Not long ago, if you had less than a $1000.00, there were few investment options available. Young people without adequate savings were stuck with the variable annuity or CD, outside of their company sponsored retirement plan, in order to attempt to earn a rate of return greater than their individual bank account. The mutual fund industry got wise and created asset allocation funds that contain several funds for greater diversification.

Before the asset allocation funds, the variable annuity sort of looked attractive for young people starting a qualified retirement investment portfolio with little money. Unfortunately, the non-qualified annuity presents some tax issues that many cannot swallow. There is the 10% early withdraw fee for age pre 59 1/2 with a few exceptions (these also apply to qualified variable annuities). In these instances, a bank CD can be a more useful investment option to satisfy short-term goals.

With the creation of asset allocation mutual funds, individuals can invest in retirement or non-qualified accounts with as little as $25 a month. It is important that all Americans are given equal grounds, in regards to savings. Besides, anyone under the age of 40 should realize Social Security is not a viable retirement nor will it probably provide enough income.

*Disclaimer: This article does not constitute financial advice. Always consult a tax advisor or financial advisor when making investment decisions.

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