What is Minimum Investment?

Minimum investment is the least amount of money an investor must invest to take part in a specific investment.

How Does Minimum Investment Work?

Many types of investments have a minimum investment, including mutual funds, certificates of deposit (CDs), unit trusts, limited partnerships and hedge funds. Minimum investment can range from a few hundred dollars to several million dollars, depending on the investment.

Why Does Minimum Investment Matter?

By requiring a minimum investment, investment managers can put a barrier in front of short-term investors who may be inclined to jump in and out of a fund at a moment's notice. It helps provide a certain amount of consistency to the fund manager -- he/she should have a rough idea of how much money is in the fund and available to invest.

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Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

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