You’ve probably heard the advice, “Investing is the best way to grow your wealth!” But what if you don’t have much money to begin with? Is there a way to invest small amounts of money?

Yes, there are ways to invest with little money. Investing isn’t just for men in slick suits who spend their weekends at the country club golfing. Technology has made investing more affordable and accessible with investment apps and robo-advisors. 

Seriously, there are legit apps that let beginners start investing in the stock market with just $5.

It’s also important to remember that the idea behind investing is letting your money work for you and growing over time. That means you can start investing for your future by saving in a high-yield savings account or buying CDs. Not the sexiest options, but they’re safe and reliable.

Now let go of your preconceived notions of needing lots of money to start investing because I’m going to teach you how to start investing with little money.

How to Start Investing With Little Money: 9 Ways to Start

1. Open a High-Yield Savings Account

When most people think about investing, they immediately think about investing in stocks or bonds. But one of the easiest ways to start investing with little money is to open a high-yield savings account. You can earn a little interest back on your savings in an account with a higher than average interest rate.

The biggest benefit of this approach is that it’s risk free. You’re saving your money in an FDIC-backed account that protects your savings up to around $250,000.

Savings account rates are lower than normal right now because of actions the Federal Reserve has taken to stimulate the economy, but you can still find savings accounts with higher than average rates.

For example, the average saving account interest rate is 0.07%, but there are a number of online banks that offer rates around 0.50%. I know that’s not a huge jump, but it’s better than the alternative.

Online banks are able to offer higher-than-average interest rates because they don’t have the same overheard as brick-and-mortar banks. Many online banks have $0 opening deposits — so there is no barrier in terms of how much you need to start investing.

Ally Bank has a great online savings account with a 0.50% APY. There’s $0 minimum starting deposit and no monthly maintenance fees.

Live Oak Bank offers an interest rate of 0.60% with $0 minimum balance requirements and $0 maintenance fees.

Marcus by Goldman Sachs is another good option with an interest rate of 0.50%, $0 minimum balance requirements, and $0 maintenance fees.

2. Use a Robo-Advisor

Deciding exactly how to invest your money can be pretty intimidating when you start investing, and using a robo-advisor eliminates that intimidation factor. Investing with a robo-advisor is a very passive way to start investing with little money because you don’t need any prior investing experience or know-how.

Robo-advisors are digital platforms that determine how you should invest your money after asking you a series of questions about your goals and risk tolerance. They recommend a diversified and low-cost portfolio of stocks and bonds that’s built to help you reach your investing goals.

Robo-advisors also do more of the advanced work, like rebalancing your portfolio if the asset allocation drifts too far one way or another and optimizing for taxes with tax-loss harvesting.

Overall, starting to invest with a robo-advisor is a really good approach for those who want a very hands-off experience. The downside to using a robo-advisor are the fees. Some charge a small percentage each month based on your balance while others charge a flat monthly fee. 

If you’re learning how to invest with small amounts of money, then I recommend looking for a robo-advisor that charges a percentage. A flat fee can equal a larger percentage of your balance. For example, if you have $100 invested, a monthly fee of $1 is a 1% fee. Compare that to a robo-advisor like Betterment or Wealthfront that charge an annual advisory fee of 0.25%. You would only pay $0.25.

I highly recommend checking out Betterment. They have a $0 minimum investment requirement, so it’s really easy for you to start investing with little money.

It’s worth mentioning that monthly advisory fees aren’t the only fees you’ll encounter if you start investing with a robo advisor. Most robo-advisors recommend a mix of ETFs (exchange-traded funds) for your portfolio, and ETFs all have expense ratios, which is a small management fee. The average ETF expense ratio is 0.44%, but Betterment’s average is 0.11%.

3. Invest in the Stock Market With Little Money

If you want to know how to invest in stocks for beginners with little money, the answer is fractional shares. Investing in fractional shares or microschares is when you buy a portion of a stock or ETF. It makes investing in companies like Apple or Tesla much more affordable for anyone who wants to invest small amounts of money.

Take buying a stock in Tesla. As I’m writing this article, the price of a single share is $683. When I was still teaching several years ago, one of my students recommended I buy stock in Tesla when it was less than $50 a share. You can imagine how much I regret not listening to him.

When you’re just starting out, you don’t want to spend $683 on a single share, and there’s where fractional shares come in. There are investment brokerages like Charles Schwab, Fidelity, and Robinhood where you can buy $5, $10, $20, etc. worth of Tesla stock. If Tesla continues to do well, then your investment grows, even with fractional shares. 

Many brokerages are now offering fractional shares because they’re really appealing to new investors, and most brokerages have eliminated commissions, so investing in the stock market little money stays affordable.

M$M tip: No matter how you start investing, I highly recommend using Personal Capital to keep track of your accounts. Personal Capital is a free investment and net worth tracking tool. My wife and I have been using it for several years, and it helps us stay on track for retirement, budget, and save money on investment fees. Learn more in full Personal Capital Review.

4. Enroll in Your Employer’s Retirement Plan

This is really practical investment advice for anyone who wants to invest with little money: start with your company’s retirement plan. If your employer offers a 401k or other kind of retirement plan, I highly recommend learning more about it.

There are a couple of serious benefits to start investing through your employer’s retirement plan. First, contributions come out of your paycheck before you’re paid. You don’t have to set aside money to invest, and it’s money most people don’t even miss, especially if you set your contributions at something like 1% of your salary.

Another perk is that 401k contributions can lower your tax liability. Contributions to traditional 401ks are made with pre-tax dollars, so they’re deductible from your taxable income.

And don’t forget about matching employer contributions! Not all employers will match your 401k contributions, but if they do, the small amount you’re investing is able to go even further.

You can manage your 401k investments on your own, or you can pay for hands-off 401k management through Blooom. Blooom runs a free 401k analysis to see how they can optimize your investments, and if you choose to use them, it’s $10/month. Learn more in my full Bloom review.

5. Start an IRA

IRA stands for individual retirement account, and it’s type of tax-advantaged retirement savings account. Starting an IRA is a great way to start investing with little money for retirement if your employer doesn’t offer a 401k, but you can also start an IRA if you do have an employer-sponsored retirement plan. 

The benefit to opening an IRA is the tax advantage, which you get to choose. There are two types:

  • Traditional IRA: Contributions to a traditional IRA are made with pre-tax dollars, so they lower your tax liability. You pay taxes on the disbursements you take in retirement. Traditional IRAs are ideal for people who think they will be making less money in retirement.
  • Roth IRA: You pay taxes on the money you put in your Roth IRA. That means your money grows tax-free, and you don’t pay taxes on retirement disbursement. A Roth IRA is best for people who think they will be earning more in retirement.

IRAs are a kind of investment account, so you will still need to pick a brokerage. I recommend thinking about what kind of investor you want to be. Hands-off investors can go with a robo-advisor like Betterment or Wealthfront.

Hands-on investors who want to self-direct their investments should look for a brokerage with no account fees, small commissions, and no-transaction-fee mutual funds. M1 Finance is a solid choice for self-directed investors. They have $0 commissions and no platform use fees.

Starting an IRA is also a solid option for self-employed people who don’t have access to an employer sponsored retirement plant. There are several different kinds of IRAs self-employed people can start, like SEP IRAs and SIMPLE IRAs. These accounts are optimized so you can lower your business tax liability and save for your future.

6. Real Estate Investing

Real estate investing — sounds like something only the rich can do, right? Think again. Real estate crowdfunding has made it an option for anyone who wants to start investing with little money. 

The way real estate crowdfunding works is that smaller investors pool their money together to fund large-scale real estate developments. You’re sharing the costs with many other investors, and then gain returns once the project is fully funded and realized. It’s a newer investment option that was opened up by the JOBS Act of 2012.

This is a little more riskier way to start investing because we’re in an unprecedented real estate market, but there are upsides too. It’s a way to learn more about commercial real estate. The biggest potential benefit is that private real estate can yield higher returns than the stock market.

Fundrise is one of the most popular crowdfunded real estate platforms, and you can start with as little as $10. There’s an annual advisory fee of 0.15%, and you need to view this as a long-term investment. Meaning, don’t think about touching your money for at least 5 years.

I’m not sure I would start with real estate, but it’s an affordable option when you’re ready to diversify your portfolio.

7. Invest With a Micro-Investment App

Micro-investment apps have become really popular in the past few years because they make investing affordable if you have little money and want to start investing. Earlier I explained investing in fractional shares, well that’s the principle behind micro-investment apps. These are beginner-friendly investing apps specifically designed for buying fractional shares of stocks and ETFs.

Acorns and Stash are two popular micro-investment apps that let you set-up recurring deposits into your investment account, or invest with round-ups. Round-ups are when you link a debit or credit card to your investment account, and when you use that card to make a purchase, the app rounds the transaction up to the next dollar amount. So if you buy a latte for $4.63, the app rounds up to $5 and invests the $0.37 difference.

Both of these apps require $5 to start investing, and they will recommend investments for you like a robo-advisor. Acorns is fully hands-off — the app is a robo-advisor and invests your funds in one of five diverse portfolios. Stash makes recommendations, but investors can choose thematic or mission-driven investments. These are ETFs that focus on female-run companies, green energy, defense spending, etc.

Micro-investment apps are an easy way to start investing with little money, and it’s exciting to watch your balance grow over time. But, the downside of these apps is that they charge flat fees (ranging from $3-$9/month depending on what kind of investment account you want)  that are higher when your balance is low.

Still, if you’re struggling to find money to invest, a micro-investment app that uses round-ups will prove that you can afford to invest. And maybe that’s the motivation you need to start investing on a larger scale.

You can learn how Acorns and Stash compare, plus hear about our personal experience with both apps in Acorns vs. Stash | Which Micro-Investing App is Best?

8. Invest in U.S. Treasury Securities

Investing in U.S. Treasury Securities is one of the safest investments you can make. There’s not a high rate of return, but it’s an affordable investment option for investors who are nervous about the risk associated with investing in stocks.

You can buy treasury securities directly from the U.S. Department of Treasury’s online portal Treasury Direct. There are different kinds of securities: bills, bonds, and notes, and all of of them require a $100 minimum investment.

Treasury bills mature in a year or less and have the lowest rate of return. Bills and bonds pay interest every 6 months, and they’re issued in terms ranging from 2 to 30 years.

Another option if you want a low-risk way to invest with small amounts of money is to buy TIPS (Treasury Inflation Protected Securities). They pay interest and make periodic principal adjustments to account for inflation.

Like I’ve said, treasury securities are super safe, but the rate of return is extremely low on them right now. It’s not always the case, but now you can earn more interest in a high-yield savings account.

9. Buy Certificates of Deposit

Certificates of deposit (or CDs) are a type of savings account with a fixed interest rate that’s generally higher than a regular savings account, possibly even a high-yield savings account. CDs have a fixed term length and date of withdrawal, which is when they reach full  maturity.

You can start investing with little money in a CD for around $50 (this depends on the bank or credit union). And the longer you’re able to invest your money in a CD, the higher the interest rate. However, because CDs aren’t the most liquid investment, make sure you can commit those funds for the full term, otherwise you may be penalized.

You’re locked into a rate once you invest in a CD, but rates do change over time. Here’s an idea of what CD rates currently look like:

  • 3-month CD 0.25% – 0.40%
  • 6-month CD 0.45% – 0.60%
  • 9-month CD 0.35% – 0.65%
  • 12-month CD 0.55% – 0.80%
  • 2-year CD 0.70% – 0.95%
  • 3-year CD 0.81% – 1.05%
  • 4-year CD 0.80% – .90%
  • 5-year CD 1.01% – 1.25%

Once your CD matures or expires there is a grace period of about a week to withdraw funds. If you don’t withdraw during the grace period, your CD may automatically renew for the same term.

How To Invest With Little Money: The Final Word

There’s no one-size fits all best way to invest small amounts of money. Instead there’s something for everyone — from safe bets like high-yield savings accounts, CDs, and treasury securities. Those have the lowest rate of return, but they’re good for beginners who aren’t ready to stomach the risk of investing in the stock market.

Investing in the stock market can be risky, so I get the fear if you don’t have much money to start investing. But the reality is that using a robo-advisor like Betterment or a micro-investment app like Acorns can help you build a diversified portfolio, and diversification is what helps protect your hard-earned investments.

Disclosure: We earn a commission for this endorsement of Fundrise.