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How To Start Investing With Little Money

Movies like “Wolf of Wall Street” or shows like “Billions” make investing look enormously complicated, cutthroat and expensive. 

But it doesn’t have to be either of those three things. 

You can invest in your future for surprisingly little money, time or drama. And thanks to technology, you can invest in everything from individual stocks and bonds to real estate, and you don’t need to be a financial genius. 

Interested in boosting your bottom line by investing? All you need is a few bucks.

What To Consider Before Investing With Little Money

Whether you’re investing with a lot of money or a little money, make sure you’re investing with a well-thought-out game plan. Craft your investment strategy with these priorities in mind:

  • Choose goals: Your investment strategies should align with your personal goals. It may be a short-term goal (like saving up for a car or a vacation), a medium-term goal (like buying a home or paying for a child’s education), or a long-term goal like saving for retirement. Your goals will help guide your strategy.
  • No such thing as one size fits all: The perfect investment strategy does not exist. Your strategy will depend on the economy, your age, income, risk tolerance and goals. And your strategy should evolve and adapt as these variables change over time.
  • Be patient: Investing is a marathon – not a sprint. Any investment strategy that offers huge returns fast is usually pretty risky. Think about investing as a long-term strategy.
  • Diversify: Do not put all your investment eggs into an undiversified basket. You mitigate risk by diversifying your portfolio with investments in a mix of companies and assets. If one investment loses money, your investments that aren’t losing money will protect you, balancing everything out. The more diverse your portfolio is, the safer you are from market volatility.
  • Do your research: Before you invest, make sure you understand what you’re investing in. Don’t put blind trust in the ideas or opinions of one person, pundit or financial guru. Learn the potential rewards and risks of the investment you’re considering. And get recommendations and feedback from reputable sources.
  • Create a budget: Before you invest, you’ll need to create a budget. Knowing what you earn and owe can help you figure out how much money you can realistically afford to invest every month. 

Can you build up savings?

The first way to invest money is to save money. Sure, you can stick with the classics (think: a piggy bank or your mattress), but automating your savings is a modern option with benefits. 

The trick is to put your money where you can’t easily access it. A standard savings account (preferably with no monthly fees and a low or no minimum balance) or a high-yield savings account should work.

You can set up an automatic transfer from your checking account on the same day every month or when your paycheck arrives. With this strategy, you can build an emergency fund, an investment fund or both.

And if you should be so lucky as to get a gift, get a bonus, get a generous tax return or win the lottery, think about putting that money (or at least some of it) in your savings before you get ideas on how to spend it. If you can forget your money is parked in a savings account, you may be able to build your nest egg even faster.

Should you invest in your own business?

Another “easy” way to save is to earn more money. Starting a side hustle or opening a home-based business can help you to earn extra income. Your biggest investment will probably be time, and you’ll need to invest a little money upfront for startup costs.

But once you’ve made that initial investment, you may be surprised by how much extra money you can bring in – money you can use to invest for the future.

How To Invest With Little Money

There are a lot of easy ways to start investing that don’t require a lot of money to start. Some options are available through your local bank or your job. And technology has made investing with small amounts of money as easy as going to a website and signing up.

Enroll in a 401(k)

If your company offers a 401(k) or 403(b) retirement plan, take advantage of it ASAP. Here’s why: the money you set aside doesn’t get taxed right away, and your company usually matches your contributions up to a certain percentage of your income. 

Figure out your employer match and try to contribute at least that much. Otherwise, you’re leaving free money on the table. 

If you leave your job, don’t worry. You can roll the money over from your 401(k) to an IRA or the 401(k) at your new job.

Enroll in an IRA

If your employer doesn’t offer a 401(k) or you’re self-employed, you can open an individual retirement account (IRA). Like a 401(k), you set aside a certain amount of money every month that gets invested until you retire. 

IRAs are typically classified as traditional IRAs or Roth IRAs. Each has its own tax benefits. With a traditional IRA, you invest your pretax income like you would with a 401(k). With a Roth IRA, you pay taxes on the money you contribute before it goes into your account. When you retire, you can withdraw your money tax-free.

Brokerages like Fidelity or Vanguard offer IRAs. You’ll need to set up a brokerage account, and you may need to pay a management fee. But the initial cost to invest and your monthly contributions may not cost you as much as you think.

Invest your spare change

Do you remember change jars? You may have one, stashing coins and small bills to save up for a rainy day. But today, most of our transactions are digital. So what happens to all our spare change now? 

Now you can use the digital equivalent of a change jar with round-up investing apps like Acorn and Stash. The apps link to your bank accounts and credit cards. Every time you make a purchase or pay a bill, the amount gets rounded up to the nearest whole dollar, and the “change” gets deposited into a savings or investment account. 

Some of these services even offer partner reward programs. Leading brands will deposit a fixed amount or percentage of your purchase into your account when you spend with them.

These services usually charge a small monthly fee. So make sure you make enough spare change to justify the expense.

You may be able to invest in investments ranging from simple savings accounts to cryptocurrency. Whatever you choose, make sure you understand the risks.

Buy fractional shares of stocks and ETFs

There was a time when investing in the stock market seemed reserved for people with money to burn. But with investment apps like Robinhood, you can buy fractional shares of stock (think: a slice of one stock) in companies with surprisingly little money. You can buy fractional shares in a single company or buy into an exchange-traded fund (ETF)

Invest in real estate with REITs and crowdfunding

Investing in real estate on your own can be profitable, but it can also be pricey and time-consuming. But there’s another way to invest in real estate with minimal effort. You can join a real estate investment trust (REIT). A REIT is a group of investors who crowdfund investments in different real estate ventures. Everyone shares in the risk, but no one has to work on maintaining the properties. 

REITs have different levels of risk and buy-in costs. But crowdfunded investments could be a savvy way to invest in real estate if you aren’t turned off by a little risk. 


Many investment platforms use robo-advisors instead of human advisors to track and manage investments. Most robo-advisors are programmed to follow a particular market index, not “play the market.” 

Robo-advisors can be a cost-effective way for online trading platforms to manage your day-to-day investments for less money. That said, when it comes to your long-term goals, you should probably get financial advice from a person.

When Should You Start Investing?

Investing is always a smart move, but you should only do it when you can afford it. If money’s tight, focus on building an emergency fund and paying off your debt (especially higher-interest debt) first. This is especially true if you plan on investing in ventures with a high risk of losing money.

Of course, nothing is stopping you from setting money aside (if you can) to invest each month while you’re paying off your student loans or credit card bills.

A Beginner’s Guide to Investing on a Budget

You don’t have to be intimidated by investing. There are tons of apps and online tools available to smooth your entry into investing. And so many people are investing now. Talk to trusted family or friends about their experiences or get recommendations for a financial planner or financial advisor. A good personal finance expert can help you get started with an investment plan that fits your goals and budget. 

By investing a little now, you can earn a lot in dividends later.

The Short Version

  • There are a lot of easy ways to start investing that don’t require a lot of money to start
  • Technology has made investing with small amounts of money as easy as going to a website and signing up
  • Investing is always a smart move, but you should only do it when you can afford it. If money’s tight, focus on building an emergency fund and paying off debt first
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