Minimum Investment
Categories: Investing
The least amount you can invest in a given, um...investment.
In the mutual fund industry, for example, the minimum investment is usually $250 to at least get started. And this makes sense: with a 1% annual management fee, the fund company is only making $2.50 from you. That barely covers even one mailing of a quarterly statement to you. So they'll lose money on you at $250 for a while, hoping you'll invest more with them in the future, or that the $250 will grow the old-fashioned way. And that you'll have the dough with them for a long time.
In other vehicles, like venture capital limited partnerships, the minimum investment is often $1 million. The people running the fund appreciate having just a small number of partners to service, communicate with, manage...rather than thousands in a normal-sized $500-ish million fund.