Do you think that it is impossible to build a balanced investment portfolio if you have very little money to invest?
Using very little money, you can spread your investments across the full spectrum of asset classes – stock-based mutual funds and exchange-traded funds, bonds, and even commodities.
All you have to do is know where to find investments that you can start with as little as $1. And there are plenty of options.
Simply put, the easiest way to start investing with no money. They just round up all the purchases you make to the next dollar and invest the difference.
So, say you go to the grocery store and spend $16.25, they will round up to $17.00 and take the 75 cents and invest it. If you do that over and over, it quickly adds up to some big savings.
By far, the easiest set-it-and-forget-it way to get started investing.
Here is how it works:
2. Give Betterment a whirl.
Betterment is an online investment firm that has no minimum investment or balance requirement. They do however require that you contribute a minimum of $100 per month to your account.
It is not a traditional brokerage firm that will allow you to invest in the stocks and funds of your choice, but is an excellent place to start investing with very little money.
How they are different (and simpler)
With Betterment, you basically have two investment options. Each option is referred to as a basket that is made up of a mix of exchange traded funds, or ETFs. One basket is comprised of stocks, and the other of treasury bonds. All you need to do is to choose your allocation between the two baskets, and your contributions will automatically be invested based on the allocation.
Another benefit to small investors is that Betterment does not charge transaction fees. The only charge they assess is an annual fee equal to .35% of your account balance, on account balances up to $10,000. If you have $1,000 in your account, your annual fee will be $3.50. When your balance exceeds this amount, the annual fee will be progressively lower.
The strategy is simple yet aggressive, and this can be a benefit to someone investing with very little money. Since you don’t have a lot of money to spread over many different assets, you need to keep your investment system as simple as possible. And since you want to grow a small amount of money into a large amount, Betterment’s aggressive approach is a solid way to get there.
Nearly every large investor started out as a small one. But the advantage that you have today is that there are more options for the small investor than ever before. Start with the investment options above, build a larger amount of money, and then you’ll be able to expand your options even more.
The most important part of investing is always getting started. And having very little money is no longer an excuse.
Read more in our Betterment Investing Review.
3. Use a broker without an account minimum.
Some brokerage firms will either lower or waive minimum initial investment requirements on certain funds.
One that I have used for years is Ally Invest. There is no minimum to open an account. This won’t allow you to invest in anything you want, but as a small investor, it is still an excellent way to get started.
4. Try the Fundrise Starter portfolio
When I started with Fundrise they required a $10,000 minimum investment. Since then they have rolled out a starter portfolio which allows you to get started with only $500. I know that might still be a stretch if you only have $100 or so to start investing, but if you can round up $500, they are a good option to consider.
I have been using Fundrise for real estate investing for almost 2 years now and I actually ended up selling my physical rental property because my Fundrise earnings were better. You can read all about that in my Fundrise Review here.
Or check the video below for my experience as well.
5. Try out I Bonds.
I Bonds are US government securities and they can make the perfect bond allocation of a small investor’s portfolio. You can buy them directly from the U.S. Treasury through their website at Treasury Direct.
You can purchase I Bonds in denominations as low as $25 ($50 if you buy using your income tax refund), up to a maximum denomination of $10,000. The minimum term is one year, running to a maximum of 30 years.
Rate of return on the bonds is a combination of interest and semi-annual adjustments for inflation. All income is added to the face amount of the bond and payable at redemption. The current rate of return on an I Bond is 2.52% (as of Sept 2018), which is far better than what you can get on certificates of deposit for much longer terms, and for far larger denominations.
I Bonds are also tax-exempt for state income tax purposes, though the income earned is taxable at the federal level.
If you have $100 sitting and waiting to be invested, check out this video to see how I invest $100, Warren Buffet style.
Have you been avoiding investing because you think you don’t have enough money? Have you tried any of the investments above? Leave a comment!
Great info. I just received my first 401k but was laid off from that company. I am wanting to start looking for ways to invest in my retirement. And unfortunately I have waited late in my life to do this. So how would you find out what is personally best for you?
Thanks good article.
Kevin M says
Hi Troy–It really depends on your time horizon, personal preferences, risk tolerance, and oher income sources you expect to have. Investigate all the possibilities, then decide what works best for you.
Thanks. I hope to figure something out and get a plan together.
Hi is there a UK equivalent u would recommend of the Acorns investment app. I have virtually no income due to ill health also needs to be an uncomplicated site ?
How do u know if ur £ is being used to invest ethically? Thanks
William Cowie says
These are all very good tips. My wife and I used something probably a little less efficient, but effective, nonetheless: we opened a separate savings account we just called “our future” or something like that. Any time we wanted to go out for dinner, we said, “Let’s buy our future dinner, instead,” and we’d put the $50 we were going to spend in there.
It earned almost no interest, but it acted as a catchment basin for all sorts of money that otherwise would have been flushed down the drain, When it reached something like I thing $2,000 or so (this was a few decades ago) we felt we had enough “critical mass” to open a brokerage account and begin investing.
What I learned from that is it doesn’t matter how little you start with, but it does matter a lot how soon you start.
The other thing we learned is: it’s amazing how much money you have to put into something like that when you don’t plan it, but just do it. Every 3 months or so we’d look at the account and go, “Wow, look how much we could put away when we thought we had nothing.” And of course, that fired us up to try even harder.
Kevin M says
Hi William–Getting started is so important. You can waste a lot of time contemplating how difficult it is, but once you start it somehow gets easier. Forward motion is one of the most under-rated success strategies. At some point you have to put reservations aside and just do something. Sure, it may not be perfect but it really doesn’t have to be either.
Thanks so much for this article! Very informative and makes me see that even though I don’t have a lot of money to invest right now, I still have quite a few options!
To invest in today’s over regulated market you must break the rules of insider trading or else your just gambling not investing. Further all debt should paid and at least 10% of your net worth in gold/silver ( physical ) for financial insurance. Fed res QE 1, 2, 3, 4 has more than trippled total money supply and is reason enough to double that. Good luck investing in anything and actualy making a profit which is the PURPOSE/DEFINITION of investing.
And no spending on education , now way over supplied, is not investment, especialy with secular over priced institutions. Don’t believe it? Just go ask the 50%+ unemployed collage grads in the last three years and with 6 figure debt. Quickest way to a life time of debt slavery is buying what educrats are selling.
Harry Poindexter says
Try a direct investment in a company. We did direct investment in Southern Electric (SO) and then DRIP (dividend reinvestment) You can start with $50 and reinvest the dividends it can really add up over time. Set and forget.
Thank-you fo this information. Iam extremely new to learning to save money much less actually investing my money. Thank-you for teaching me options to get started when I have very little to invest to begin with. Iam truly happy to have happened upon this site. Thank-you for the help.
get 2 jobs. live on one and use the other income to build your wealth by purchasing assets.
learn what an asset is
learn what a liability is
spend money on only assets and protect them with knowledge and asset “insurance”
learn the right things to value and pursue them obsessively, especially if your broke now.
Sounds good. You got more info?
I and many of my associates (friends) are of the over 50 types with years of business experience and the means to produce. NOT in todays socialists, the world owes me, pop culture! I’m thinking there has got to be many more like us just sitting on the side lines waiting for this nonsense to pass.
I do not think its going to pass.
Looks like the working class will have high un employment for some time. Gotta start voting for free markets or the market will continue to contract.
Wilfred Khalik says
Is it possible for Non-US Citizens to invest in I Bonds?
I have used I Bonds effectively. You get interest rate which can change but also a bonus for inflation. Some of my bonds last year gave me over 2 percent. If you can do without the money for at least 1 year then I bonds are the way to go.
Lauren (SeedTime Editor) says
That’s great, Vincent!
Rajkumar Jonnala says
This post is amazing and I have been following this site for many days and it never disappointed me. This post just made my day as I thought making money via little investment is merely impossible and I need thousands of bucks to invest Something and from this post I learned many ways of investments like mutual investment and bonds. I decided to implement the methods I learned here as soon as possible and keep rocking by posting more articles like this.
Have a good day!
Lauren (SeedTime Editor) says
nice post! thanks for sharing this.
Thank you for the ideas you have shared, I have already started with Airbnb in April this year and its working well ,will research on the other ways shared
Joe Nations says
Yes. You did not speak about the monthly fee. Are you still making a profit after the monthly fee?
With which investment?
Rosalind Matthew says
I first got involved with the internet and money making on the internet in 2007, ever since I watched many videos that I bought and youtube vidoes that I found on youtube. I bought books, paid to have websites set up and was never ever successful in making any money from any of them. I even tried Shoppify which I thought was easy. If something I do not understand or was never explained to me crops up, then I am stuck. This is not as easy to me as everyone makes it out to be so where am I going wrong. I am a reasonable intelligent person, but whenever I come up against a problem and have no one to turn to it makes it quite difficult. If I had someone near by to show me just where I am going wrong, that would be a great help. I am just going to continue plugging away at it for the time being.
Wealth Secure says
Wow, Nice Article.
whats happening with your money when you buy a share or stock, and it doesnt generate a return? is that money lost? when do you start getting a return from any type of share or stock you buy into?
Great tips Kevin!
Do you know of any apps that just do the tax harvesting? We’re filing taxes now and looking to take advantage of this. I think Betterment has it as a feature, but I’m looking for something that solely performs this function. Thanks!
Shaylee Packer says
I have never heard of an I bond before. It seems like a good way to start investing because of the low starting costs. My brother has been interested in investing. I will have to share this article with him, so he can share it with his advisor.
Lexus Peters says
I love this post, especially as a young adult, I want to learn how to invest my money for the future. I know that I can’t invest as much since I am still in college, but it will help me grow more money in the future. I should really look into using Acorns because you don’t put much thought into the process as it just rounds up to the next dollar. It has worked great for my fiance. I invest through Janus Henderson so they choose all of my stocks by mutual funds. I think trying out Betterment would be more interesting because it would make me more involved with the stock market and watch what is going on. Once I have enough money, I would like to invest in real estate because many people say that is how they secure great money for their retirement.