How to Invest With Little Money


When I was in my 20s, I thought I needed a good chunk of money before I could get my feet wet with investing. But after poking around the internet, I stumbled upon an article on investing with just $100 a month,  alternating between various index funds to get a diverse mix of investments . This simple strategy helped me get over this misconception that I needed thousands of dollars to be an investor.
Fast forward to the present. With the financial tech boom, there are plenty of products, services and apps to help you invest with very little money. If you don’t have a whole lot to invest, here are some strategies to help you get started investing in stocks .
Try a Micro-Investing App

There are a handful of micro-investing apps such as Stash Invest and Acorns  that you can get started with for as little as five dollars. Acorns rounds up the transactions from your bank account and invests your spare change, and Stash Invest has featured portfolios so you can invest in causes or companies you care about. Plus, the monthly fee for such micro-investing apps is only around a dollar a month.
Another type of micro-investing service is Stockpile , where you can buy fractional, or partial, shares of stocks. You only need five dollars to open an account, and there are thousands of stocks to choose from. It costs 99 cents per trade, plus a three percent fee if you pay with a debit or credit card.
Make It a Part of Your Budget

Pay yourself first and create a monthly investment plan of $25, $50 or $100, recommends  Larry Ludwig , founder and editor-in-chief of Investor Junkie . “Treat it like a bill,” says Ludwig. “But instead of paying something off, you’re sending it to your brokerage account.”











It doesn’t really matter how much you set aside, as long as you’re saving something. If you’re saving a small amount, such as $20 a month, you can make a single investment every few months.  
Put Your Pay Raises Toward Investing

For every raise you get at work, put aside an amount (e.g., 50 percent) toward investing, like an employee-sponsored 401(k) plan, suggests Ludwig. “Not only are you saving more with every paycheck, you also have some reward for the increased salary.” Plus that pay increase won’t go toward something willy-nilly, or cause lifestyle inflation.
You can also make a commitment to put aside a set amount on a consistent basis, recommends Laura D. Adams , personal finance author and host of the Money Girl Podcast . For instance, if you’re already investing, make a goal to increase your contribution by at least one percent per year. “You’ll build wealth faster and have a comfortable retirement to look forward to,” says Adams.
Invest in Your Company’s 401(k)

Take advantage of your employer-sponsored retirement fund, whether it’s a 401(k), 403(b), or 457, recommends Adams. “I recommend making it your go-to investment choice because it’s convenient, cuts taxes, and may come with free matching funds from your employer,” says Adams. “You typically choose mutual funds, index funds, or exchange-traded funds from an investment menu.”
Even if you only have $50 or a month to invest, don’t be ashamed to participate in a retirement plan, says Adams. Remember: There’s no minimum amount you must invest each year, and you can increase or decrease your contribution amount at any time.
If you’re not making contributions to an employer-sponsored fund that offers a match, you’ll be leaving money on the table. Try to contribute at least enough to get the full match. If you have questions, reach out to your human resources department or your plan representative.
Invest in Low-Cost Funds
When you’re investing, you’ll want to be aware of all the fees involved, such as expense ratios, which is a percentage of your investment, a fee to open and close accounts, transfer funds, front-load and back-load fees, and the costs per trade.
You’ll always want to be mindful of the fees involved when you invest, but this especially rings true when are investing with smaller amounts. Consider investing in low-cost index funds and exchange traded funds (ETFs), recommends Stephen Rischall, a financial advisor and founding partner at 1080 Financial Group . “By investing in a fund, you can diversify your holdings and spread the risk across many different companies,” says Rischall.
Some major online brokerages don’t charge any transaction costs, and investing platforms such as Robinhood  don’t charge fees. (However, there are separate FINRA and U.S. SEC fees.)
Automate Your Savings

Don’t make the mistake of thinking that you can’t start investing if you only have a small amount to put aside, points out Adams. “Even on a tight budget, there are many options to make your money grow,” says Adams. “The best strategy is to automate it.”
“Automation works because it forces you to maintain good savings habits and prevents you from spending money that you shouldn’t,” says Adams. “It’s a barrier you set up that allows you to outsmart yourself so you manage money wisely.”
To start, set up an auto transfer that deposits a set amount from your checking account to you investing account, service or app each month. Be sure to choose a date that coincides with your payday, and keep an eye on it to make sure you aren’t overextending yourself. If you want to be cautious, automate a small amount, and bump it up over time.
As you can see, you don’t need a ton of cash to started with investing. You can get the ball rolling with just five bucks every month. It’ll help you learn the ins and outs of investing, and make it a priority. In turn, your money will grow and help you build wealth.
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