Getting started with investing is the hardest part. Once you have a cash buffer, consider starting with small investments in your IRA or 401(k). You can even start investing in real estate with just a little money.

I’m here to tell you: You don’t need to be the Wolf of Wall Street to start investing. Even if you only have a few dollars to spare, your money will grow with compound interest.

In this article, we go over seven ways you can get started investing — even with just a little money in your pocket.

Why Investing is Important

But first things first.

If you’ve been paying attention, you’ve probably noticed that inflation is at a 40-year high. This means that life’s becoming more expensive than ever before. Everything’s going to cost more, from buying groceries to filling up your car just to get to work.

You may have also noticed that your income likely hasn’t risen at the same rate. Despite the cost of living going up, you’re probably not earning at a rate to match this increase.

Read more: Inflation is on the Rise — Here are 7 Tips to Protect Your Finances Against it

That’s why we can’t stress enough the importance of investing your money now, regardless of what stage of life you’re at. You may think that investing is too risky — but it’s even riskier to not have some money invested for the benefit of future you.

So, just why is investing so important?

  • You want your money to work for you. You work hard for your money. You should let your money work for you by earning some decent returns.
  • Your money loses value in a bank account. With inflation rising, your purchasing power drops when you leave your money sitting around, not earning interest.
  • A savings account just isn’t enough interest. My bank sent me an email about a limited time offer of 2.5% interest on a savings account. This doesn’t even come close to the current inflation rate.
  • You don’t want to work until you’re 70. The sooner you start, the sooner you’ll have compound interest on your side. The whole point of investing is to ensure you don’t have to work forever.
  • You’re missing out on “free money” when you don’t invest. Your investments should be earning you money. When you don’t use your money to make money, you’re missing out on what would essentially be free money.
  • You should start investing early to build the habit. The point of investing when you don’t have much money is to learn how to invest so that you’re prepared when your income does go up.
  • It’s easier than ever to invest your money. With the rise of so many platforms, there are so many ways to invest money online. You can set it and forget it. You don’t have to study stock charts or sit in front of the computer for hours.

Now that you know why you should be investing, it’s time to look at the perfect time to start (hint: it’s sooner than you think).

When to Begin Investing

Before you begin investing you’ll want to make sure the basics of your finances are in order. Investing involves risk, so  you’ll be better off if you can be sure you won’t need the money you’re investing for a long time – preferably five years or more. So, while the goal is to start immediately, you should tackle the following two financial issues first:

  1. Pay off high-interest debt. You should aggressively try to make payments on this to bring the balance down — because the interest you’ll pay will negate any gains you make on your investments.
  2. Build an emergency fund. Work on an emergency fund so that you have three months or more of living expenses in a savings account. You need to ensure you could survive financially if you lost your job or if an unexpected issue were to occur.

As soon as you make progress on your debts and start building your emergency fund, only then should you begin to invest your money.

Read more: How to Get Out of Debt on a Low Income

How to Start Investing with Little Money

Here’s a common phrase I hear about investing: “I’m going to start investing when I have real money to invest.”

I’ve heard this from many friends and readers who believe they don’t have enough money to start investing. But the idea that you have to be rich to invest couldn’t be further from the truth. You should be thinking about investment strategies as soon as you start making any money.

It’s understandable that you may be confused about investing when you have competing financial priorities. You may have debt or you may not have any savings yet.

But apart from the two recommended steps above (pay off debt, build an emergency fund), it’s never too soon to start investing. Your first investment can be a $20 stock purchase. You have to start somewhere.

Here are seven ways to start investing with little money.

1. Try the Cookie Jar Approach


Saving money and investing it are closely connected. In order to invest money, you first have to save some up. That will take a lot less time than you think, and you can do it in very small steps.

If you’ve never been a saver, you can start by putting away just $10 per week. That may not seem like a lot, but over the course of a year, it comes to over $500.

Try putting $10 into an envelope, shoebox, a small safe, or even that legendary bank of first resort, the cookie jar. Though this may sound silly, it’s often a necessary first step. Get yourself into the habit of living on a little bit less than you earn, and stash the savings away in a safe place.

The electronic equivalent of the cookie jar are high yield savings accounts; it’s separate from your checking account. The money can be withdrawn in two business days if you need it, but it’s not linked to your debit card. Then when the stash is large enough, you can take it out and move it into some actual investment vehicles.

Read more: Best High-Yield Savings Accounts Compared

2. Enroll in Your Employer’s Retirement Plan

If you’re on a tight budget, even the simple step of enrolling in your 401(k) or other employer retirement plan may seem beyond your reach. But you can begin investing in an employer-sponsored retirement plan with amounts so small you won’t even notice them.

For example, plan to invest just 1% of your salary into the employer plan. You probably won’t even miss a contribution that small, but what makes it even easier is that the tax deduction you’ll get for doing so will make the contribution even smaller.

Once you commit to a 1% contribution, you can increase it gradually each year. For example, in year two, you can increase your contribution to 2% of your pay. In year three, you can increase your contribution to 3% of your pay, and so on.

If you time the increases with your annual pay raise, you’ll notice the increased contribution even less. So if you get a 2% increase in pay, it will effectively be splitting the increase between your retirement plan and your checking account. And if your employer provides a matching contribution, that will make the arrangement even better.

Read more: The Best 401(k) Investment Accounts

If you’re at a complete loss, companies like blooom offer hands-off investment management of your 401(k).

3. Open an IRA as Well

Employer-sponsored 401(k)s are great, but they don’t offer the same tax benefits as other retirement accounts, which is why opening an IRA is also important.

For starters, you’ll have more investment options, since you’re opening your own personal IRA rather than going through your employer, who determines your investments for you.

In addition, one of the very best benefits of an IRA (a Roth IRA, specifically) is its ability to grow tax free. Your account will both grow without being taxed and you’ll be able to make tax-free withdrawals starting at age 59½.

Read more: Roth IRAs for young adults: why starting early pays off

4. Let a Robo-Advisor Invest Your Money for You


Robo-advisors entered the investing scene about a decade ago and make investing as simple and accessible as possible. You don’t need any prior investing experience, as robo-advisors take all the guesswork out of investing.

Robo-advisors work by asking a few simple questions to determine your goal and risk tolerance and then investing your money in a highly-diversified, low-cost portfolio of index funds, mutual funds, and/or bond funds. Robo-advisors then use algorithms to continually rebalance your portfolio and optimize it for taxes.

There’s no easier way to get started in long-term investing. Most robo-advisors require very little cash to get started and charge modest fees based upon the size of your account. All offer automated investing plans to help you grow your balance.

If there’s any downside to robo-advisors, it’s cost. Robo-advisors charge an annual fee equal to a small percentage of your balance. The industry average is about 0.25%. So, if you invest $10,000, you’ll pay $25 a year. That’s not a lot of money, but it begins to add up if you amass hundreds of thousands of dollars.

It’s important to note that robo-advisor fees are on top of the fees charged by the exchange-traded funds (ETFs) that robo-advisors buy to make up your portfolio. You can avoid paying the robo-advisor fees by building your own portfolio of ETFs or mutual funds. For the vast majority of investors, however, that’s a lot of additional work and responsibility.

The bottom line? Robo-advisors are cheap and well worth it.

Read more: The best robo-advisors

5. Start Investing in the Stock Market with Little Money


Investing in the stock market can take many forms. It doesn’t necessarily mean buying individual stocks. Investing in the stock market can also mean buying index funds or mutual funds.

Index funds and mutual funds are “baskets” of stocks where your small investment can buy a piece of the whole. Index funds follow an index – such as the S&P 500 – and include the same companies in the same proportions as the index it’s following. They are passively managed, sometimes even managed by a computer, that simply follows the index. Therefore the management fees are typically quite low.

Mutual funds are also groups of stocks that you can buy into but they are actively managed and rather than following an index, they follow a set of objectives set forth by the company. For example, the fund may only invest in growth companies. Or perhaps income is the objective so it will only invest in dividend stocks.

Of course, you can also invest in individual stocks. There are increasing numbers of options that have swung open doors to a new generation of investors — letting you get started with as little as $1 and no trade commissions.

In the past, stockbrokers charged commissions of several dollars every time you bought or sold stock. That made it cost prohibitive to invest in even a single stock with less than hundreds or thousands of dollars. In fact, $0 commissions have been so successful they’ve disrupted the entire investing industry and forced all the major brokers — from E*TRADE to Fidelity — to follow suit and drop trading commissions.

Plus the ability to invest in companies with fractional/partial shares is a complete game-changer with investing. With fractional shares, it means you can diversify your portfolio even more while saving money. Instead of investing in a full share, you can buy a fraction of a share. If you want to invest in a high-priced stock like Amazon, for instance, you can do so for a few dollars instead of shelling out the price for one full share, which, as I write this, is around $2,434.

Read more: How to Invest in Stocks: The Beginner’s Guide to the Stock Market

6. Dip Your Toe in the Real Estate Market

Believe it or not, you no longer need a lot of money (or even good credit) to invest in real estate. A new category of investment known as “real estate crowdfunding” makes it possible to own fractional shares of large commercial properties without the headache of being a landlord.

Crowdfunded real estate investments require larger minimum investments than robo-advisors (for example, $5,000 instead of $500). They’re also riskier investments because you’ll be putting that entire $5,000 into one property rather than a diversified portfolio of hundreds of individual investments.

The upside is owning a piece of a real physical asset that’s not necessarily correlated with the stock market.

As with robo-advisors, investing in real estate via a crowdfunding platform carries costs that you wouldn’t pay if you bought a building yourself. But here, the advantages are obvious: You share the cost and risk with other investors and you have no responsibility for maintaining the property (or even doing the paperwork to buy it!).

I think real estate crowdfunding can be an intriguing way to learn about commercial real estate investing and also diversify your assets. I wouldn’t lay all of my money on these platforms, but they do make an intriguing alternative investment.

Read more: Can You Make Money in Real Estate? Here’s What the Experts Say

7. Put Your Money in Low-Initial-Investment Mutual Funds

Mutual funds are investment securities that allow you to invest in a portfolio of stocks and bonds with a single transaction, making them perfect for new investors.

The trouble is many mutual fund companies require initial minimum investments of between $500 and $5,000. If you’re a first-time investor with little money to invest, those minimums can be out of reach. But some mutual fund companies will waive the account minimums if you agree to automatic monthly investments of between $50 and $100.

An automatic investing arrangement is particularly convenient if you can do it through payroll savings. You can typically set up an automatic deposit situation through your payroll, in much the same way that you do with an employer-sponsored retirement plan. Just ask your human resources department how to set it up.

Read more: How to Buy a Mutual Fund

What are the Best Investment Strategies for Beginners?

There are many different investment strategies out there. You could read material from Warren Buffett, Dave Ramsey, and other personal finance experts who will all have different beliefs on investing and managing your money.

Before you begin, here are a few things to consider with all investing strategies.

1. Understand Your Goals and Risk Tolerance Before Doing Anything

What are your investment objectives? Here are some goals you may be pursuing:

  • Saving up for early retirement
  • Investing in real estate so that you can become a landlord
  • Investing in the stock market so you can buy that dream home in 10 years

And so on. The good news is that investing your money is a personal decision, so no goal is the wrong goal.

Here are a few helpful tips to keep in mind if you’re investing as a beginner:

  • Money that you need within five years should not be invested in the stock market – whether that is individual stocks, index funds, or mutual funds.
  • Money that you’ll need before retirement should not be in a 401(k) or IRA.
  • When saving for retirement, get the employer match, then max out your Roth, then go back to max out your 401(k). Anything after that should be in a brokerage account or real estate.

2. There’s No Such Thing as the Best Investment for Everyone

I have friends who refuse to even think about cryptocurrency. Then I have other friends who only invest in cryptocurrency. I know people who swear by real estate investing while my dividend stock investing friends are terrified of getting into the real estate investing space.

It’s important to remember that there are many different investment strategies and there’s no such thing as a one-size-fits-all solution. You may find that investing your money with robo-advisors works best or you could lean towards getting into real estate investing.

Your own personal risk tolerance and financial situation will be big factors in your investment decisions.

If you feel like you need investment advice you can speak to a financial advisor. However, that will likely cost some money – but it might be worth the cost if it gives the confidence to get started. A financial advisor can create a plan with your personal financial situation in mind.

Look for an advisor who is a Certified Financial Planner. A lot of advisors have minimum investment requirements before they will take you as a client. However, you can hire a “fee only” financial advisor who will charge you a flat fee. These advisors are more likely to work with lower-balance clients as they don’t get paid based on a percentage of your investment portfolio.

3. You Have to Build up to Different Investments

One thing you have to accept as a new investor is that there are different investment strategies for every stage of life.

For example, when you first get out of college, you may want to focus on opening a few investment accounts with just a bit of funding, as you tackle your student loans and build up an emergency fund.

You have to invest money that you already have before you can get into bigger investments.

4. You Have to be Patient as an Investor

Warren Buffett is known for the following quote about patience in investing: “The stock market is designed to transfer money from the active to the patient.”

What this means is that many beginner investors will lose money because they’re too impatient or because they’re looking to make a quick buck from investing.

Mistakes to Avoid when Investing with Little Money

When some people first get into investing, they just want to get rich quick. I can relate because I read books and blogs about that very topic when I was a new investor. I wanted to find the secret sauce. But after wasting six months on various get-rich-quick schemes, I accepted that I just needed to focus on investing my money the right way.

There are plenty of investing mistakes that rookies typically make — mistakes that could cost you thousands of dollars and discourage you from investing in the future. We want you to avoid these mistakes.

So, what are they?

  • Not investing at all. The worst thing that you could do is put off investing. That’s because you want time to be on your side when it comes to compound interest.
  • Trying to time the market. They say that time in the market is more important than timing the market. As tempting as it is to buy the dip, you have to remember that nobody can accurately predict the market.
  • Getting involved in shady investments. As tempting as it is to go after those promises of high returns with low risks, you have to watch out who you trust your money with.
  • Putting all your eggs in one basket. It’s crucial that you diversify your investments so that you don’t end up hoping for one investment to pay off.
  • Panicking at the first sight of volatility. You have to understand that ups and downs in the market are normal. When the market drops, it’s important that you walk away from your portfolio so that you don’t end up selling at the bottom.
  • Selling when an investment drops. You don’t lose money until you sell. Too many rookie investors will start selling off their assets when they begin to drop. You have to be patient and expect short-term fluctuations.
  • Taking advice from random strangers. There’s an abundance of self-proclaimed gurus out there who want to give you unsolicited stock picks. You should avoid these people at all costs.
  • Not understanding what you’re investing in. Before proceeding with an investment strategy, you have to know exactly what you’re putting your money into.

At the end of the day, you want to start investing the right way (and right away) so that your money can begin to work for you now.


There are plenty of ways to invest with little money, including utilizing online and app-based platforms that make it easier than ever to invest. All you have to do is start somewhere. Your future self will love you for it.

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About the author

Total Articles: 84
David Weliver is the founder of Money Under 30. He's a cited authority on personal finance and the unique money issues he faced during his first two decades as an adult. He lives in Maine with his wife and two children.