13 Ways to Invest Small Amounts of Money

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Everyone in your life is telling you that you need to begin investing. But it’s hard to start when you don’t have a lot of money.

It sometimes seems like the system is stacked against you. Many mutual funds require an initial investment of thousands of dollars, and they take a percentage of your money on top of that.

In addition, investing in individual stocks can be hard if share prices are high. But there are many ways to invest small amounts of money that can earn passive income.

Where to Invest With Little Money

There are several options for investing small amounts of money at a time. Some opportunities are more aggressive and volatile than others.

Choosing to invest in several of these ideas can diversify your portfolio and help you manage risk.

1. High-Yield Savings Account

If you are starting on the path to saving money, one of the first places you’ll want to look is the bank. You might start an emergency fund, for example.

A high-yield savings account is a low-risk way to earn interest on your entire account balance.

The interest rate for a high-yield savings account can be significantly higher than a traditional savings account.

Most online banks are free and don’t require a minimum balance. Discover Bank can be one of the best options as there is no monthly fee or balance requirements.

These bank accounts also have FDIC Insurance up to $250,000. If the bank fails, you can recover the first $250,000 in deposits.

Place the cash you want in the bank that you want easy access to. One general guideline is any funds you plan on spending within the next three years.

While the bank deposits won’t earn as much as investing in stocks, your cash value won’t lose money like when stock prices drop below the original investment price.

2. Bank Certificate of Deposit

You may be able to earn even more money than a high-yield savings account if you place funds in a certificate of deposit (CD).

A CD can offer a higher interest rate if you agree not to withdraw your money before a certain time.

Most bank CDs are a “term CD” because you invest for a specific number of months.

For example, a 12-month term CD means you invest for 12 months. You can withdraw your funds penalty-free when the investment term ends.

The early withdrawal penalty is usually several months of interest income. The bank discloses the early withdrawal penalty before you invest.

If you choose to renew your CD, your balance reinvests at the then current interest rate. It can be higher, lower or the same as the original rate.

Many online banks offer CDs with terms as long as five years (or as short as a few months.)

Some banks also offer no-penalty CDs. You can withdraw your funds before the CD returns, but these CDs usually have lower interest rates.

Not every CD has a higher yield than a high-yield savings account. It pays to compare rates.

But if savings rates rates decline, you can earn more with a CD that keeps the same rate for longer.

Interest rates in general are still low by historical standards, so you won’t get rich putting money in savings accounts or CDs alone.

But interest-bearing bank accounts are an easy way to earn passive income with short-term investments.

3. Commission-Free Index Funds

One of the tricky things about buying stocks is that single shares of stocks are expensive. One of the easiest and cheapest ways to invest is with index funds.

These funds seek to match the performance of a stock market benchmark like the S&P 500.

Not guessing which stocks will outperform the market keeps investing costs low since fund managers don’t sell stocks often and pay taxes. As a result, index funds have some of the lowest investment fees.

Index funds are available in for these asset classes:

  • S&P 500
  • Large-cap US stocks
  • Small-cap US stocks
  • Government bonds
  • Investment-grade corporate bonds
  • Developed markets international stocks
  • Emerging markets international stocks

Many long-time investors, including Bogleheads, invest most of their cash into index funds. The low costs and simplicity make index fund investing easy.

Some index funds only have a $1 minimum investment. Others require a $100 initial investment but only have a $1 subsequent investment minimum.

So, if you can invest $100 into an S&P 500 index fund and get exposure to 500 companies. But if buy single shares, $100 only lets you buy into a few companies.

Another advantage of index funds is that you don’t have to rebalance your asset allocation frequently. The fund manager keeps the portfolio diversified.

If you hold several different types of index funds, you will still have to rebalance your stock and bond index funds periodically.

Most online brokers offers index funds plus individual stocks and thematic ETFs with no trade commissions.

4. Thematic ETFs

Thematic ETFs (exchange traded funds) hold companies for a specific industry or investing purpose.

Some thematic ETF examples include:

  • Clean energy
  • Banking
  • Cybersecurity
  • Healthy living
  • Consumer staples

As these funds have a more focused investment strategy they can be riskier than index funds.

Most brokers offer ETFs as they have lower investment minimums and lower fund fees. You can buy these ETFs with any investing app like Robinhood.

It’s also possible to invest in similar mutual funds but with higher annual fund expense ratios. Some traditional brokers have more mutual funds than ETFs.

However, annual mutual fund fees can be between 1% and 2%. Similar ETFs may have an expense ratio between 0.20% and 0.75%.

Another difference between mutual funds and ETFs is the minimum initial investment. Most mutual funds require a higher initial investment but usually require subsequent investments of $100 or less.

ETFs require you to buy a whole share but more brokers are offering fractional investing as low as $5 at a time. But the subsequent investment minimum can be higher than mutual funds if you must buy whole shares.

5. Individual Stocks

Many investors dream of buying an unknown stock and holding it to become a millionaire. But buying stocks is riskier and requires more money to diversify than buying index funds or thematic ETFs.

But buying high-quality stocks with promising growth potential can boost investment returns and not rely entirely on index funds.

There are many brokers to choose from the let you buy stocks and funds. A micro investing app can be the best option for investing small amounts.

Here are some of the investing apps to consider first.

M1 Finance

M1 Finance is a free investing app offering stocks, ETFs and premade investment portfolios. You can buy fractional shares and assign a target asset allocation to each position.

You can open a taxable account ($100 minimum) and IRA retirement accounts ($500 minimum). All subsequent investments only require $25 but can buy multiple stocks with each trade.


Beginner investors may appreciate the simplicity of Stash which offers educational tools and makes investing in stocks and ETFs easy.

You can invest in fractional shares with as little as $5 with unlimited no-fee trades.

Individual and retirement accounts are available. Each subscription plan also comes with their Stock-Back® Card that you can use to round-up purchases and earn pieces of stocks of companies you shop at.

One downside of Stash is the monthly fee of either $1, $3 or $9.


Robinhood lets you buy stocks and ETFs with a $1 investment minimum. Most investing apps require a $5 investment minimum.

You can also trade cryptocurrency futures for Bitcoin, Etheruem and other popular cryptos.

There are no account fees but only taxable accounts are available.

6. Dividend Reinvestment Plans

You may also decide to buy dividend stocks for recurring passive income and potential share price growth.

Most dividend stocks are “blue chip stocks” that are well-established companies. Usually they are the largest companies in their industry.

Dividend-focused stocks tend to pay a higher dividend than growth stocks. But their share prices may not grow as much as stocks that reinvest profits to grow their brand instead of paying a dividend.

The dividend stocks pay quarterly payments. Reinvesting these dividends by buying more shares can be a powerful way to increase your earnings.

The problem with dividends, however, is that that they often don’t amount to enough to buy a full share of stock.

For example, let’s say you own 100 shares of a stock, which pays a quarterly dividend of 39 cents per share. This means you’ll get $39 each quarter.

But a new stock share sells for about $45. So how can you reinvest the dividends?

Dividend Reinvestment Plan

The answer is through a dividend reinvestment plan (DRIP).

You can buy fractional shares of stock even if it isn’t enough to meet the regular investment minimum.

Most brokers let you reinvest dividends into the same dividend stock at no cost. TD Ameritrade is one online brokerage offering DRIP investing.

If you buy stock directly from the company instead of a broker, many companies offer automatic dividend reinvesting too.

7. Robo-Advisors

Not every investor wants to manage their own investment portfolio. They may not have the time, skill or desire.

If this is you, consider investing with a robo-advisor.

A fully-automated robo-advisor automatically invests your cash into a basket of index funds that matches your investing goals and risk tolerance.

As you grow older, the robo-advisor gradually shifts your asset allocation into a more conservative strategy. You may start holding 90% stocks and eventually reduce to a 70% position for instance.

Most robo platforms charge an annual advisory fee around 0.25% of the portfolio value. The fee is $2.50 per $1,000 you invest at this fee level.

Here are some of the best robo-advisors to consider first.


Betterment is one of the first and largest robo-advisors. You can open an account with $1 and follow-up investments only require $10.

You will answer several investment questions when joining that Betterment uses to recommend a stock and bond index portfolio.

The annual advisory fee is 0.25% which is competitive with most advisors.


Acorns offers several ways to help you find money to invest with taxable and retirement accounts. Like other brokers, you can schedule monthly transfers to invest new cash.

Acorns also offers spending roundups when you link a credit card or debit card. With each purchase, Acorns rounds up purchases to the next dollar and invests the round-up.

A third way to get free money is by shopping online with Acorns retail partners. Instead of getting cash back, Acorns invests the shopping rewards.

The investment minimum is $5 per trade into a premade portfolio of index fund ETFs.

An online checking account is also available. The monthly fee is either $1, $3 or $5.

8. A 401k Plan

If you have an employer-sponsored retirement plan such as a 401k or 403b, this option can be the easiest way to start investing.

Your employer can invest a percentage of each paycheck. Many employers also offer matching contributions for the first portion of your investment.

Most 401k plans offer index funds, target date retirement plans and stocks.

When you don’t know what to invest in, a service like Blooom can assist. Blooom can evaluate your investment options and recommend a personalized portfolio.

If you live on a small income, you may decide to only contribute enough to earn the full employer match.

401k plans have tax advantages that minimize your taxable income. You only pay taxes once on the contribution amount.

Traditional 401k contributions reduce your taxable income upfront but you pay taxes on the withdrawal amount.

Roth 401k contributions require you to pay income tax upfront but your withdrawals are tax-free.

Not every employer offers Roth 401k plans as Traditional 401ks are the default plan type.

9. Crowdfunded Real Estate

Putting your money into the bank or stock market are not the only ways to earn passive income.

Crowdfunded real estate can also be a reliable way to earn recurring income. Most investments are for multifamily apartments and commercial real estate with multiple tenants.

Unlike owning rental properties, you do not have to screen tenants or handle repairs.

Many real estate platforms have a minimum investment of $500 or more. While that’s more more than investing in stocks, it’s a low threshold for private real estate.

You can earn regular dividend income by collecting rent payments from the tenants. A second way to make money is when the platform sells properties for a profit.

The annual investment returns can be competitive with the S&P 500 index funds. However, most crowdfund investments require a five-year investment commitment.

The long-term investment commitment is how crowdfund real estate can offer above-average investment returns.

Potential risks include depreciating property values and vacant properties and tenants not paying rent.

Here are some of the crowdfunding platforms to consider first.


Fundrise has a $500 investment minimum for their Starter Portfolio. This portfolio invests in multifamily and commercial properties across the United States.

Advanced investment strategies are available with a minimum $1,000 portfolio balance. The annual management fee is approximately 1%. Other fees may apply.


If you’re willing to research individual properties, consider Groundfloor. You invest in fixer-uppers and can receive a profit when the homeowner repays the loan.

The minimum investment is $10 per project with an investment period up to three years.

Groundfloor has some of the lowest investment minimums and shortest holding period for a real estate investing platform.


DiversyFund has a Growth Fund with a $500 minimum investment.

This fund focuses more on long-term capital appreciation and less on dividends. You will earn most of the investment gains when the fund can sell holdings for a profit.

10. Small Business Bonds

Investing in small business bonds can provide a higher yield than traditional bond investments. Bond index funds invest in large corporation and government bonds.

Worthy Bonds lets you earn 5% per year with a minimum $10 investment. These loans are collateral-backed however small businesses can be riskier.

The additional risk is why this investing idea has a higher yield versus traditional bonds.

11. Precious Metals

Precious metals like gold and silver are a popular stock market alternative. Buying gold coins is one option but can require investing a few thousand dollars at one time.

Physical silver is more affordable than gold but can still require investing over $100 at once.

It’s also possible to buy “vault gold” in fractional amounts with Vaulted. Once your balance is high enough to buy a 1 oz. bar, you can request delivery or keep it in the vault.

12. Peer-to-Peer Lending

Did you know it’s possible to make money by lending money to people who can’t or won’t use a traditional bank?

Online platforms now allow people to “invest” in the debt of others, and potentially earn a solid return.

Prosper is one “peer-to-peer” lending platform and you can start investing with a $25 minimum.

Prosper claims historical returns averaging 5.3% annually. This rate includes the average default rate that reduces potential returns.

Borrowers are assigned a credit rating and those with lower rates have a lower risk rating.

13. Your Own Business

Income-producing assets that others produce are not the only way to invest. It’s a good idea to diversify your investments.

If you have the time and motivation, investing in yourself can be worth the effort.

Investing cash into your business can help you reach new customers, hire staff and take classes to learn new skills.

It might take a few years of hard work to earn recurring income, but it’s possible. You may consider starting with an online job that require no investment to keep costs low.

Starting a physical business is also possible but usually requires more cash as you may need to lease office space and equipment.


As you can see, there are several ways that you can invest small amounts of money so that you can begin building wealth.

Make sure to choose the one that best fits your personality and risk tolerance.



  1. I would like to restart investing my I lost my job I Janurary 2020 and receive unemployment benefits and I wad trying to find the best way to start rebuilding my money. I had to withdraw my 401k early that’s gone .

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