I have long thought that I should not run a mutual fund company because I obviously do not understand the business model. At least the business model that should be focused on people just starting out.
I have railed against Vanguard, Fidelity and T.Rowe Price for their $2,500-$3,000 inital deposits thinking they are losing young people that would probably stick with them for life if they offered something like $500 to get in. I'm sure they don't want to because the cost of managing an account will outweigh any money they could make. But if they kept the account for forty years and it grew... Well, I'm sure they have meetings and analysis done on this stuff all the time so, again, I must be missing something.
Thought I found it when I got this in my e-mail. (I'm starting to get stuff from investment houses and consultants so somebody is reading this stuff and deciding it just may be worth their time to send a press release. Don't waste time sending stuff to me. Call your buddies at Forbes, Fortune, Business Week, NY Times, Washington Post and have them do an article on me and make me famous. I will gladly kick back some of any outrageous money I make.) Back to 'this' which is this
News Release link
American Century Investments is introducing the "My [Whatever] Plan," a
package of web-delivered investment products and services designed for
people at the beginning stages of investing, specifically Gen Xers and
Millennials. This new service features multiple components that make
getting started and staying on track simple and understandable. It
a no-load, low-cost asset allocation mutual fund, a lower minimum
investment of $500, ongoing access to investing tips, education and a
special new website to manage the investorâ€™s new plan â€” all online.
Check it out at https://www.mywhateverplan.com"
Contacts: Jami Schaefer 816 786-2206 or JQ5@americancentury.com
American Century MEDIA LINE 816 340-7033 or
I have to admit that when I mention funds I usually stick to Vanguard and Fidelity. I tend to forget American Century which I should not because I know they are huge and low cost, I think, but I don't know much more about them. In the future I will include them. Sorry, Jami.
Anyway, I thought this was a great idea. Having my doubts after reviewing the site but still the best of a bad lot. Let's go to the site.
A bit busy for my tastes but I'm sure it was market tested to death. I like the low $500 inital deposit, don't like the $100 a month. I think this will scare off a lot of people. $100 a month is not what it used to be but still, well, a $100 a month. Why didn't they just do $500 to start and $25 or $50 or $75 or $100 a month as options? People like to start out slow, put in the big toe and go from there.
Then you define your goal. A bit busy. My goal, if I were you, would be to start saving painlessly with a small amount every month. The $100 already scared me off.
Choose a fund--visual overload. Why don't funds ask this question--do you need the funds in the next six months? One year? Two years? Five Years? Ten Years? Then "tell" people that this is the fund for the six month investor. This is the fund for the one year investor and so on. Funds do not want to do this because they may get sued but it is what people want because...it is simple.
Get started. This is the application. Not too hard, no big deal.
Hmmm. I think I missed something. Or it isn't there. Didn't see any mention of fees. It is long accepted financial advice to go with the lowest fee structure. Hard to do here since there is no discussion of fees. Maybe there was. I'll go back and check. Nope, didn't see anything about fees.
So here are the pluses. $500 to get in. Regular investments that do the weighted average investing thing by default.
Minuses--FEES? $100 a month. Too many managed funds--no index funds.
Overall, a good deal but not simple. Well, it is simple but could be a lot simpler. If you want to set it and forget it, probably not bad. If you want to mazimize, save up the $2,500-$3,000 and go for index funds.
It's your choice.