Email FacebookTwitterMenu burgerClose thin

How to Invest With Little Money


Investing is an important part of any financial plan. Trading stocks, exchange-traded funds (ETFs) and other securities can help you to build wealth over time. And, typically, the sooner you begin investing, the better. The good news is that you don’t need to have a lot of extra cash to get started. The secret to how to invest with little money is to know where to put it in order to maximize your returns. You can also work with a financial advisor to manage the entire asset allocation process for you to help you reach your financial goals.

How Can I Start Investing With Small Amounts of Money?

One misconception about how to start investing is that you need to have hundreds or thousands of dollars to buy into the market. While that is sometimes true for certain investments, such as hedge funds, it’s more of an exception than the rule. So how much money do you need to start investing?

The short answer is that it depends on what you want to invest in. But it’s possible to start trading stocks, ETFs and even cryptocurrency with a $100 investment or less. Will it potentially take you longer to build wealth when investing smaller amounts? Perhaps. But waiting until you have more money to invest can cost you if you’re missing out on the power of compounding.

When you invest money, you put it into the market where it can grow through compound interest. That’s another way of describing the interest you earn on your interest. The more time you have in the market, the more time you have to benefit from compounding. So even if you only have $25 or $50 a month to spare, you can still benefit from investing in the long run.

How to Invest With Little Money

The secret to investing with little money is knowing how to make every dollar count. There are certain investment vehicles and platforms that are likely to be more useful to someone who only has a small amount of money to invest, at least to begin with.

Here are some of the smartest ways to invest in smaller increments:

Buying Fractional Shares

A stock share represents an ownership stake in a company. Normally when trading stock shares you’re buying full shares. Fractional share trading, on the other hand, allows you to buy into companies a little bit at a time.

Many brokerages offer fractional share trading and it’s possible to begin buying shares with as little as $1. You can continue depositing money to purchase additional fractional shares in amounts that work for your budget.

Investing in fractional shares can help you to dip your toes into the market and own shares of higher-priced companies. Instead of paying $100 to buy a single share of a blue-chip stock, for instance, you could take that same amount and spread it out across fractional shares in 10 different top-tier companies.

Buying fractional shares of ETFs can be an even better deal since you can get a basket of securities in one investment vehicle. You can spread your money across multiple ETFs to gain exposure to different sectors or industries while diversifying to manage risk.

Investing Spare Change

Spare change investing apps allow you to invest money, typically through pre-selected ETFs, using just your spare change. Generally speaking, these apps link to your bank account and track your spending, then round up transactions. The rounded-up amount is then invested for you.

Using a spare change app to invest has some advantages since you can get into the market with literal pennies. These apps can also make diversification easier since you’re usually investing in ETFs, rather than having to select individual stocks.

If you’re considering spare change apps as an option for how to invest little money, check the fees you might pay, if any. And weigh the range of investments offered. If you’re already buying fractional shares of an ETF through your brokerage for example, buying a similar ETF through a spare change app could lead to overlap and water down your diversification strategy.

REITs and Crowdfunded Real Estate

Real estate can be a great investment as it’s typically a hedge against inflation and has low correlation with the stock market. Buying a rental property or a fix and flip property can be difficult, however, if you don’t have thousands to spend on a down payment or home improvements.

Real estate investment trusts (REITs) and crowdfunded real estate offer a backdoor in for investors who have little money to get started. A REIT is a legal entity that owns real estate and pays out dividends from those holdings to investors. With crowdfunded real estate, you’re pooling money along with other investors to earn dividends and interest from investments.

While some REITs and crowdfunding platforms might require $10,000, $25,000 or more to get started, others set the bar much lower. For instance, you might be able to own part of a property with just $250 or $500 instead.

Investing in REITs or crowdfunded properties can help you add a new dimension of diversification to your portfolio. One thing to note is that these types of investments usually have a longer holding period. So instead of being able to cash out of your investment at any time the way you could with stocks or ETFs, you may be waiting five years or more to get your initial investment back.

Investing at Work

how to invest with little money

If you have a 401(k) or similar retirement plan at your job, that can be a great introduction to investing. With a 401(k), for example, you can defer a percentage of your salary into the plan each payday. You can choose the amount to invest, based on your budget and income.

Investment options for a 401(k) typically include mutual funds, ETFs, index funds and target-date funds. You likely won’t be able to buy or sell individual stocks, but you can still build wealth gradually, even if you set your initial contribution rate on the lower side.

You can increase the amount you defer gradually as your income rises. If you get a 2% raise, for instance, you could adjust your contribution rate by 2% and continue to base your budget on what your paychecks were before. Keep in mind that if your employer offers a matching contribution, there may be a minimum amount you’ll need to chip in to get the full match.


If you don’t have extra cash to pay for advisor fees, you might try a robo-advisor platform instead. Robo-advisors create a portfolio for you using proprietary algorithms. You deposit money into your account and the robo-advisor invests it for you, adjusting as needed based on your goals.

Compared to traditional financial advisor fees, robo-advisors can be an inexpensive way to invest. And you can grow wealth with small amounts of money on autopilot when you set up recurring contributions to your account.

Peer-to-Peer Lending

Peer-to-peer (P2P) lending is a type of crowdfunding in which multiple investors come together to fund someone’s loan request. That money is then paid back to the investors with interest.

While peer-to-peer lending can be risky as borrowers may default, it’s still a way to invest smaller amounts of money while potentially earning great returns. You can invest a few hundred dollars in a single loan or divide it up to fund multiple loans.

A good rule of thumb with P2P lending is that the higher the projected rate of return, the greater the risk. For that reason, it might make sense to spread your investment dollars over a mix of different loans to manage risk.

The Bottom Line

how to invest with little money

Knowing how to invest with little money matters if you’re ready to get into the market but haven’t joined the ranks of the rich yet. Taking advantage of all the different ways to invest smaller amounts can help you to create a well-rounded portfolio that aligns with your needs, goals and risk tolerance.

Tips for Investing

  • Consider talking to a financial advisor about the best ways to invest with just a little money. If you don’t have a financial advisor yet, finding one doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • One of the most important considerations when deciding how to invest little money is cost. For example, if you’re planning to trade fractional shares of a stock then it benefits you to find an online brokerage that charges $0 commission fees to trade. If you’re investing through your 401(k) at work, it’s helpful to know what kind of fees the plan charges and the expense ratios for each fund that you own. The more you do to keep fees at bay the more of your money you get to keep.

Photo credit: ©, © Trade, ©