How To Invest Small Amounts Of Money In 15 Different Ways

This post will teach you how to invest small amounts of money in 15 different ways. I used to think that you must have a large pool of funds before you begin to invest money. But I discovered that I was wrong. You will be surprised if I tell you that you can start investing in the stock market using mutual funds with $50 monthly. Also, you can start it if you have not done so and you will be just as surprised as I was when I started investing, with the little amounts that I had then. However, in this post, I will share how you can start investing with amounts in the range of between $100, to $1,000. Using these benchmarks, here are 15 ways of how to invest small amounts of money.

how to invest small amounts of money

How To Invest Small Amounts Of Money In 15 Different Ways

 

  1. Savings Account

You can start by investing in a savings account. In this investment through a bank, you have little risks and you cannot lose money. But the growth of your earnings is limited. So, just use the savings account as a way to accumulate a large amount of money. When the money is large enough then you invest in higher risk investments that will also give you a higher return.

  1. Betterment

There are investment advisors that will charge you a fair amount and let you know how to invest small amounts of money. One of such places is Betterment. To start off, you will fill a questionnaire and they will use it to create an investment account for you based on your risk tolerance.

The account Portfolio will include Exchange Traded Funds (ETF). After identifying your risk acceptance level, then you can fund your account and let them select the investments for you. You can open an account with $100. They charge a management fee of 0.35% for accounts having balances lower than $10,000. But this Management fee reduces as your account becomes bigger.

  1. Lending Club

This is another investing platform. It is a peer to peer lending platform where anyone can go and borrow money. But it is investors that provide the cash that this platform lends. In lending club rates of return on this investment is in double digits.

And you can begin your investment with $25 for a single loan note. So, if you invest $1,000 you will have up to 40 notes in different portfolios. The limitation is that most States set a minimum an investor must have to invest in this platform.

how to invest small amounts of money

  1. M1 Finance

M1 Finance is a brokerage firm and like Betterment lets, you invest small amounts in different portfolios. If you want to learn how to invest small amounts of money,  you can consider this brokerage firm. They allow you to trade in Stocks and ETF free. M1 finance is top in the list of companies with the largest no-fee investments by any brokerage firm in the USA.

Their services let you buy fractional shares. That means if for instance, Google shares trade at $400, you can by $50 worth to own 12.5% of that stock. Also, you will have access to free analysis before you invest your money in any investment product.

  1. Fundrise

Fundrse is a real estate investment trust. This company helps you to invest in real estate easily.  You can start flipping houses and become a landlord through Fundrise. At Fundrise, they invest your money in real estate developments. And as they make money you do too.

Your returns are based on the investment properties you invest in. As of last year, investors have made up to 11% returns on their investments. The best part is that you can start with $500 and help yourself to grow faster if you have knowledge in real estate by selecting good projects to invest in on their real estate portfolio.

  1. Paying off debt

This is another way of how to invest small amounts of money. Don’t invest little amount of money if you owe an unsecured debt. Also, paying off debt will help you take advantage of an above-average guaranteed rate of return on your money. This is true if interest charge on your credit card is in double-digit.

This is how it works. If you have a credit card balance of $1,000 at 15.99% interest rate yearly. And then pay off your debt, you will take advantage of up to 16% rate of return on your money till infinity. also, you can pay off that credit debt faster by getting a card with zero interest or zero balance transfer credit cards.

  1. Your employment sponsored retirement plan

This is the easiest way to invest small amounts of money. What happens is that you set up a certain percentage deduction from your paycheck monthly for investment. You may choose from 1 to 20 percent of your pay depending on the policy of your employer.

Also, you don’t need a large pool of money to begin to invest. Check the type of investment you can invest in with your capital permitted by your employee retirement plan.

Even some employers offer a matching contribution and that is free money too. So this should be one of the first investment methods you could start with.

  1. Your own retirement plan

If you don’t have a retirement plan set up by an employer, you can do it by yourself and learn how to invest small amounts of money on your own. To start it, you have to qualify by earning income. There are two popular investments you can choose from. The IRA or a Roth IRA.

These two are just like a retirement plan employers set up. Return on investment taxes is deferred until you start withdrawing money from the fund when you retire. And the contributions you make on a normal IRA are tax-deductible.

Note that Roth IRA plans are not tax-deductible. But when you start withdrawing, it is free from taxes if you reach the age of 59 and a half years and if you have been contributing in that plan for at least five years. Also, you are allowed to contribute up to $5,500 yearly in both plans. You may contribute $6,500 if you are more than 50 years of age.

how to invest small amounts of money

  1. Prosper

This company is like Lending Club. In Prosper, you can start at $25 and spread your investment in many loans. But the limitation is the State minimum net worth required for you to qualify to invest. According to  Prosper, you could get a return of 16% annually on a single note.

But, in Prosper and Lending Club you could lose your principal if the borrower defaults in paying back a loan. Secondly, FDIC does not protect your investment like it covers a Savings investment in a bank.

  1. US Treasury Securities

You can learn how to invest small amounts of money buying US treasury Securities. If you want to take little or no risk at all, invest in US Treasury Securities. They are debt obligations that the US government issues to pay the national debt.

You can invest in security with a range of 30 days to 30 years. If you have a longer-term and sell it before it matures you risk your capital.

Start investing by visiting the US departments Treasury Direct. The denominations are as low as $100. You can also sell the security in that portal. And there are no penalties if you withdraw earlier than planned.

  1. Investing in your own skills

Can you learn a new skill to gain promotion in your career. For example, you could learn computer application, public speaking, sales or a foreign language. If you improve your skills this could allow you to transfer your skills to a new organization to earn more or you are promoted by your present employer. Then you will have more money to invest.

  1. Dividend reinvestment plans

Dividend reinvestment plans (DRIPS) offer you another way of how to invest small amounts of money. This plan allows you to invest small amounts of money in the stock of companies that pay dividends. You can look out for this types of companies and invest in their stocks directly.

And, if you do so, you won’t have to pay any fees when you invest in them. You can build your investment using a payroll deduction method. Also, the dividends you earn are automatically reinvested in the same company stock that paid the dividends.

13 Low Minimum investments Mutual Funds

Many mutual funds and ETF funds have different minimum investment they allow. Some want high amount to open an account and some take small amounts. An example is the Schwab Total Stock Market Index(SWTSX).

With $1,000 investment you could buy 10 different funds. Do your research and find out from other mutual funds to discover what they offer for a $1,000 investment or less. Index funds are usually the best to invest in.

how to invest small amounts of money

  1. Online brokerage firms

This is another way of how to invest small amounts of money. You can invest $1,000 or lower in many online brokerage firms. Some of these firms include Facet Wealth, SoFiInvest and  Zacks Trade.

Also, if you open an account with Charles Schwab and set up an automatic monthly transfer of $100 to your Schwab money account or Schwab bank high yield checking accounts connected to your brokerage account they will waive the requirement of a minimum of $1,000 to open an account there.

You may also open an account at Etrade and TD Ameritrade without any minimum deposit. And you will have wide investment choices too

  1. Your own business

You could look inwards and invest in your own business. you can set up a small business in virtually any area you have great interest in. Also, you can begin part-time to do any business you love and until it is fully set up and it can support your lifestyle.

For instance, you could start a website to sell any product online. And then start a blog and use it to create affiliate sales plans with others marketing your product too. You may also choose to become an Uber driver, or buy rare goods and sell on Craigslist or eBay.

Conclusion

In this post, I showed you how to invest small amounts of money in 15 different ways. All it takes is to begin without wasting time. You can learn to invest in other people’s business but the safest person to invest your money in is yourself. Take inventory of your skills and open your own business now.

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