In 9 Ways to Invest $100 I gave suggestions on how to invest when you have just a few dollars.
In this article, I want to take it up a notch, which is to say how can you invest when you have more than a few dollars, but not the thousands that traditional investment vehicles usually require?
You can also check out my post on the best short-term investments for your money!
Well now I know more about the world of investing and I can help you out with these same thoughts and fears.
I was surprised – shocked really – that I could start investing in the stock market via mutual funds with only $50 per month.
And that’s exactly what I did. Even though I later found out that the mutual funds were okay at best, the fact that I started investing in myself was huge for me.
And for many, it’s that first step that prevents them from amassing wealth later on.
Investing in yourself doesn’t require thousands, it just takes getting started.
For our purposes here we are going to define small amounts of money as something more than $100, but not more than $1,000. Based on that parameter, here are 14 ways to invest small amounts of money.
Do you need help finding some extra cash to get started with your investment? Check out these tips on how to make money fast!
The 14 Best Ways To Invest Small Amounts of Money:
Table of Contents
- 1. Automate Investing With Betterment ETF Portfolios
- 2. Balanced Stock Portfolio With M1 Finance
- 3. Build a Real Estate Portfolio With $10
- 4. Paying Off Debt
- 5. Savings Accounts
- 6. Your 401k Plan
- 7. Get a Roth (or Traditional) IRA
- 8. Prosper
- 9. US Treasury Securities
- 10. Investing in Your Own Skills
- 11. Dividend Reinvestment Plans
- 12. Low Minimum Investment Mutual Funds and ETFs
- 13. Online Brokerage Firms
- 14. Your Own Business
- The Bottom Line – How to Start Investing With Little to No Money for January 2024
1. Automate Investing With Betterment ETF Portfolios
There are a number of “robo advisors“, online investment platforms that offer professional management of your portfolio with very low fees.
One of the best for small investors is Betterment.
You start by completing an online questionnaire that enables the site to determine what your risk tolerance is.
Based on that evaluation, a portfolio is created for you with an allocation that includes several different exchange-traded funds (ETFs). By purchasing ETF you’re essentially buying a diversified portfolio of stocks that you don’t have to manage.
Because of this allocation, your only responsibility is to fund your account – there is no need to concern yourself with investment selection, or with re-balancing your investments.
Currently, they offer a variety of investing options with their Betterment Core, Goldman Sachs Smart Beta, and Innovative Technology portfolios:
With these portfolios, you’ll get access to familiar ETFs with Vanguard and iShares, both popular in the investing community.
Betterment investments actually have no minimum initial account deposit requirement. And just in case you missed that…
You can open up an account by committing to monthly contributions of as little as $250. The annual management fee to maintain your account is 0.25% of your account balance, on accounts of less than $100,000.
If you’re not ready to invest, they also offer a “No-fee” checking account that pays a competitive variable rate greater than what your bank is paying (currently 0.35%)
The management fee works on a sliding scale and drops as your account balance grows.
2. Balanced Stock Portfolio With M1 Finance
M1 Finance has brought a great new perspective to investing. Like Betterment they allow you to automatically invest in various verticals, but the brokerage also allows you to trade both stocks and ETFs for free. That’s right FREE!
M1 Finance, by far, has the largest list of no-fee investments available through any brokerage.
M1Finance also lets you purchase fractional shares of stock. This means that if Apple stock is currently $400 a share, you can purchase $50 of Apple stock and own 12.5% of a share.
Finally, you can get a free financial analysis from M1 Finance, before you invest a single dollar.
$0 to setup, $100 to Invest
3. Build a Real Estate Portfolio With $10
Fundrise makes investing in real estate a breeze.
This real estate investment trust allows you to invest in real estate without flipping houses or becoming a landlord. Fundraising is simple: your money is invested in real estate developments. Whenever they make money, you make money.
Just how much money, you might ask? Your returns will vary based on the project you invest in, but Fundrise investors garnered an average return of over 11% last year, thanks to technology that pinpoints profitable real estate projects for you to invest in based on your goals.
Perhaps the best part of Fundrise is its low minimum. If you’ve ever tried your hand at real estate investing, you know that it isn’t cheap.
But Fundrise opens the door for investors who might not have thousands of dollars at their disposal. You can invest in Fundraiser with as little as $10. Usually, you would need $1,000 to invest with them, but they are currently opening up the doors to smaller investors with their “Starter Portfolio”.
While Fundrise will invest in ideal projects for you, you can also take a more hands-on approach by selecting from a number of Fundrise’s projects to invest in.
I’ve been investing with Fundrise for over 4+ years and have been more than pleased with my returns. You can learn more about my Fundrise returns here or watch the video below.
4. Paying Off Debt
There are two reasons to pay off debt. The first is that you shouldn’t invest if you have debt, especially unsecured debt.
The second reason is that paying off debt is the best way to lock in an above-average and guaranteed rate of return on your money.
This is especially true if the interest rate is in double digits – there are no places available to the average investor to get double-digit returns that are guaranteed.
Let’s say that you have a credit card with a balance of $1,000 with an interest rate of 15.99% per year. By paying that card off, you’ll lock in a nearly 16% rate of return on your money, virtually forever!
If you have debt with a high interest rate, you may consider taking out a personal loan with a lower interest rate and using that money to pay off the debt with a higher interest rate.
5. Savings Accounts
To be sure, you won’t be able to earn much money on your investments at the bank.
However, the advantage that banks offer is that you can invest very little money in a savings account, earn a little bit of interest, and have zero risk of loss.
Let me be honest, savings accounts are not the most exciting investments
The best purpose for a savings account is to use it as a place to accumulate a larger amount of capital for higher risk/higher yield type investments later on.
Up to 4.65%
Initial Deposit Minimum
Some of the investments in this list will require $500 or $1,000 to get started. While that is not a ton of money, if you are getting started with a smaller investment, your best bet might be to take your time to build up a little cash and expand your investment options.
Learn more about my picks for the best highly competitive online savings accounts.
6. Your 401k Plan
This is probably the easiest way to invest small amounts of money, or even if you don’t have any money at all. That’s because it’s generally set up as a payroll deduction so that you can allocate a percentage of your paycheck to go to the retirement plan.
You can designate just about any amount of your paycheck that you choose – as low as 1% to 20% or more, depending on the rules established by the employer plan.
In this way, you don’t even need to have a large nest egg to invest. You can just add small amounts to your account with each paycheck, and then begin investing in any types of investments that your available capital (and the employer plan) will permit.
Best of all is the tax benefits! Not only are your contributions tax-deductible, but the income earned on your investments will not be subject to income tax until you retire and begin withdrawing money.
No matter how much money you have to invest, investing in your employer-sponsored retirement plan should be one of the first steps you take.
7. Get a Roth (or Traditional) IRA
If you don’t have an employer-sponsored retirement plan, you can almost always set up your own retirement plan. All you need to qualify is earned income.
The two best plans for most people are either a traditional IRA or a Roth IRA. Much like an employer-sponsored retirement plan, any returns on investment that you earn are tax-deferred until you begin withdrawing the funds in retirement.
Also, contributions to a traditional IRA are generally fully tax-deductible.
Roth IRA contributions are not tax-deductible, however, withdrawals will be free from taxes as long as you are at least 59 ½ at the time the withdrawals are made, and you have participated in the plan for at least five years.
And though there is no employer matching contribution (since there is no employer), a self-directed traditional or Roth IRA can be held in a brokerage account that offers nearly unlimited investment alternatives.
You can contribute up to $7,000 per year to either a traditional or Roth IRA ($8,000 if you are age 50 or older), which means you can build up a substantial portfolio in just a few years.
Also with the best Roth IRA providers, there is a very low entry cost. Of the investment ideas we’ve offered so far; Betterment, M1 Finance and Fundrise all offer Roth IRA accounts. This is huge for all the small investors out there!
Prosper works much the same as Lending Club.
You can invest as little as $25, so you can spread a few hundred dollars across many different loans. There is also a state-by-state minimum net worth requirement here as well.
Prosper reports that the average annual return on a note approaches 16%, which is an incredible return on a fixed-rate investment.
In the case of both Prosper and Lending Club, there is a risk of loss to your principal in the event that one or more loans you’re holding go into default.
There is no FDIC insurance protecting your investment the way it would with bank investments. I also did Prosper reviews for both borrowers and lenders. You can get full details of the platform there.
9. US Treasury Securities
If you are looking for a more conservative investment, one where your principal is protected from market swings, you can invest in US Treasury Securities.
These are debt obligations issued by the United States Treasury Department, to fund the national debt. Securities have maturities ranging from 30 days to 30 years (longer-term maturities do involve a risk of principal if you sell before maturity).
You can invest in these securities through the US Treasury Department’s portal Treasury Direct. By using the portal, you’ll be able to buy US government securities in denominations as low as $100.
You can sell your securities there as well, and there are no early withdrawal penalties for doing so.
You can also use Treasury Direct to buy Treasury Inflation-Protected Securities (TIPS). These not only pay interest but also make periodic principal adjustments to account for inflation based on changes in the Consumer Price Index.
10. Investing in Your Own Skills
Are there any skills that you could acquire that could bring you up to the next level in your career? Think in terms of learning a new computer application, a foreign language, or taking a public speaking- or sales course.
It’s possible that you could acquire certain career-enhancing skills that would enable you to either get a promotion in your current job or even transfer to a new, higher-paying position with another employer.
A few hundred dollars is often all it takes to take a course to learn that kind of skill.
11. Dividend Reinvestment Plans
Better known as DRIPS, these are plans that allow you to invest small amounts of money into stocks of companies that pay dividends.
Many large companies offer DRIPS, so if you want to invest directly in stocks, and you like certain companies, you can invest in those companies – usually without having to pay any kind of investment fees.
DRIPS typically allows you to build your investment over time by making periodic contributions. Often, this can be done using payroll deductions.
This can also be an excellent way to dollar cost average your way into large investments in major companies. And when you earn dividends, the money will automatically be reinvested to buy more company stock.
12. Low Minimum Investment Mutual Funds and ETFs
Different mutual funds and ETFs have different initial investment minimums. Many do require that you have several thousand dollars to open an account, but there are some that allow you to start an account with far less.
An example is the Schwab Total Stock Market Index (SWTSX). With a required minimum that is that low, you could spread $1,000 across 10 different funds.
You can check with any large mutual fund families, and even some investment brokerage firms, to see which funds are available with a minimum initial deposit of $1,000 or less.
You may find index funds to be your best bet since they represent the best play on the entire market.
13. Online Brokerage Firms
It can come as a surprise to many small investors that you can actually open up an account with an online brokerage firm for $1,000 or less.
- SIPC-insured up to $500,000
- No trading, account transfer, or rebalancing fees
- Automatic rebalancing
- Tax-loss harvesting
- Access via mobile app
- Get $10,000 managed for FREE when you sign up for your first Wealthsimple account
For example, the minimum initial deposit to open an account with Charles Schwab is $1,000 but even that can be waived if you set up an automatic monthly transfer of $100 through direct deposit or Schwab MoneyLink or open a Schwab Bank High Yield Investor Checking account linked to your brokerage account.
In addition, you can open a brokerage account with TD Ameritrade with no minimum initial deposit.
The advantage of investing through a brokerage firm is that will provide you with a wider variety of investment choices than you can generally get through direct investments alone.
14. Your Own Business
I’ve discussed investing in other businesses so far, but if you’re looking to invest small amounts of money, investing in your own business could prove to be the best choice of all. After all, who better to invest in than yourself?
For example, for a few hundred dollars you can buy a decent lawnmower, and start cutting lawns to generate income.
With those few hundred dollar investments, you could have more than five thousand dollars to invest in no time.
You could also start a website, dedicated to selling a certain product line. Or you can start a blog and use it to create affiliate sales arrangements.
If it’s something you might enjoy doing, you could go to garage sales, estate sales, flea markets, and thrift stores, or buy unusual goods and sell them at a profit on eBay or Craigslist.
With advances in technology and the growth of the Internet, it’s easier than ever to start your own home-based business on a shoestring.
If you only have a few hundred dollars to invest, investing in starting your own business could be the most profitable venture of all. Many business owners start out by picking up a part-time job or side hustling to make extra cash to get their business up and going.
A great side hustle is to become an Uber driver, you can create your own schedule and just sit back and drive and earn extra cash to throw at that dream of yours!
So here you have 14 ways to invest small amounts of money, so there’s nothing stopping you from investing in something. Investing is one of those activities where the most important step is getting started, and here are the ways you can do it.
The Bottom Line – How to Start Investing With Little to No Money for January 2024
In conclusion, starting to invest with little to no money is possible through a variety of options such as opening a brokerage account, participating in your employer’s retirement plan, or utilizing a robo-advisor.
While it may seem intimidating to start investing with a small amount of money, the most important thing is to start as soon as you can. By investing even a small amount consistently over time, you can potentially see your investments grow through the power of compound interest.
Remember to do your research and seek the advice of a financial professional before making any investment decisions.