Okay, so you have $5,000 (or $50) and you want to invest it — open a Roth, say. Maybe you've already decided where to open the account, maybe not. Either way, you'll have to choose investments eventually. It's not overwhelming, we promise.

This is for you: If you're just getting started investing for the long-term (like for retirement, say), and you want to choose an investment that will be appropriate for several years-ideally while it quadruples in value. (Disclaimer: Bundle does not guarantee quadrupling.)

Hands-on time: Less than an hour

Total time: Less than an hour

Cost: You'll need at least $50 to invest.

The quick-and-dirty: If you're not planning to be a manic trader — and we wouldn't recommend it — the easiest, most cost-effective way to start is with a diversified, low-expense mutual fund. A mutual fund is a portfolio of stocks, bonds, and/or other assets, which means you get the benefits of several investments without having to choose 50 stocks yourself. And 'low-expense' means you won't pay a lot to own it.

Quick note: A share of stock is a tiny sliver of a publicly-held company. A bond is a loan to the issuer, which can be a company or the government (city, state, school district, nation). Stocks are generally riskier than bonds, which means the potential for bigger gains and greater losses. The more stocks you own (directly, or through your mutual fund), the more aggressive your investments are considered to be. The right mix for you depends on how comfortable you are with risk, but experts encourage younger people to invest heavily in stocks, with the idea that you have many years to ride out the ups and downs of the markets, and that over time, you'll come out ahead.

What to do:

1. If you're just starting out, choose one fund. There's no need to spread your $1,000 among five different investments. Later, when you've built up a good base ($10,000, say), you might consider putting some of your money in a second fund, and so on.


2. Do a little bit of research.We've listed some funds to start with below, or you might do your own investigating.Either way, for each fund you consider, note the following:


• Expense ratio. This is how much it'll cost you to be in that fund, expressed as a percentage of the fund's assets. If you can, stick to funds that charge less than 1 percent.


• Diversification. Look for funds that include a mix of investments, or even a mix of other funds.


• Minimum. That's the minimum dollar amount you'll need to get into a certain fund. It's often different for IRAs than for other investments ($1,000 vs. $3,000, for instance).


• Load. This is the transaction cost to purchase or sell a fund. Look for no-load funds, which charge no transaction costs.
3. Don't wait until you have a huge amount to invest. Just because a Roth has a $5,000 annual limit doesn't mean you have to have $5,000 to put into one. Some mutual funds let you start with with $50 monthly contributions. And the sooner you start, the better.


4. Get started. It's more important to get the ball rolling than to spend weeks picking the Best Fund Ever. Pick a solid fund and write a check, or make an electronic deposit. You can always change your investment choice later.

Some fund suggestions from our experts:

• Vanguard STAR: A fund of 11 other Vanguard stock funds (60 percent) and bond funds (40 percent). Expenses: 0.37%. Minimum to invest: $1,000


• Vanguard LifeStrategy Growth: A fund of four of Vanguard's index funds, including domestic and international stocks and bonds. The proportion of stocks varies from 60 percent to 90 percent, at the fund manager's discretion. Expenses: 0.23%. Minimum to invest: $3,000


• T. Rowe Price Spectrum Growth: A fund of T. Rowe's stock funds, including international funds. Expenses: 0.83%. Minimum to invest: $1,000; $50 if you commit to an automatic $50 monthly investment


• T. Rowe Price Balanced: A mix of stocks (60%) and bonds (40%). Expenses: 0.73%. Minimum to invest: $1,000; $50 if you commit to an automatic $50 monthly investment


• T. Rowe Price Growth & Income: A mix of stocks of primarily American companies. Expenses: 0.76%. Minimum to invest: $1,000; $50 if you commit to an automatic $50 monthly investment


• Fidelity Asset Manager 85%: A mix of domestic and international stocks, with 15 percent bonds. Expenses: 0.97% (but reduced to 0.83% in 2010). Minimum to invest: $2,500


• Fidelity Balanced: A mix of mostly domestic stocks (60%) and bonds (20%). Expenses: 0.68%. Minimum to invest: $2,500


• Schwab MarketTrack Growth: A fund of Schwab's stock funds (80%) and bond funds (20%). Expenses: 0.70%. Minimum to invest: $100

Need help choosing? Plug up to three funds into the FINRA Fund Analyzer to do a side-by-side comparison, or read the fund analyst reports atMorningstar.com. (True, Morningstar is an investor in Bundle, but it also happens to be a mutual fund research firm with clear, easy-to-understand information, and free access to its premium content for two weeks, which is all you should need to get started.)

To learn more:
Morningstar IRA Calculator

Who helped: Sheryl Garrett, financial planner and founder of the Garrett Planning Network; Constance Stone, financial planner in Chagrin Falls, OH; Ted Toal, financial planner in Annapolis, MD


Did you do it? Tell us what worked or share other tips in the comments below.


Articles on Bundle are intended as suggestions only. Your personal circumstances may require you to take different steps or to seek the advice of a financial professional. For more about what we do (and don't) do, read our Terms of Use.



Related Links:

How to choose between a Roth IRA and traditional IRA

How to invest when you're broke

How to make an IRA contribution