12 Clever Ways to Start Investing if You Don’t Have Much Money

If the term “investing” makes you think of hedge funds and Wall Street brokers, you might believe that you have to be rich if you want to invest money. In fact, 62% of people think you need $1,000 or more to open an investment account, according to our recent survey about investing habits.

But thankfully, that isn’t the case. You can start investing and building your nest egg for far less than that. Here are 12 savvy money moves that let you start investing with next to no money.

12 ways to start investing if you don’t have much money

Even if you don’t have a big investing budget, you still have many investment options to choose from. Build a healthy habit of regular investing by exploring the options below.

1. Open a retirement account

Retirement accounts are accounts that typically offer some form of tax advantage to incentivize you to start saving for retirement. You may even already have an option available to you at work. A few common retirement account options include:

• 401(k)
• Traditional IRA
• Roth IRA
• 403(b) (generally reserved for government workers)

You can set up a retirement account through your employer’s HR department or through a brokerage. Once the account is open, you can fund it through regular paycheck contributions, such as with a 401(k), or by transferring money from your bank account, such as with a Roth IRA. You may be able to open an account with $0 and contribute as you are able.

Make sure you understand how taxes work for your account. For instance, with a Roth IRA, you deposit money you’ve already been taxed on, then withdraw the money tax-free in retirement (as long as you meet the requirements). A 401(k) or traditional IRA, on the other hand, may give you a tax deduction today, but you’ll have to pay taxes when you withdraw the money in retirement.

Retirement accounts may have penalties if you withdraw money before you reach age 59 ½, so be confident you can leave this money invested for the long haul.

2. Invest in an index fund

No matter what kind of investment account you open, you have to choose which investments it will hold. Stocks and bonds are popular choices, and so are mutual funds. A mutual fund works like a collection of stocks or bonds that you can buy with just one purchase.

One type of mutual fund that makes it easy to start investing is called an index mutual fund. Each index fund has a variety of investments inside it that mirror a particular index, such as the S&P 500. Instead of buying one share of each of the 500 companies in the index, you can simply buy a share in the index fund, and it will reflect the performance of all of those companies.

Index mutual funds often require minimum initial investments to get started, but you can find several that don’t. Fidelity, for example, offers a handful of mutual fund options with no minimum investment requirement, such as:

• Fidelity ZERO Large Cap Index Fund (FNILX)
• Fidelity ZERO Extended Market Index Fund (FZIPX)
• Fidelity ZERO Total Market Index Fund (FZROX)
• Fidelity ZERO International Index Fund (FZILX)

Another upside of index funds is that they are diversified, which means you spread out the risk. Rather than holding a single company’s stock, which could drop drastically in value, you hold multiple stocks with an index mutual fund. If one firm performs poorly or goes bankrupt, you still have other companies in the index fund that could outperform.

Remember to watch out for fees, though. For mutual funds, fees are expressed as a percentage called an “expense ratio,” and the lower an expense ratio, the better for your bottom line. Even a 0.5% difference in fees can make a massive difference over the long term.

3. Diversify with an ETF

Another option for your investment account is an exchange-traded fund, or ETF. ETFs work much like mutual funds, because they also typically track a specific index. However, unlike mutual funds, which are traded once at the end of the day, you can trade ETFs on the market all day long, just like you can with stocks.

As with mutual funds, ETFs provide diversification to help you avoid concentrating risk in a single stock. ETFs also tend to have lower fees than mutual funds, and you only need to have enough money to purchase a single share of the ETF (plus commission, if applicable).

If you’re looking for a place to invest in ETFs, consider opening an account with Stash. This service allows you to invest in stocks and ETFs with no minimum investment. Stash does charge a monthly fee to use its service, but it starts as low as $3 per month.

4. Purchase fractional shares of stock

If you prefer to pick the individual companies you want to invest in, you can still invest in stocks without a lot of money. Several new investing apps, including Robinhood and Stash, allow you to buy fractional shares of stock and ETFs.

Rather than having to save up $1,000 to buy a single share of a popular technology company, you can buy 0.001 shares of the company for $1. This makes it easy to diversify your portfolio of individual stocks.

You can use fractional shares to buy partial shares of several companies with a relatively small investment. It would be difficult to do this with whole shares unless you had a significant amount of money saved or only invested in companies with cheap stocks.

Not all brokerage firms allow fractional share investing. If this is how you want to invest, make sure you verify fractional share investing is an option before you open an account.

5. Get started in real estate

If you want to invest in real estate, such as commercial property, you don’t need to buy an entire building. That could easily cost you $100,000 or more.

Instead, you can invest in real estate with much less money using real estate crowdfunding techniques, such as a real estate investment trust (REIT). REITs can own multiple income-generating properties, and you can buy one or more shares of a REIT according to your investment strategy.

One such company is DiversyFund. DiversyFund lets you start investing in real estate with just $500 when you choose its multifamily property fund. The company pools the funds from several investors, then uses the money to buy real estate. This particular investment aims to renovate and reposition select properties to increase their value.

This fund doesn’t trade publicly, which means it may be difficult or impossible to sell your investment on short notice. That said, this investment targets medium-term investors who want to invest in private multifamily real estate, such as apartment complexes.

You must decide if an investment’s potential returns exceed the risks you’d have to take in participating. If it does and fits your investing goals, it may work for you.

6. Put your money in a CD account

The best small investments don’t have to involve traditional options such as stocks or bonds — sometimes a bank account is a good option too. You can invest in something as simple as a certificate of deposit (CD). When you invest in a CD, you deposit your money with a financial institution for a set period. In exchange, the company pays you a predetermined interest rate.

CDs can be a good option if you can afford to lock up your money for an amount of time and don’t want to risk losing your principal, which is possible with other types of investments. The interest you earn compounds, which means you can earn additional interest on the interest you already made.

Most CDs are insured by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Association (NCUA), usually up to $250,000 per depositor, per account. This provides the security of knowing your money will be there when the CD matures, even if something happens to the bank.

7. Look into a money market or high-yield savings account

What if you don’t want to lock your money away for months or years but still want a higher interest rate than you’d get with a traditional checking or savings account? Consider a money market or high-yield savings account. These accounts typically provide higher interest rates while still offering FDIC or NCUA insurance.

For example, while the average interest rate on a savings account is 0.46% in 2024, a high-yield savings account may offer rates over 5%.

Money market accounts combine features of both checking and savings accounts, but with a higher interest rate. Some money market accounts may have a minimum balance requirement, but it varies by institution. Check before you open an account to make sure it won’t be an issue.

8. Let a robo-advisor do the heavy lifting

Instead of a traditional financial advisor, who typically charges a fee for working with them, you could try enlisting the help of a robo-advisor.

Robo-advisors use technology and algorithms to help you build a diversified portfolio. They may even be able to help you balance your portfolio and reallocate investments based on your financial goals.

Some robo-advisor portfolios are built by financial advisors but are maintained and administered by the robo-advisor. You can simply choose one to invest in based on your goals and risk tolerance.

The real benefit of robo-advisors is they often have no or low minimum initial balance requirements to start investing. Traditional fiduciary financial advisors might not even talk to you unless you have $100,000 or more in assets to invest. Additionally, the fees for robo-advisors are often lower than those for conventional advisors, who commonly charge a fee of 1% of the annual assets under management (AUM). In other words, the fee is based on the amount of money you have invested with the company.

One robo-advisor to consider is Betterment. It has no minimum initial investment requirements, and its fees start at $4 monthly or 0.25% of assets under management.

If you eventually build $100,000 in investments, you can move to its premium tier. It offers unlimited access to human Certified Financial Planner (CFP) professionals. This tier costs 0.65% of assets under management annually.

9. Get started with micro-investing

Micro-investing allows you to invest tiny amounts of money repeatedly to start building your portfolio. Acorns is a popular app that enables you to grow your spare change using automated investing.

When you link a payment card to the app, it rounds up each transaction to the nearest dollar. Once your round-ups exceed $5, they get invested in your chosen Acorns portfolio. Plans start at $3 per month, and you can invest beyond your round-ups whenever you choose.

10. Invest in your peers

Traditional stocks, bonds, ETFs, and mutual funds aren’t always the right fit. If you’d rather invest your money with other people, Prosper may be a better fit. This company connects individual borrowers with people willing to lend money in a concept called peer-to-peer lending.

You can invest as little as $25 in a loan to a borrower. Once enough people provide enough money to fund the loan, the peer-to-peer lender gives the borrower the money. Then, the peer-to-peer lender collects payments, including interest, and remits the payments to you.

Getting repaid hinges on your borrower making payments. If they default on the loan, you could lose your investment. Whether the return on investment may be worth the risk depends on your goals and risk tolerance.

11. Purchase U.S. Treasury securities

Some people decide to invest in U.S. debt through Treasury securities, which are debt instruments issued by the federal government. The U.S. has a stellar track record of paying back its debt and the likelihood of a default is extremely low, making Treasurys a relatively low-risk investment.

If you want to invest in Treasury securities, you can choose either EE bonds, which keep the same interest rate for 20 years, or I bonds, which earn a rate that may change every six months. You can buy either type of bond at TreasuryDirect.gov in amounts starting at $25.

12. Invest in yourself

Traditional investments are great, but you may be able to earn even more money investing in yourself. You can buy books or courses to teach yourself new skills that make you more marketable at your job. You can verify your skills by taking tests and earning certifications. These can show your expertise in a particular skill.

You may want to pick up new skills that allow you to start a profitable side hustle. In many ways, successfully investing in yourself could result in making more money in the long run versus investing in traditional investments. Thoroughly investigate any potential training before purchasing it. Although many legitimate opportunities exist, scams are present, too.

The bottom line

You don’t have to have thousands or even hundreds of dollars sitting around to start investing. Thanks to technology, investing is more accessible than ever and just requires saving a little bit to get started. Just keep in mind that no investment is risk-free, so be sure to carefully consider the risks before investing.

Once you find an option that fits your needs, risk tolerance, and long- and short-term financial goals, start setting aside money and enjoy the rewards that come with good investment habits.