Minimum Initial Investment Definition and Analysis

Minimum Initial Investment Definition and Analysis

Last Updated by WikiWealth

Fund managers put minimum restrictions on investments to allow the fund to function properly. These minimums guarantee that any investment from a purchaser of a fund meets the minimum standards of the fund. These are meant to safeguard the fund from having the administrative requirements for numerous small investors, while improving liquidity for investors in general. By setting a higher initial minimum, fund managers can regulate cash flows in and out of the fund, while protecting itself from the short term trades that may disrupt the fund's strategy.

The IRA minimum initial investment amount is usually set lower than the regular account minimum.