How Do I Invest Without Much Money?

Learn how to invest when you're on a budget.

Dear Miss Money Matters,

How can I start investing if I know nothing and have very little money to begin? Firms seem to be hands-on and helpful if you can start with thousands of dollars. If you can only start with $100 or so, they direct you to an online account with no real help or guidance.

– Robin, Albuquerque, N.M.

Dear Robin,

It’s great that you want to start investing. But it’s understandable that you feel like your lack of knowledge and funds are barriers. Fortunately, there are ways to get around both of these shortcomings. You can get started investing with very little money.

Click to read more about what beginning investors need to know.

Start With Your Workplace Retirement Plan

If you’re not already taking advantage of a workplace retirement plan such as a 401k, that’s an easy way to start investing. You can choose an amount you want automatically deducted from each paycheck to be contributed to the plan. You also can choose how you want your money invested from the options offered by your plan.

Building Wealth

Most 401ks offer a selection of mutual funds, which are a collection of stocks, bonds or other securities. The benefit of mutual funds is that your money is spread out over a variety of securities rather than, say, just one stock — which provides you with more protection if the market drops. Investing in stocks can be made simpler by following guidelines found online.

It’s worth noting that mutual funds do charge fees, which can eat away at the money you make on your investments. So, pay attention to the fees on the funds in your 401k, and consider opting for those with low fees. The average expense ratio for actively managed mutual funds (funds managed by financial professionals) in 2016 was 0.82 percent — or 82 cents for every $100 in assets, according to the Investment Company Institute.

You also might be able to get help picking investments from your retirement plan’s administrator or as part of your work benefits. About half of employers provide some type of financial advice for employees, ranging from online assessments and tools to one-on-one advice with a financial counselor, according to a survey by the Society for Human Resource Management.

Building Wealth

More on Where to Start: 10 Best Stocks for Beginners Under $100

Invest Through an Individual Retirement Account

If you’re self-employed or your employer doesn’t offer a retirement plan, you can invest on your own through an individual retirement account such as an IRA or Roth IRA. These accounts have tax advantages that traditional brokerage investment accounts don’t have. You typically can get a tax deduction for IRA contributions. Although you can’t deduct Roth IRA contributions, you can withdraw the money tax-free in retirement, with some exceptions.

Several investment firms — including Merrill Edge, Fidelity Investments and TD Ameritrade — don’t require a minimum investment to open an account. So you don’t need much money to get started investing through an IRA with these companies, which also offer investment guidance for account holders.

You can make the investment-picking process easy by opting for an index fund, which tracks the performance of a major market index such as the S&P 500. Or you could choose a target-date fund, which automatically shifts from a portfolio of stocks to more conservative investments as your retirement date approaches.

Building Wealth

Related: How to Find the Best Roth IRA

Use an Investing App

If you’re looking to invest outside of a retirement account, there are several apps that make investing easy for beginners. And you don’t need much money to get started.

For example, the Acorns app lets you invest your spare change. For as little as $1 per month, Acorns will round up your purchases and invest that change in portfolios developed with the help of a Nobel Prize-winning economist.

The Betterment app and website also can help you get started investing. There’s no minimum investment requirement. And Betterment charges an annual fee of just 0.25 percent of your account balance to recommend an investment portfolio for you based on your investing goals and tolerance for risk. Although Betterment is what is known as a robo-advisor — an automated, web-based portfolio manager — it offers access to a team of financial experts who can answer your investing questions.

Click through to read more about investing questions you’re embarrassed to ask.

Check Out: Best Short-Term Investments

Life + Money columnist Cameron Huddleston answers your money questions, drawing from her more than 15 years of experience as a personal finance journalist, as well as advice from financial experts. If you have money questions, send them to with the subject line Dear Miss Money Matters.

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About the Author

Cameron Huddleston

Cameron Huddleston is an award-winning journalist with more than 18 years of experience writing about personal finance. Her work has appeared in Kiplinger’s Personal Finance, Business Insider, Chicago Tribune, Fortune, MSN, USA Today and many more print and online publications. She also is the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. U.S. News & World Report named her one of the top personal finance experts to follow on Twitter, and AOL Daily Finance named her one of the top 20 personal finance influencers to follow on Twitter. She has appeared on CNBC, CNN, MSNBC and “Fox & Friends” and has been a guest on ABC News Radio, Wall Street Journal Radio, NPR, WTOP in Washington, D.C., KGO in San Francisco and other personal finance radio shows nationwide. She also has been interviewed and quoted as an expert in The New York Times, Chicago Tribune, Forbes, MarketWatch and more. She has an MA in economic journalism from American University and BA in journalism and Russian studies from Washington & Lee University.

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