Do you want to learn how to invest with little money? This post tells you how to invest for beginners when you have no money.

How to Invest with Little Money

  • Post author:Bob Haegele
  • Post last modified:December 26, 2023

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It’s no secret that I’m a fan of investing. Investing is one of the best ways to grow your wealth because it’s almost 100% passive. However, it can seem difficult when you’re just starting out. So, do you want to know how to invest with little money?

In this post, we’ll go over investing for beginners and those who don’t have a lot of money.

Employer-Sponsored Retirement Plan

An employer-sponsored retirement plan is one of the easiest ways to invest when you don’t have much. Generally, you will have a set amount withheld from each paycheck.

Each employer sets their retirement plans up a little differently. Some employers require you to contribute a certain percentage of your pay; others don’t. Many employers match your contributions, but that is no guarantee.

Regardless of how it is set up, employer-sponsored retirement plans are one of the easiest ways to start investing.

Just beware of the fees – sometimes, the investments in these funds have high fees. If you aren’t sure, talk to a representative at your benefits office.

Round Up Your Purchases

It’s not easy to start investing when you don’t have a lot of money to start. One way around this is to round up every purchase you make. One of the best tools for accomplishing this is Acorns.

Instead of investing a large amount of money, Acorns rounds up every purchase you make and sets the money aside. Once you have at least $5, it will invest the money for you.

However, round-ups are just Acorns’s flagship feature. You can also use it like any other investment app and transfer money from you bank account.

Right now, Acorns has a special promotion that will give you a $10 bonus just for signing up. Join Acorns and start investing your spare change now.

Index Funds

Index funds are a great wealth-building tool. They’re also one of the easiest ways to invest because they typically give you exposure to large parts of the market.

Some index funds, known as “total” market funds, give you exposure to the entire market.

However, these funds are often considered off-limits to those without much cash. The best example of this is probably the extremely popular VTSAX. In the past, it had a minimum investment of $10,000 – surely too much for the beginner investor with a low net worth.

That minimum has since been reduced to $3,000, but even that amount is too much for many beginner investors.

Here’s the good news: things are changing. Slowly, but they are. In addition to VTSAX being reduced to $3,000, many index funds now have no minimum at all.

Schwab and Fidelity both have funds with little or no minimum investment to get you started. The Schwab funds have a $1.00 minimum, so you might have to find some change under those couch cushions!

Below is a simple example of how investing a small amount of money can really pay off. This shows an investment that starts at zero with just $50 invested monthly. 10% is a pretty optimistic rate of return, but this is just for example.

You can really see the magic of compounding here; the growth starts slow and then really accelerates toward the end.

Although Vanguard has been the biggest name in index investing for a while, both Schwab and Fidelity are very popular nowadays. That’s no surprise since both have very competitive investment options.

M1 Finance

M1 Finance is another product that is very useful for the average investor. However, it seems like not everyone knows about it.

Long story short: the main reason M1 is so popular is due to what they call fractional shares. As the name implies, this means it allows you to buy a fraction of a share.

Typically, buying individual stocks would mean you would simply buy shares of a stock. If you want to invest a lot in that company, you could buy several shares.

This can be a problem since some stocks such as Google (GOOG) can be valued over $1,000. That’s a problem for new investors, especially since you don’t want to “put all your eggs in one basket.”

Thanks to fractional shares, you don’t have to. Rather than having to buy whole shares, you can buy as little as $0.01 worth of a share.

And it’s not just stocks that you can buy through M1. It also allows you to buy many funds – specifically ETFs – in fractional shares as well. That means you won’t be able to buy the ever-popular VTSAX, but you can buy its ETF equivalent in VTI.

Here’s just a quick glance of the stocks and funds you’ll see on M1. Indeed, most of the most popular options are represented here:

Exchange-Traded Funds (ETFs)

Technically, the funds you buy on M1 Finance are ETFs. That means that if you are just starting out, buying ETFs via M1 Finance is probably your best bet.

However, if you’re more of a purist (and perhaps have a little more cash to start), buying ETFs outright can also be a decent option.

If you do so, you’ll have to buy whole shares. But, ETFs have no minimum investment like index funds do. In other words, you could buy VTI with no minimum. The minimum investment for VTSAX is currently $3,000.

The biggest drawback here is you will probably have money left over. At the time of this writing, one share of VTI costs $147.19. That means you can only buy shares of it directly through increments of that price.

Also, note that VTI is far from the only ETF out there. I am merely using that as an example, but Fidelity, Schwab, and others have excellent ETFs as well.

Tax-Efficient Investing

Since we just talked about ETFs, you might be wondering how you buy them. After all, it’s not like you can just go on Amazon and buy some ETFs.

Nope – to buy exchange-traded funds, you’ll need an investment account of some sort. But how do you decide that?

A lot more could be said about this, but here’s the short version: ETFs are tax-efficient investments. This means it makes the most sense to keep them in taxable accounts. Bonds are generally less tax-efficient.

Tax-efficient investing will help you make the most of your investments.



Tax-efficient investing will help you make the most of your investments.

However, note that despite the tax advantages of ETFs, you should be maxing out your tax-deferred accounts (401k, IRA, etc.) first. In other words, you wouldn’t want to put your ETFs in a taxable account if you are still far away from your 401k contribution limits.

I may write a full post about tax optimization later, but I wanted to make a note of that here.

High-Interest Savings

It seems many people still have a significant amount of money in traditional savings. Unfortunately, the interest rates on these accounts is usually pretty poor – usually around 0.1%.

Nowadays, there are plenty of excellent online savings accounts that offer high interest rates. As of right now, they hover a little over 2%.

In reality, this rate is at or slightly below inflation, but it’s still better than earning almost no interest on your money. Plus, many of them have no minimum balance. Ally, SoFi, Schwab, and others are comparable.

If you don’t want to mess around buying partial shares with M1 Finance, for example, you could put your money in a high-interest savings account until you’re ready to invest in an index fund.

There are many ways you can do it, and this is just one of them.

Certificate of Deposit

A certificate of deposit (CD) can also be useful in some situations.

The good thing about certificates of deposit is they have a maturity date. This means you cannot take money out of them without incurring a penalty. This can make them useful if you are saving for a specific larger purchase, such as a house.

If you are worried you’ll be tempted to withdraw that money for other things, that’s where a CD can be useful. Plus, many CDs have no minimum deposit.

Interest rates on certificates of deposit can sometimes be low, but some are around the same as high-interest savings accounts.

I probably wouldn’t recommend these as part of your larger investment portfolio, but they can be useful when saving for big purchases.

Now You Know How to Invest With Little Money!

Okay, so these are just a few ideas. If you want to know how to invest with little money, there are all kinds of creative ways. However, these are definitely some great ways to get started.

Want even more investing options? Check out the interactive table below for ideas.

Hey there. My name is Bob Haegele and I'm a personal finance writer who has been freelancing since 2018. Since then, I've built a six-figure career as a freelance writer. My work has been featured in Business Insider, Forbes Advisor,, USA Today, and many other outlets. Interested in starting a blog of your own? Check out my post on starting a blog.

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