Investing In Mutual Funds Doable For $25 A Month

Disciplined investing in mutual funds doesn’t have to be painful. A review by Morningstar found about 17 funds whose “automatic investment plans” require minimum monthly investments of only $25.

Many funds will agree to lower the minimum if you agree to invest on a regular basis. You can do this by investing a certain amount each month through automatic deductions from your bank account.

There are lots of benefits to investing regularly. For example, it gets you into the saving habit.

And by investing the same amount each month, you are dollar-cost averaging, which lets you buy more shares when prices are lower, and fewer shares when prices are higher.

The result? By investing the same dollar amount each month, you assure yourself of a lower average price over time.

Before you get started, here are some points to keep in mind:

The table above has only a small sampling of many funds that feature automatic investment plans.

To produce the basis for this table, Morningstar sorted through records of U.S. diversified stock funds whose performance placed them in the top quarter of funds (with the same investment objective) over the three years through Oct. 31. All the funds had an automatic investment plan requiring an initial minimum investment of $250 or less. But lots of other funds also offer automatic investment plans.

Many of the funds in the table levy some sort of sales fee. But remember that there are many mutual funds, called no-load funds, that also offer automatic investment plans but levy no sales charges.

If you prefer not to invest a set amount each month, remember that there are lots of funds that will let you invest a relatively small lump sum all at once, perhaps $100 or so. You can scan through Morningstar or other mutual fund guides at your local library to find such funds.

Order blind-sides arbs

Officials at Washington Water Power Co. and Sierra Pacific Resources weren’t the only ones blind-sided by the Federal Energy Regulatory Commission’s decision to push their proposed merger off the fast track.

Wall Street’s arbitrageurs, affectionately known as “The Arbs,” had to scramble to cover their misplaced bets that the deal was all but done.

D.A. Davidson analyst Jim Bellessa, Jr., noted that after FERC announced its decision early Wednesday morning, arbs who had bought Sierra stock betting the price would go up when the shares were exchanged for WWP paper instead sold at a loss.

Sierra stock dropped 62 cents to $23 in volume nine times normal.

On the other hand, WWP rose 62 cents because arbs who had sold shares short anticipating a decline as a result of the merger were forced to buy.

In short sales, the sellers borrow stock they expect to replace later with shares purchased at a lower price.

But Wednesday’s closing price, $17.50, was the highest in a year, and volume was heavy.

Marriage for fun and profit

Here’s an idea for the romantic - how to make money on your wedding.

What we’re really talking about is your wedding “date.” When you file your federal tax return next spring, your marital status on Dec. 31 will be used as your marital status for all of 1995. Under the current system, a couple with each partner earning $100,000 could face $5,000 more in taxes by getting married before the end of the year, according to the National Taxpayers Union.

You could save that by postponing the wedding until 1996, the group suggests.

Those of you whose marriages aren’t working out can save a few bucks with a quickie divorce. That way you can avoid the “marriage penalty” by claiming single status for all of 1995.

You could already owe

Someone once said the saddest words in the English language are “What party?”

So let’s call these the next-saddest: “What credit-card offer?”

If you’re not being offered any new credit cards, you are definitely being snubbed.

That’s because three out of every four American households are offered a new credit card at least once a month, according to the consumer group Bankcard Holders of America. With all these offers pouring into your mailbox, it’s easy to take a passive approach to picking a card.

But the offers that come with your junk mail may not be the best around. So, if you’re not satisfied with the deals you’re offered, how do you find the best rates?

You can get a list of rates for hundreds of credit cards from the RAM Research group, which charges $5 a copy for its monthly CardTrak publication. Call 800-344-7714.

, DataTimes ILLUSTRATION: Graphic: Investing on the cheap