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3 Best Mutual Funds to Buy for Just $100

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Believe it or not, investments can actually begin with just $100. True, there are plenty of stocks available for less than a penny, but investing $100 in stocks may not always provide investors the diversity that mutual funds can assure. Moreover, risks associated with penny stocks are much higher.

On the other hand, there are low-cost mutual funds with decent returns where investors can invest just $100. These funds are even offered by prominent firms like BlackRock Inc. (BLK - Free Report) and Charles Schwab Corp. (SCHW - Free Report) . Mutual funds are an affordable option for diversity as well as a safer investment bet.

Investing in Mutual Funds

Mutual funds are great options for investors looking for a relatively less risky way to earn at least more than what fixed income instruments offer. Money from individuals and even organizations are invested in stocks, bonds, or other assets covering diverse industries globally.

One of the benefits of mutual funds is that it allows a small investor to invest in a basket of securities at one go. Investors need not worry about investing a large chunk in securities separately. Moreover, these are less risky than any individual asset class as underperformance of a security gets mitigated by outperformance of others in the portfolio. In addition to the asset diversification, mutual funds also provide liquidity, economies of scale, and are professionally managed.

A $100 investment cannot make an investor rich. This can only be to get someone started with investments, with the actual returns coming when an investor decides to invest a certain amount of money for a considerable time. So, this can double up as a great retirement plan as well.

3 Best Bets Now

A $100 bet will make more sense when the bulk of that amount is invested and no charges are paid from it. Funds that carry no sales load and have relatively low expense ratios should be preferred. It is also important to look at the performance track record.

The following funds hold either a Zacks Mutual Fund Rank #1 (Strong Buy) or Zacks Mutual Fund Rank #2 (Buy), as we expect the funds to outperform its peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but the likely future success of the fund.

Schwab Large-Cap Growth (SWLSX - Free Report) seeks long-term capital growth. To pursue its investment objective, the fund invests primarily in U.S. common stocks. Under normal circumstances, the fund invests at least 80% of its net assets (net assets plus borrowings for investment purposes) in large-cap stocks of U.S. companies. 

The minimum initial investment for the fund is $100. SWLSX has an annual expense ratio of 0.99%, and the fund carries no sales load. Its three main sectors include technology, consumer cyclical, and healthcare.

SWLSX carries a Zacks Mutual Fund Rank #1 (Strong Buy), and has returned nearly 20% in the past one year.

BlackRock Balanced Capital (MRBPX - Free Report) seeks the highest total investment return. The fund invests in equity securities and fixed-income securities. It may make investments directly in equity and fixed-income securities, indirectly through one or more funds that invest in such securities or in a combination of securities and funds.

The fund intends to invest at least 25% of its assets in equity securities and at least 25% of its assets in senior fixed-income securities, such as U.S. government debt securities, corporate debt securities, and mortgage-backed and asset-backed securities. The fund may also invest in mid cap companies.

The minimum initial investment for MRBPX is $100, with a minimum subsequent investment of $0. The fund has an annual expense ratio of 1.22% and carries no sales load.

MRBPX is a #2 (Buy) on the Zacks Mutual Fund Rank, and has returned 12.4% over the past one year.

Schwab Balanced Fund (SWOBX - Free Report) seeks capital growth by primarily investing in equity securities and fixed income securities. The fund primarily invests in equity securities of large and mid-cap U.S. companies and investment grade debt instruments.

SWOBX may also invest in equity securities of small-cap companies and, to a limited extent, in high yield securities (junk bonds). The fund offers dividends and capital gains annually.

The minimum initial investment for SWOBX is $100. It has an expense ratio of 0.62% and carries no sales load.

SWOBX is a #2 (Buy) on the Zacks Mutual Fund Rank, and has returned over 11.14% in the past year.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank in our Mutual Fund Center.

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