor. However, there is a $2,500 minimum and he only has $1,200.00 in his 401K. He must either buy individual stocks or a CD if he sticks with Fidelity to do the roll-over.
This is what we were thinking: dividing his small sum between Duke Energy, PG, and Eli Lily and sticking with Fidelity to complete his paperwork.
He is reading Investing for Dummies....which is exactly what we both are when it comes to investments. However, I think we need a primer.....Investing for Real Dummies!
I would appreciate any thoughts or other alternatives before he makes this move.

[jimnjana]

I would stick it in a CD until he learns more about investing.

[FinanceDude]

Can't he open a Vanguard account and invest for less than $1200?

[Leonidas]

Quote:

Originally Posted by FinanceDude Can't he open a Vanguard account and invest for less than $1200?

There is no minimum amount needed to open an IRA at Fido, but I think all of their mutual funds require a minimum of $2,500 as an initial buy in. ETF's are another story though, don't think there are minimums on those at Fidelity, as best as I recall anyway.

[Looking Ahead]

Yes, Leonidas....$2,500 is the minimum for mutual funds. He has already opened an account with Fidelity, he just needs to decide whether to stick it in a CD or buy individual stocks due to his low account opening balance of $1,200.
Any thoughts on buying Duke, PG, and Eli?
FinanceDude, good idea to check to see if Vanguard has lower minimum to purchase a targeted retirement date fund. He does need to use the targeted retirement date fund if he can qualify with his low investment due to his lack of knowledge and the ease and convenience of the targeted funds.
Thanks to all.

[Alan]

Quote:

Originally Posted by Leonidas There is no minimum amount needed to open an IRA at Fido, but I think all of their mutual funds require a minimum of $2,500 as an initial buy in.

Not done this with Fidelity but Vanguard allows less than the fund minimum if it is an IRA. When each of my kids reached 18 I opened a Roth IRA for them with $1,000 in a balanced fund which was below the normal limit. This was 10 years ago so the rules may have changed....

[Alan]

Quote:

Originally Posted by Alan Not done this with Fidelity but Vanguard allows less than the fund minimum if it is an IRA. When each of my kids reached 18 I opened a Roth IRA for them with $1,000 in a balanced fund which was below the normal limit. This was 10 years ago so the rules may have changed....

Apparently this has changed. I did a search on VG funds with a minimum of $1,000 and only the STAR fund came up. Oh well, times they are a changing...

[Looking Ahead]

Son called Vanguard. Minimum to open targeted retirement fund is $3,000.00. They advised him he is eligible to roll it to the STAR fund. It has a -2.17 YTD.

[Leonidas]

Quote:

Originally Posted by Looking Ahead Any thoughts on buying Duke, PG, and Eli?

I would be glad to give you my opinions on PG (which I currently own), and somewhat lesser informed thoughts on DUK and LLY. But, I re-read your first post

Quote:

Originally Posted by Looking Ahead He is reading Investing for Dummies....which is exactly what we both are when it comes to investments. However, I think we need a primer.....Investing for Real Dummies!

and that makes me reconsider your request.

I do invest in individual securities, which makes me different from many other members here as most prefer mutual funds. It is not for the faint of heart, nor for those who aren't going to spend the time to get the information and do the research necessary. Many other members here will tell you that mutual funds are a lot easier to do and pose less risk than individual securities.

My best advice to you would be don't commit that money before you have learned some more about investing.

As for getting around the obstacle posed by the $2,500 minimum, since you are going to open an IRA, can your son make contributions to the IRA equal to the $1,300 needed? If not, I would consider an ETF.

[FUEGO]

Star is the only $1000 min fund at VG.

Fidelity is probably a better option. you can now buy 25 different ETF's commission free at fidelity. For that small amount of money and given he is 25 years old, I'd put it in a single index fund, SP 500, total market or something.

[JPatrick]

Given the small amount of money and your son's age, I'd go with an ETF.
Over the long term probably any of them would work out, but I think I would lean towards IJS (S&P 600 Small Value) or EEM (Emerging Markets)

I also like DUK for its div and steady performance, but I think the way for a small investor to hold it is through their exceptional DRIP program.

[Alan]

Quote:

Originally Posted by Looking Ahead Son called Vanguard. Minimum to open targeted retirement fund is $3,000.00. They advised him he is eligible to roll it to the STAR fund. It has a -2.17 YTD.

Sure - I wasn't suggesting that he put it in STAR, just interesting that STAR is the only VG fund that has a $1,000 minimum.

[bbbamI]

In regards to PG, I hold some in my 'hormonal' individual stock portfolio. I've always been happy with this stock.

[jIMOh]

T Rowe Price will accept rollovers of $1200 or less

[Eladio]

Take a look at VTV.

It's an etf, exchange traded fund, that has three things going for it:

Value tilt
Low expense ratio
pays somewhat of a dividend

It's a good core holding, and I've owned it for several years.

Eladio

[yakers]

My son's small IRA (he is a college student) is in VG Star fund. It has worked well for him I expect he will leave it alone for the next 40 years or so. Had this fund since his high school job 4 years ago.
If you don't have a lot of money the VG Star fund is actually a good choice as well as the default choice for low valued VG funds.

[FUEGO]

Another plus at fidelity is the ability to automatically reinvest dividends for free on almost all ETF's.

[Nords]

Quote:

Originally Posted by Looking Ahead Any thoughts on buying Duke, PG, and Eli?

I hope that's not in the spirit of "diversification". Another option would be to buy ETFs which hold those stocks, or their sector ETFs. Fidelity is in the process of going to commission-free trading on iShares ETFs, which would make them just as affordable as most of the mutual funds.

If you're not going to diversify then go for the ultimate in concentration: "B" shares of Berkshire Hathaway... and a library card to borrow a copy of Bernstein's "Four Pillars".

[CyclingInvestor]

PG is a long time favorite of mine, and is (by a small margin) my largest holding.
I have never been a fan of utilities - DUKs long term dividend growth is under 3%.
LLY is a kind of slow grower in its sector - I prefer JNJ or ABT for the long term.

[Looking Ahead]

If you're not going to diversify then go for the ultimate in concentration: "B" shares of Berkshire Hathaway... and a library card to borrow a copy of Bernstein's "Four Pillars".
----------------------------------------------------------------------
Stating the obvious, my learning curve has been steep, and I know it is hard to believe but I do have a library card that I use for other purposes besides checking out the latest best sellers. Admittedly, my attempt to self-educate myself on the world of investments has so far been an embarrassing failure.

Thanks to all who have so graciously replied, your advice is sincerely appreciated.