Invest in Mutual Funds For Kids

Youth definitely has its benefits. For kids, investment time horizons are typically very long. This means they can afford to weather stock market ups and downs, riding out the troubling times and taking advantage of periods of great return and appreciation. Mutual funds can be a good investment for saving for college, potentially putting Junior ahead of those kids who have mere savings accounts.

Determine your investment objectives and the amount of time you have to accomplish them.

Understand that mutual funds require minimum investments, ranging from a couple of hundred to thousands of dollars. There are, however, many funds that allow for lower minimum investments, ranging from $25 to $100, as long as you enroll in an automatic investment plan.

Use the Internet to search for kid-friendly mutual funds. Visit MFEA.com. This site offers investment advice and education, as well as links to mutual funds for kids.

Recognize that some companies have developed mutual funds that are just for kids. Others are intended for investors of all ages, but may be especially suitable for kids because of low minimum investment amounts or automatic investment plan options.

Determine the type of fund you need based on your objectives by clicking the "Kid Friendly Funds" link, followed by the "Selecting Funds" link. You'll find a chart that details the type of fund best suited for those with various objectives. The chart also lists the type of investments made according to the fund category, the potential for growth or income, and the potential risk level.

Click the fund selector link to find mutual funds that meet your requirements. You can search according to fund type, load, account type, minimum required to invest, performance, and a range of other criteria. Alternatively, you may search for kids' funds on MorningStar.com.

Visit the websites of the mutual funds that interest you and download prospectuses. Review them carefully, paying close attention to objectives and strategies, fund management details, fees and expenses.

With the help of your financial adviser or broker, invest in the kids' mutual funds that suit your goals for the child in your life. Alternatively, you may choose to contact the funds directly to open accounts and purchase shares.