By Aviya Kushner, Contributing Writer

The biggest excuse small investors make is always lack of cash. But sit back and imagine enjoying the diversification benefits and low cost of indexing for just $50 each month.

Though many index funds still require hefty upfront minimum sums, five companies now offer the chance to get into an index fund with absolutely no initial lump-sum investment. Happily, this means any mumbled excuse about needing to accumulate a chunk of startup investment cash is now null and void.

All you've got to do is commit to a monthly withdrawal from your bank account. For young investors or beginning investors, this inexpensive indexing is a great way to get started. Four of the companies set the monthly minimum at fifty bucks, while TIAA-CREF, which just opened its index fund, will let you in for just twenty-five dollars each month. What's more, TIAA is waiving part of its investment management fee through the year 2003.

Let's look at the performance records and expense costs of the funds offered by these five companies: American Century, T. Rowe Price, Strong, TIAA-CREF, and Transamerica. These companies' index offerings include traditional S&P 500 index funds, a Dow 30 fund and a Russell 3000 fund.

The S&P 500 index funds all own more or less the same top ten holdings, with heavy stakes in Microsoft, Exxon-Mobil, and IBM. Several of these funds were started very recently, so keep the inception date in mind as you compare performance notes and the percentage of fund assets in certain stocks. Because the market has been down for much of this year, the life-of-fund records for the newcomers will be less impressive.
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