This post may contain affiliate links. Please read our disclosure for more info.

Last Updated on

invest with little money

You hear the word ‘investing’ being used all the time, but generally it’s associated with just the wealthy or retirement-aged individuals. But most of us aren’t billionaires, and need to know how to invest with little money. But even the wealthy had to start somewhere.

Famous professional investors like Warren Buffet have changed the way we think about investing and the possibilities involved, and how important it can be for planning for the future and for retirement. Wouldn’t it be great to make a little extra money without having to physically work for it?

The trouble most of us have with the conversation around investing is that we believe it takes money to invest, and most of us don’t have the funds to spare for the type of investments discussed by the wealthy, or those who have spent their whole lives saving up for their investments.

It’s time to change the paradigm! There are actually lots of things we can do to start investing in our future, even without thousands of dollars to throw into the stock market or a retirement fund. With a little education and discipline, we can all start putting a little bit toward our future, and it will make a big difference. 

Investing isn’t just something only wealthy people can afford to do. There are many options available if you want to start putting your money to work. First we need to discover how to invest with little money.

Are You Worried About How to Invest With Little Money?

You’re not alone. But you also don’t have to worry. You don’t have to invest a ton or go on a buying spree of Amazon shares. A little at a time is enough to make a big difference.

Today there are many routes you can take to start putting your cash to work without unloading your entire bank account. You can use modern exchange-traded fund (ETF), Mutual Funds, explore DRIPs (dividend reinvestment plan) and other methods. All of these will help you begin to invest with little money. The sooner you start, the better!

Also, it’s smart to maximize the amount of money you do have by having a consistent and disciplined budget.

A Wave of Finance Platforms

Many financial platforms have risen to prominence to make life easier. Some help you budget or save on purchases, some help you make additional money, while others allow for low-allowance trading, such as M1 Finance and Robinhood. These allow you to create portfolios that require small amounts of money to invest.

They are a form of ETF, an asset that is used to trade stocks, bonds, and other commodities around its net value. The ETF was a recent creation, designed to make trading much simpler. However, if you don’t trust your money in the hands of a statistics-reading automated program, you can investigate online brokerage firms.

A brokerage firm is a financial institution that helps individuals buy and sell stocks or shares. While brokerage firms more commonly work with individuals with some sort of savings, there are plenty now that are willing to work with you for about a thousand dollars, and sometimes less.

Mutual Funds

Aside from dabbling into the stock exchange, you can also buy into low-minimum investment mutual funds. A mutual fund is a system where a pool of money is gathered from several people and then the funds are used by professional investors. In other words, all that money is appropriately invested in stocks and other assets.

A low-minimum investment fund can be as cheap as one hundred dollars plus you can add to it monthly. Mutual funds are invested in the private sector of the economy. However, if you would rather go another route, you might want to consider the US Treasury.

US Treasury

Funds that go into the US Treasury help to pay off our national debt. T-Bonds (or Treasury Bonds) are marketable securities issued by the United States government. They are available in increments of $100, which make them more affordable for starting investors.

However, onet hing to be aware of with bonds is that they have a maturity date of 10 to 30 years. This means that the face value of a bond is actually what it would be worth at the specified maturity date. Certain bonds pay you bond interest (also called a coupon rate). So your bond usually grows with interest over time.

DRIPs

Another approach to invest with little money is DRIP (aka Dividend Reinvestment Plans). This allows you to invest small amounts of money into company stocks that pay dividends. A dividend is a payout of company profit. Usually, you’ll receive payouts on a quarterly basis if you’re a stock or shareholder.

Taking this approach means you can start small with stocks and continue to increase your investment with periodic contributions.

Plan for the Future

Some investment routes aren’t obvious.

A lot of companies offer retirement plans to employees such as the 401K, which requires putting some of your paychecks into it every month. These can be appealing because often the company matches whatever amount you add. If you work for a company that offers retirement plans, take advantage of it because it’s an investment towards your future.

However, not all companies offer 401Ks. So if that is your situation, you can always look into a personalized and private retirement approach known as an IRA (Individualized Retirement Plan).  These accounts are made available through a variety of banks.

There are different types of IRA available and each one offers different interest rates, penalties, and tax breaks. Make sure you thoroughly examine the details.

Build Towards Something You Want

You’ve probably heard the age-old lesson about keeping a savings account to pay for a few months worth of living expenses. This is absolutely vital advice. However, savings accounts aren’t only for emergency funds, they can be used to build towards your retirement or something you’ve been trying to obtain. Plus, you get to set the terms or how much you want to invest into it each month (although it does take a little more discipline to manage it yourself).

Every bank offers savings accounts that accrue interest but with slight differences. Specifically, regarding interest rates, rules, and regulations. Nonetheless, interest accumulates if you put money into a savings account without taking it out for a period (e.g. 10 years).

Invest in Yourself

Not all investments are cash in and cash out. Some involve putting money into other aspects of your life so income can increase in the future. This may involve things like working on your education or investing in a personal business that isn’t yet profitable.

Education has a rightfully-deserved reputation for being incredibly expensive. However, today there are more ways to add to your own education without breaking the bank. Many colleges and universities offer certificate programs that are much cheaper and shorter than full degree programs.

There are also several platforms like Udemy that offer courses in just about any skillset you want to improve. Furthering your education is an investment that can pay you for many years. The more value you can provide to others is in direct proportion to your monetary earnings in life.

Build Your Own Plan to Invest with Little Money

There are a lot of ways to invest your money, even if you don’t have a lot to spare. Some investments can take a long time to provide value to you, while others have a more immediate impact. Do your research and find the approach that works best for you and your family.

Related Posts:

No Money in the Bank?

If you struggle to save money, it’s because you don’t know how to do it. Start growing your wealth every month with our 6-Day Free Workshop.

We respect your privacy. Unsubscribe at any time. Powered by ConvertKit
The following two tabs change content below.
A budgeting fanatic and a frugal living lover! We want to share our budgeting techniques because of how much they have improved every aspect of our life! We teach the ultimate way to budget so you can save tons of money, eliminate debt fast, and achieve guilt-free spending!

Latest posts by Evan Sutherland (see all)