Can I open a mutual-fund account with $100? If so, how do I get started?

QUESTION: Can I open a mutual-fund account with $100? If so, please tell me how to get started.

-- E.D. Zanders
ANSWER: Security Mid Cap Value SEVAX

While most retail-oriented fund companies set their minimum initial investments between $1,000 and $5,000, some no-load fund families do have lower requirements. With a $100 grubstake, you might want to check out the Amana Growth fund (AMAGX) and the Amana Income fund (AMANX), which invest according to Islamic principles. For fixed-income portfolios, try Dupree Mutual Funds. And if you'd like to open an IRA for $100, you can check out the Julius Baer International fund (BJBIX), which we recently profiled, or any of the offerings from Country Mutual Funds.

If you can scrounge up a bit more, several no-load families have $250 minimums, such as Monetta and TIAA-CREF. You can also choose from the Pax World funds if you're interested in socially responsible investing. Double that investment to $500 and you can invest in a fund from the AFBA or Excelsior families.

But if you're able to make regular additions to your $100 initial investment on a monthly basis, your no-load options increase significantly. An automatic investment plan, or AIP, allows you to make monthly contributions to an account, with as little as $50 or $100 to start. Payments are made via electronic transfer from your checking or savings account. You can stop the automatic payments once you reach the fund's minimum investment level, but if you can swing it, it obviously behooves you to keep on going. After all, what better way to enjoy the benefits of dollar-cost averaging?

And while the selection of companies that offer low-cost AIPs isn't as wide as we'd like, it does include some strong no-load families. For as little as $50 a month, you can invest with Invesco, Strong, T. Rowe Price and USAA. And for $100 a month, you can sign on with the likes of Dreyfus and Turner. If your budget is really tight, try TIAA-CREF, which requires only $25 to open an AIP account.

One thing to be aware of: Some of these families don't include all of their funds in these plans. When in doubt, call the fund company's toll-free number and ask about its AIP. (Other names for these plans include "automatic account builder" or "automatic asset builder.") It may take a minute to explain what you're looking for, but don't be discouraged. Remember that these plans aren't top-of-mind at most firms since low-balance accounts are usually not profitable for them.

What happens if you can't keep up with the monthly payments? Most companies won't close your account right away. Some may charge you a low-balance account fee -- usually $10 to $20 a year -- if you suspend your payments before you reach their minimum initial investment level. Or they may simply send you a letter or give you a reminder call. But if your account dips below $100 at some firms, your shares will be redeemed without notice. Fortunately, though, they won't do this should your account fall below this mark due to sour investments.

No-Load AIPs for Less
Fund Company Web site Initial AIP Investment* Subsequent AIP Investments
TIAA-CREF www.tiaa-cref.com/mfs $25 $25
Alleghany www.alleghanyfunds.com $50 $50
Ariel www.arielmutualfunds.com $50 $50
Fremont www.fremontfunds.com $50 $50
Invesco www.invescofunds.com $50 $50
Strong www.estrong.com $50 $50
T. Rowe www.troweprice.com $50 $50
USAA www.usaa.com $50 $50
AFBA www.afbafivestarfunds.com $100 $50
Amana www.amanafunds.com $100 $25
Berger www.bergerfunds.com $100 $100
Dreyfus www.dreyfus.com $100 $100
Dupree www.dupree-funds.com $100 $100
Gabelli www.gabelli.com $100 $100
Turner www.turner-invest.com $100 $50
*Automatic investment plan may not include all funds at the company. Source: Morningstar, company reports