Just a guess here, but I suspect most people who don’t invest avoid it because they assume you need to start with thousands of dollars. Believe it or not, that just isn’t true. You can actually get started investing with $500 or less.
The next objection might be how to invest $500 – after all, even if you can open an account, there are many investments you can’t make with just a few hundred dollars, right?
Wrong! Absolutely wrong.
With the merging of technology and investing, there are all sorts of ways to invest a small amount of money. It’s even possible to get exposure to thousands of different securities with just a few hundred dollars.
Best Ways to Invest $500:
Even if you don’t have $500, you can still start investing through micro-savings apps. These are apps that enable you to save small amounts of money through regular spending activity. You connect the app to your checking account or credit card, and each time you have a transaction, a small amount of money will be allocated to savings, and even investments.
Here are examples of popular micro-savings apps:
Acorns is probably the most popular micro-savings app.
They even have an IRA version, Acorns Later. The process works by what they refer to as “Round Ups”. You make a purchase for, say $9.23, and the app rounds the transaction up to $10. The additional $0.77 goes to savings.
Stash is different from Acorns in that they don’t actually manage your money. Instead, they provide you with recommended investments, which you make through your account. Unlike Acorns, Stash not only recommends ETFs, but also individual stocks.
Qapital uses round-up methods, similar to Acorns. But they allow you to allocate up to $5 to the account per purchase. You can link your checking account, credit card or even PayPal account.
Qapital also has some unique and innovative ways to help you accumulate money. For example, you can contribute a fixed dollar amount on a regular basis, allocate money from freelance income, or even tie contributions to certain activities, like going to the gym. The idea is to create a savings incentive to do beneficial activities.
Micro-savings apps are a perfect way to get started saving and investing if you have no money at all. But once you have at least $500 saved, you can consider transferring the balances over to other investments in this article.
Robo-advisors are online, fully automated investment management platforms. They handle all aspects of investing, from portfolio allocation, to periodic rebalancing, and dividend reinvesting. Some even offer strategies to minimize income taxes, and nearly all offer IRA accounts.
Here are five we recommend:
Betterment is probably the best known of all robo-advisors. It manages your account for an incredibly low fee of just 0.25% on a standard account. What’s more, you can open an account with 0 upfront, and fund it with recurring deposits.
They’ll invest your money in 12 exchange traded funds (ETFs) that includes thousands of stocks and bonds. This gives you an incredible level of diversification with a very small investment.
Blooom differs from the other robo-advisors on this list as its primary focus is managing your 401k. For $10 a month, Blooom balances your investments to keep you on target, constantly working to avoid fees, distribute your investments correctly, and garner high returns. You can get started with Blooom by signing up for a free analysis of your current 401k plan to see how the service could work for you.
Wealthsimple works much like Betterment and Wealthfront, but they also offer socially responsible investments, as well as a Halal Portfolio that invests based on Islamic principles. The annual management fee is higher than on the other platforms, at 0.50% per year. But you can open an account for with no upfront investment, and fund it through regular contributions.
M1 is a bit different from the other robo-advisors, because they provide you with a choice of portfolios they refer to as Pies. They offer predesigned pies, but you can also make modifications in each.
You can choose to hold either ETF’s or individual stocks, or combination of both. There’s no minimum investment, so you can fund your account with regular contributions. And perhaps best of all, there’s no annual management fee.
Hedgeable might be the most interesting robo-advisor of all. The name “Hedgeable” is a play on “hedge”, as in hedge fund, which is about the size of it. Hedgeable is making sophisticated hedge strategies available to very small investors. You can get started with as little as $1. They use investment strategies designed to protect your portfolio from catastrophic losses, which provides an opportunity to outperform the markets during financial market downturns.
They also have more diverse investments, like private equity, Bitcoin, real estate and commodities. It’s a real opportunity to diversify across multiple asset classes.
Low Minimum Investment Brokerages
Some new and small investors don’t even bother to investigate popular investment brokerage firms. You might assume they require thousands of dollars to open an account. There are brokers like that, but below is a list of seven discount brokerages where you can open an account with zero to $500.
Best Low Minimum Investment Brokerages
TD Ameritrade is a full service discount broker, offering every type of investment there is from funds to individual securities. They require no minimum initial investment, and there is no annual fee for the account. Stocks, options and ETF’s can be traded for $6.95 per trade.
Ally Invest is another full service discount broker, that also has no minimum investment requirement. They offer all types of investments, at $4.95 per trade for stocks, options and ETF’s.
E*TRADE requires a minimum initial investment of $500 and also provides all types of investment options. You can trade stocks, options and ETF’s at $6.95 per trade.
Firstrade also requires no minimum initial investment. You can trade stocks, options and ETF’s for just $2.95 per trade, and mutual funds for just $9.95 per trade. They also offer more than 700 commission-free ETF’s.
Unique Low Minimum Investment Brokerages
The last two brokers are “different” in the investment brokerage world. You’ll see why as you read about each.
Robinhood is a smart phone-based trading platform available for both Android and iPhone. There is no minimum initial investment, and you can trade stocks and ETFs, with options and even crypto currencies being rolled out sometime this year. And you can do all your trading for free!
Motif allows you to design your own portfolios, referred to as “motifs”. The name confirms you can create theme-oriented portfolios.
For example, you can create a portfolio with up to 30 stocks and/or ETF’s – for one flat fee of $9.95. Some motifs are pre-designed (over 9,000 in fact!), but you can also create your own. There’s no minimum initial investment, but you do need at least $250 to build a motif.
One of the very best ways to invest $500 or less is by participating in a retirement plan. If your employer offers a program, you can join by making payroll deposits. There’s no need to come up with upfront money at all.
Many employer plans, like 401(k)s also offer an employer matching contribution. If your employer offers a 50% match, and you make a 6% contribution, they’ll put in an additional 3%. That will give you a total contribution of 9% of your income.
A 401(k) is one of the easiest ways to invest in your future and a very rewarding one. I recommend investing at least 20% into your retirement plan, whether it’s a 401(k) or not, but $500 is a great place to start.
But if you do have $500, you can also open up an IRA account. This can be done with either a traditional or Roth IRA. You can open an account with any of the investment brokerages or robo-advisors in this article. Many will even waive the minimum initial investment requirements for an IRA.
Perhaps the best thing about the IRA option is that it’s totally self-directed. You can choose the trustee for the account, and even the investments you’ll hold in the account. If you’re not familiar with investing, you can start an IRA with one of the robo-advisors. They’ll handle all the investment management for you, and all you’ll need to do is fund your account.
Once your IRA account is opened, you can fund it with payroll contributions, the same way you do with your checking and savings accounts. $500 will be more than enough to get started, and setting up payroll contributions will turn it into an automatic process. You’ll build up into the thousands of dollars in no time.
Start an Online Business
Let’s shift gears here. So far, we’ve been talking about investing your money in a more traditional sense, through investment apps, investment brokerages, robo-advisors and retirement accounts. But if that doesn’t get you excited, and you have a more entrepreneurial streak in you, you can instead invest $500 – or less – in starting an online business.
Don’t think it’s possible? Online businesses aren’t capital intensive like brick-and mortar businesses. You don’t need office or warehouse space, you can sell products and service you don’t even have to buy, you can work from home, and get all the free marketing you need.
Interested? Try these:
Start a Blog
This of course is the first one that came to my mind, since it’s what I do. But it wasn’t always that way. When I get started, I knew absolutely nothing about blogging. But I went from zero to over $1 million in blogging income in about seven years. I wrote all about it in How I’ve Made Over $1,097,757 From Blogging, and that was three years ago!
I’m not saying that’s what will happen with you, but blogging is a way to turn a very small amount of money into a nice part-time or full-time income. What’s more, it can actually be a semi-passive way to earn income. Once you get your blog up and running, it can continue to generate income from advertising and affiliate marketing.
That’s better than any other investment possibility on this list.
We’re talking about investing $500 here, but you can actually start a blog for a lot less. For a couple hundred dollars or less, you can set up a web domain with different hosts, like Go Daddy.com. You can use a free blogging platform like WordPress to build your blog on. There are dozens of other apps, some free and some paid, that you can use along the way, but you don’t have to do it upfront.
Once you get your blog up and running, it’s just a matter of filling it with content. Write about what you really like, or what you know well. As long as you’re helping people do what it is they want to do, you’re heading in the right direction.
Marketing and Monetizing Your Blog
Novices sometimes think you can just set up a blog, add content, and thousands of people will come rushing to your site. But it’s not that simple. As you’re adding content to your site, you also need to market it in various places and to as many people as possible.
Fortunately, there are different ways you can do this without spending any money. One of the best ways is to guest post on popular blogs and websites. That will get you and your blog noticed immediately. You haven’t spent any money, but you’ve invested time writing articles.
You can also help your cause by doing podcasts on your blog. They can either be standalone or included with your articles. It helps, because some people would rather listen to content than read it.
Another big one is to create YouTube videos. You can feature them on your blog, but by setting up a YouTube channel, you can build a library of videos. That channel will help to send more visitors to your blog.
As you create content, it’s important to become an expert in your particular niche. This will enable you to focus primarily on that niche, and become a go-to source of information. In a real way, you’re giving away your knowledge and information for free. But don’t worry – it’s actually how you make money with a blog.
The money comes from advertising, affiliate marketing and other sources. As you’re creating content, those are generating revenue. And as your web traffic grows, so does your income!
Starting an Online Store
If you’re not into blogging, you can start an online store, selling a product or service. Thousands of people are making money doing exactly this.
If you’re into creating a product, like some kind of handcraft, you could actually sell it on a site like Etsy. And there are people who have eBay stores, selling entire product lines. Many of turn this into a full-time income.
You can also go the direct route by creating your own online store.
My buddy Steve Chou and his wife Jennifer did just this. Jennifer went from a $100,000 job to an online store earning at least as much. You can read all about their story in GF¢ 018: How Steve Chou’s Wife Replaced Her $100k Income With an Online Store.
Jennifer did this by selling wedding linens online. If that sounds incredible, it shows you the potential of how much money can be made on a single concept.
If you’ve got a product you’d like to try to sell, or even a service, starting your own online store could be the way to turn into a profitable reality. It’s another of those concepts that can be started for a small amount of money, and turned into something much bigger.
Buying Stuff and Flipping it for Profits
Most people are familiar with the concept of buying a stock and selling it later at a higher price. There’s also real estate flipping – buying a property it’s been neglected, renovating it, and selling it at a big profit.
But did you know you can do the same thing on a much smaller scale? And you can do it with less than $500.
What kind of things am I talking about? Items you can buy at garage sales, on Craigslist and elsewhere. You can often find them for just a few dollars, and sell them for many times more.
You only have to make a few flips a month to turn that into a decent part-time income. And it doesn’t take a big upfront investment to make it happen. Much like blogging or starting your own online store, it’s mostly an investment of time and effort. In the case of flipping, the time and effort is spent browsing around for salable merchandise, then marketing and selling it.
To get started, you can sell items you have in your home and no longer need or want. You’ll be amazed at what people will buy, even if you think it’s junk. From there, make a habit of searching garage sales in your area, or even estate sales or thrift stores.
Selling Your Merchandise
While the buying may be done in person, the selling can be done online. You can sell your merchandise on different websites, like eBay, Amazon and even on Craigslist, for larger items. Apart from those three sites, there are new sites coming online all the time. Some newer ones include Facebook Marketplace, LetGo, OfferUp and even Shopify.
You can start making serious money doing this if you can specialize. This may include certain items, like antiques or unusual items. If you’re fairly good at repair work, you can even buy damaged items, repair them, and sell them for much greater profits. The advantage is that damaged goods can often be purchased for next to nothing.
The list of items you can sell is virtually unlimited. It can include :
- Gaming equipment
- Tools and lawn equipment
- High-end or classic toys
- Sporting equipment (golf bags, fishing gear, etc)
- Concert tickets
- Celebrity memorabilia
- And even certain kinds of clothing
One that I heard of that apparently works quite well are regional specialties. That might be something like Vermont maple syrup, southwestern pottery or Hollywood memorabilia. These are items that may be common where you live, but not in the rest of the country or around the world. You can make some serious money making them available to people outside your area.
Two items you might want to steer clear of – firearms and baby furniture. According to Aaron LaPedis, author of The Garage Sale Millionaire, secondhand baby furniture could result in a lawsuit, and firearms can be used in criminal activities. Both are best avoided.
Otherwise, the list of potential items to flip is close to unlimited! Check out this Twitter thread, #2017FlipChallenge for more ideas on what people are flipping for profit.
If You Have $500 Don’t Stop There!
As you can see from the many options in this article, $500 is more than enough money to start investing. Getting started is surely half the battle, and you’ll find once you do everything will go easier going forward.
But remember, it’s just the start. Choose your investment method, invest what little money you have, but then continue investing from there.
If you start with $500, and continue contributing $250 per month, at the end of one year you’ll have $3,500 invested. And that doesn’t include the income you’ll earn on those investments. Keep doing that year after year, and hundreds will turn into thousands, which will turn in the tens of thousands, and eventually hundreds of thousands.
Soon enough, you may even become a millionaire! But that will only happen if you get started today. Don’t let the initial investment scare you. Scrape together whatever money you have, even if that means selling a few personal possessions.
Once you get started, and get into the routine, you’ll be on your way to financial independence.