It used to be that you needed at least a few thousand dollars to start investing in the stock market. Technology has allowed nearly anyone with as little as just $5 to start investing in the stock market, and with no prior investing experience.
What is the best way to start investing with little money? Here are 10 investment options that allow you to get started investing with as little as just $25, $10 or even $5.
10 Ways To Invest With As Little As Just $5
Why do investment companies require a minimum investment amount? Traditionally, there is a service fee associated with processing a buy or sell of an investment product, and processing these transactions with low amounts of money can be a costly expense. However, modern investment companies have enabled technology to save them on common expenses. Here are 10 ways to start investing with just $25 or even just $5 in some cases.
1. Start With As Much (or little) As You're Able To
You're probably asking what the heck I mean by this. Perhaps you are on a tight budget and have only $5 per week to invest. Well, by opening up a free brokerage account and depositing $5 per week, you'll be able to make your first investment in just a few weeks!
So, when I mean start with as much or little as you can, I'm saying that little deposits to your investment account build up enough cash in just a few weeks to start investing.
2. Invest In Stock Using A Trusted Robo Advisor
A robo advisor is an investment company that creates a customized investment portfolio for you, based on your response to some initial questions about your goals with the money to be invested. Robo advisors take the knowledge and expertise of financial experts, and place them in an algorithm that recommends your portfolio based on your investment risk tolerance.
Most robo advisors only require a small amount to begin investing, between $5 and $25 in most cases. Our robo advisor of choice is Acorns. Why Acorns? Because they only require $5 to get started, it was built on Nobel-prize winning expertise, and they even offer you $5 when signing up for free through our partnered link here:
3. Invest In Fractional Stock Shares
Traditionally, you needed at least enough money to purchase a whole share of a company. That meant that in order to invest with major companies, like Amazon, you would need hundreds of dollars of even thousands of dollars just to purchase one share!
Fractional shares aren't offered everywhere, but are growing in popularity. Two companies to start investing in fractional shares are:
Stockpile: Buy stock of almost any company with any amount of money. The only fee is a $0.99 trade commission for processing your buy or sell.
M1 Finance: A completely free investing platform that allows you to make your own “Pie” of favorite companies and allocate your money as a percentage to each company.
Stash Invest: Stash is a beginner friendly investing app that allows fractional shares investing in hundreds of companies. They charge a minimum fee of $1 per month, and offer educational content, a checking account and a popular “Stock-Back” program.
Stockpile, M1 Finance and Stash Invest all focus on investing a certain dollar amount, rather than how many shares you want to buy. That means you can invest in any company you want with as little as $5.
4. Invest In Peer-To-Peer Lending
Peer-to-peer lending allows you and I to play the bank in lending our money to those in need of a loan. Hundreds or even thousands of investors group together their pool of money to make up the loan amount needed by a borrower. This is done through platforms such as Prosper and LendingClub. You can invest as little as $25 per loan, and make money back on the interest rates charged on the loan. The best part is, its all automatic, all you need to do is open up a free account and contribute your money!
5. Invest In Zero Cost Mutual Funds
Not many mutual funds out there offer zero cost funds that allow you to invest as much money as you want, completely free of charge. Usually they are index mutual funds, which in some cases is all the better!
Fidelity Investments offers a handful of zero cost mutual funds that track market indexes, such as the Fidelity ZERO Total Market Index Fund. This gives you the peace of mind that your money is diversified, it's invested completely free of charge, and you can start with as much or little money as you want!
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6. Invest In Your Employer Sponsored 401k
It used to be that employers offered pension packages for their employees. Now days, employees have the option to contribute to a 401k, and the majority of the time the company will match a certain amount that you put in. That means that if you contribute $100, they will add another $50 or even $100 if they match up to 100% of your contributions.
Once you've set up your contributions per paycheck, they will invest the money into your choice of a few selected funds, regardless of the amount that is contributed! This makes investing automatic, and the money is withdrawn from your paycheck so you never have the temptation of spending it instead.
7. Invest In Exchange Traded Funds
Most investment banks today offer exchange traded funds. Many ETF's available only cost $10 – $25 per share, and they are a passive way of investing in hundreds or thousands of companies with one ETF share.
An ETF is simply a basket of companies that are brought together to create a fund of companies in which you can buy all together. They are similar to a Mutual Fund, but the expenses are a fraction of what a mutual fund charges most often, and they are much more simple by nature, in that they trade just like a share of stock trades.
8. Invest Your Spare Change With “Round-Up” Apps
The pioneer of the “Round-Up” is of course Acorns, who is a great option for investing your spare change. However, since the popular trend of round-ups, many apps have taken the concept of rounding up your daily purchases to the next whole dollar amount and invest the spare change for you.
Apps that allow you to round up your purchases and invest the difference are:
Acorns: As recently mentioned, Acorns is the pioneer of the Round-Up feature. They allow users to round up their daily purchases and invest the change in the stock market. Your portfolio is designed for you based on a few questions about your investing objectives, and your investments are invested into the recommended fund automatically.
Stash Invest: Stash was briefly mentioned from tip #3 above. They are a beginner investing app that provide a well rounded option for investors looking to invest fractional shares, with educational content and even offer round up options for investing spare change.
Qapital: A great option for people who like to save and invest for specific goals. Qapital allows for investing your round ups along with many other options to help motivate and accelerate your financial goals.
9. Invest In Cryptocurrency
You've probably heard about the cryptocurrency trends. In the past years it's grown by a lot, and also fallen in value by almost as much. Should you choose to invest in cryptocurrency, be sure to know there is a lot of volatility, and you probably shouldn't invest more than 5% of your overall investing portfolio until you're comfortable with understanding how cryptocurrency works and what it is.
However, when investing in cryptocurrency, hands down the best option available is Coinbase. They only list the largest and well vetted cryptocurrencies for trade, and they are the largest exchange and easiest place to buy in. For signing up via our partner link, you will even get $10 free for setting up your free Coinbase account.
10. Join & Invest With A Stock Club
Stock Clubs are popular in that they allow you to get expert advice from expert investors with a long track record of world class success. One of these that I personally use and write for is MyWallSt. Founded by Emmet Savage and backed by The Motley Fool Ventures, MyWallSt. hand picks the top investments that they believe will out perform the overall market.
Furthermore, when subscribing to MyWallSt. for only a few bucks per month, you also get access to link a free investing account within the app on the DriveWealth platform. DriveWealth allows you to invest in nearly any stock, and in fractional shares which means little investments such as $5 or $10 are allowed.
11. Bonus Recommendations
The reason these mentions weren't directly suggested is because they require a minimum balance to begin, but after that is met you have the option to invest with little money.
Invest With Fundrise: Fundrise is an app similar to a peer to peer lending app like Prosper, but rather than lending your money to other borrowers, you're lending your money to investors who pool investors funds together to invest in expert picked real estate properties. Fundrise has a minimum opening balance of $500.
Invest With Wealthfront: Wealthfront is most similar to other robo advisors like Betterment. After opening your account and funding it with $500, you are then asked some questions to determine a recommended investment portfolio catered to your risk tolerance.
Invest With Wealthsimple: Wealthsimple is another robo advisor like Betterment and Wealthfront. They originally started in Canada, and are now available to all of North America. They are a great option for investing little money into the stock market. Your funds are also invested into a recommended portfolio based on your risk tolerance.
