Smart investments for young professionals: whether you have $500 or $5,000, here are great places to stash your cash

Black Enterprise, July, 1993 by Leslie N. Vreeland

Another way to beat the steep initial minimum investment obstacle is by targeting fund groups with minimums you can afford. Several good funds will still let you in for $1,000 or less (regardless of whether you open an IRA with them); others waive minimums for shareholders who agree to make regular, automatic investments from their bank accounts. "That's why it doesn't take a lot of cash to get started," says Morningstar's Don Phillips. His growth-fund picks for budget-minded investors: Nicholas, which buys market leaders at depressed prices and is up 12.63% in 1992 (minimum initial investment: $500; 414-272-6133); Strong Opportunity, a growth-oriented fund that concentrates on solid, underfollowed companies and gained 17.35% last year (minimum investment: $1,000; 800-368-3863); and Twentieth Century Select, which lost 4.43% in 1992 but out-paced the Standard and Poor 500 stock index by 4.81% percentage points over the last 15 years by snapping up dividend-paying stocks in fast-growing industries (minimum investment in an automatic payment plan, $25 a month; 800-345-2021).

If You Have $3,000 To Invest

With $3,000 in your pocket, the fund universe widens considerably. "You can't beat 'em for diversification when you're talking about this much money," says Sheldon Jacobs, editor of The NoLoad Fund lnvestor in Irvington, N.Y. Respected fund families like Vanguard and Fidelity, which generally require minimum deposits of $3,000 and $2,500, respectively, now bob into view. In fact, the majority of funds are yours to pick from, particularly if you establish an IRA account when you invest the maximum IRA contribution (by law, the maximum IRA contribution, and thus the minimum set by some funds, is $2,000 per year).

Even better, you can easily afford to set up a couple of accounts. Suppose, for instance, that you invested your first $1,000 in a steady-as-she-goes total return fund such as Neuberger & Berman Guardian, recommended by planner Broussard, which looks for high-quality undervalued companies (up 19% last year; 800-877-9700). Now you want to diversify your portfolio further. Planner Sheldon Jacobs counsels adding to your selections by choosing funds with different investing styles.

For instance, you could put $1,000 into Stein Roe Prime Equities, a growth-and-income fund that buys high-quality, swiftly-growing firms and was up 10% last year (800-338-2550); another $1,000 into Babson Enterprise II, a small-company growth fund that looks for cheaply-priced stocks and gained 17.2% in 1992 (800-422-2766); and $1,000 more into Financial Industrial, a growth fund that concentrates on blue-chip companies with significant earning potential, up just 2.8% last year, but 42% in 1991 (800-525-8085).

Or, if this is your first foray into stocks, Jacobs recommends putting your whole $3,000 stash into Vanguard Index Total Stock Market, which attempts to mirror the performance of the stock market itself. As of a year ago last March, this fund was up 14.8% (minimum initial investment, $3,000; 800-662-7447).