Investing in Stocks With Little Money: You Can Do It!

investing in stocks with little money
Investing is something that has always interested me. From the time I was three years old I watched the stock market go up and down with my grandfather on television, over the phone and eventually on the internet. Watching your money work for you: what could be better than that?

Of course, investing is never a sure thing. In fact, most of my college savings were dried up in the small stock market crash in the 2000s. There are ways you can start investing in stocks with little money (and minimal risk).

Investing in Stocks With Little Money 

Before you think you have to have a ton of money to invest, think again. You can invest with as little as $20. Once you have some emergency savings put away and all of your high-interest debt paid off, you should think about investing, even if it is just a little bit. Here’s how:

How to Invest $20  

If you’re thinking that investing $20 is a waste of money, it’s not. If after you’ve paid off your debt, have money saved and paid your bills you only have $20 left over the best possible thing you could do with it is invest. Thousands of major corporations offer DRIPs Dividend Reinvestment Plans, which allow you to make an initial invest as little as $20 or $30. Making this small investment now could lead to big returns in the future.

How to Invest $100 

What if you have a bit more than $20 but not quite $1000? Well, if there’s a way to invest $20, there are always ways to invest $100 to $999 as well. One of the best ways to invest a couple hundred is an index fund. Some index funds (if they track the S&P 500 index) can lead to a 10% return each year! Your $100 could be making you hundreds in no time.

How to Invest $1000 

Have an extra $1000 or more to invest? You have a ton of options! The most obvious option is to open a discount brokerage account. If you are able to contribute to the account regularly, you’ll be able to stack up a sizable amount of cash. Keep in mind, however, that the more valuable your account is, the more fees you’ll encounter. Invest in a way that minimizes your fees.

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Other Investments You Can Make With Little Money 

You don’t necessarily need to turn to the stock market to invest your money either. There are other ways to invest with smaller amounts of money. If I was looking to invest a smaller amount of money, here’s where I would start:

  • Savings – Start a new high-yield savings account. If you’re able to find a bank account or credit union with higher interest on their savings account, apply and open one. Some of these accounts will require a higher opening account balance but most simply require $25. It is a great way to start earning interest on your cash.
  • 401K/IRA – Does your employer have a 401K? If so, have you thought about opening a 401K for yourself? Beginning investments for 401Ks are usually pretty low and you contribute out of every paycheck or as you see fit. It is a great way to prepare for retirement, invest and save all in one. Not all employers have this, however, so if you’d still like to invest in a similar platform, ask your financial advisor about ROTH IRAs. You will need more money to invest in an IRA but it will definitely pay off in the long run.
  • Acorns – Last but not least, Acorns is an app I discovered about two years ago. It allows you to invest your spare change. Similar to bank programs like “Keep the Change,” Acorns rounds your transaction up to the nearest dollar and invests your change in a diversified portfolio. The best part about Acorns is that you can tailor it to your personal needs. So, if you want to put in a recurring deposit, you can. If you want to only invest change, you can. If you’d prefer a more aggressive approach to a less risky investing style, you can tailor that as well.

Whatever you do, don’t avoid investing because you don’t have enough money. Your $20 or $30 could be making you even more cash right now so don’t wait!

Incidentally, if you’re north of the US Canadian border, consider checking out  Their site is popular and they have a popular brokerage review series – their Questrade review is ranked well.

Photo: Dividend Magic

How You Can Invest Without a Lot of Money

Invest Without a lot of Money
You’ve done your research. You have picked the stocks and markets in which you want to place your money. You’ve even brushed up on the stock market lingo, but you don’t have thousands of dollars to drop. Good news, you don’t have to have thousands to invest.

Making your first investment is an exciting and terrifying task. However, many people are under the impression that, in order to invest, you need to have a lot of money. That is just not the case. In fact, many successful investors have started small and worked their way up. Here are a few ways to start your investing journey small:

Get a plan through your employer

Placing money into a mutual fund or 401(k) through your employer is a no-brainer. There is no minimum required investment for many of these plans. You will simply have it automatically placed into the 401(k) from your paycheck. Many employers also offer a matching contribution as well. Usually you have to stay with the company a certain number of years or have put a certain amount in the 401(k) to have the company match your contribution, however, it is definitely worth it. If you put $1,000 in, the company will put $1,000 in as well, giving you $2,000. Some companies offer a percentage match or up to a dollar amount as well (capping at $5,000, for instance).

Schwab Index Funds

Investing firm Charles Schwab offers five conventional stock-index mutual funds and three bond-index funds. Each of these has a $100 minimum. It has U.S. stock market fund options, international-index fund and bond-market funds. Any or all of the three would make for great portfolio holdings and none of them require a huge amount of money to get started.

Actively managed fund

Some investing firms will waive their regular minimum if you agree to making a recurring deposit. For instance, if you don’t have a lot of money to invest now (only $100), you would agree to have $50 withdrawn from your account monthly for a specific period of time.

Online Brokerages

Online brokerages have made it easy for many people to start investing. With as little as $500, you can open an account. Some online brokerages don’t require any minimum deposit. With these brokerage accounts, there are ways to pay no commission and buy/sell investments for very little money (about $10 is standard).

Acorns Investing

If you have never tried it, Acorns is an app through Intuit. It allows you to create a portfolio based on your investment goals. You can set up recurring deposits or you can start with a small amount (as little as $5). Acorns also allows for a “Round Up” investment. This means that every time you swipe your credit or debit card, the app rounds up and places the change in your investments account.

Any account with only $100 or $1,000 won’t do you much good. If you want to gather a decent amount of cash, you will have to save as much money as you can. When you have extra money, place it towards your investments.

Do you have any additional funds or investments that don’t require a high minimum? Let us know! We’d love to hear from you. 

Photo: Flickr: 401(K) 2012