How to Invest With Little Money

Daniel Penzing
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You Don't Need Thousands of Dollars to Invest

How to Invest With Little Money?

I know you get tired of reading the same old headlines of "Getting Rich", "The Secrets to Getting Rich", and "10 Easy Steps to Get Rich" like us. I know you have been flipping through the business channels on television and have seen enough "get rich" infomercials to make your head spin.

I know you are tired of the hype and the ads and you just want the nuts and bolts of how to actually do it. Before I give my experience, let me state this: Just because I got rich in a short period of time does not mean that you can too.

Like everything else in life, I do not think there is a "secret" to getting rich. I think if there is a secret, it is using the mind you were born with to create solutions to problems that most other people overlook.

I am from a small farming town. I worked on a small ranch and my family did other chores to survive. My father and his brothers loved ranching as a life style. My dad shared two reasons he loved the ranch, and those same reasons influenced my mindset.

{1}. I could be self-employed. I work for myself every day. I can focus on tasks and goals that benefit me and my family.
{2}. I need few resources to create a wealth producing business. I have less overhead and expenses than normal businesses. I love the freedom that comes with having less.

Step 1: Make Room in Your Budget

Unlike many investments, you do not need a high level of capital to start investing. All you really need is a source of investment dollars and a time horizon within which your money can earn more money for you.

The bad news is that if you are not independently wealthy, this can come at a considerable cost.

Debt, such as credit card debt, is one of the biggest drains on your investment dollars. Some people have fallen into a bad habit of paying off credit card balances only to use the card to buy another thing they do not really need. If you allow this to happen, you could be foregoing the bulk of your return from your investment dollars.

To make financial room for investing, you must first identify the things in your life for which you can cut back your spending. Then, work to eliminate these unnecessary expenses from your budget.

Save More and Invest

Once you have freed up some budget space, do not keep it idle. Instead, save more of your income and channel it into your investment activities.

If you are doing this as a side-hustle, streamline the rest of your life as much as possible in order to free up more time to dedicate to this side-hustle.

If your side-hustle is a full-time gig, then simply dedicate your efforts to putting extra dollars in the bank and in your investments.

Step 2: Save Up Some “Seed” Money

Now that you have worked out how much you are able to invest, you will need some seed money. The idea is that this should be the minimum amount of investment that you can afford, even if you have to save up for it by cutting back on your lifestyle.

First, you should take a close look at your ongoing expenses. Think about all of the standard bills which pile up month after month. Do you have credit card debt? Do you have car payments? Are you in student loan debt? You may also have some smaller expenses like various subscriptions and online services.

This step is also where you figure out how much it will cost you in order to open an account and start trading. This could include things like a broker’s fee, registration fees, and commission. If you are looking for a broker where there is no minimum deposit, I recommend Interactive Brokers.

The next step is to take a closer look at your discretionary spending. This includes various expenses which you have currently decided to spend money on. Maybe you have a restaurant budget. Perhaps you have entertainment money. Or possibly you’ve budgeted for clothing.

Step 3: Maximize Payroll Deductions

When it comes to investing in the stock market, the more you invest, the more opportunity you have to make returns. The dollars you invest in stocks will be traded on the markets for stocks and mutual funds. The more dollars you use, the more trades you can be involved in.

The same thing goes for payroll deductions. Using a lot of your income for payroll deductions means you are able to trade a higher number of shares than you would with a low, fixed amount of withholding.

Most people do not have enough capital to invest everything at once. But the more you invest with each paycheck, the more trades you can be involved in. You will also gain control over your financial security as you build your net worth quicker.

In general, you are better off investing for the long term, but there are a few exceptions that justify using high payroll deduction amounts.

Incurring a high amount of capital gains, whether by force or circumstance, could be a good reason to make high payroll deduction amounts. If you have a big capital gain in the last couple of years, you might find that the benefits outweigh the temporary tax hit.

Another instance when you might want too use a lot of your paycheck is when you are in a high tax bracket. This means you would be better off investing for the long-term, but you might benefit from some of those taxed shares in the short-term.

Step 4: Start With the Right Retirement Plan

One of the most important ways to begin investing with little to no money is to have a retirement plan. And that’s because this is the type of investment that allows you to roll profits over year to year as long as you’re working.

For instance, if you have a 401(k) and you roll over profits each year, you can make sure that they remain in the account. By doing this, you’ll be able to keep your money safer and have the opportunity to make additional profits.

Also, because your retirement plan is a retirement account, you’ll also be able to withdraw your money at any time without paying any penalties. So if you absolutely need your money for an emergency, you can simply withdraw it.

Although this type of investment only comes in handy for those who have a job and are able to contribute, it’s still a viable option for those without any money.

Step 5: Use an Investment App


Invest Your Spare Change With Acorns

The Acorns app allows you to invest small amounts of money on a regular basis. Instead of trying to save up a few hundred dollars to invest in a mutual fund, you can use Acorns to do the saving for you.

If you have a small job where you have the opportunity to collect a paycheck, Acorns will take the spare change from the little bonuses and other fees and put it into your account. You can also add in any changes you’ve made to your bank account. Acorns has it set up so that you’ll never even notice when the spare change is taken out of the account.

When you set up your Acorns account you can choose what types of stocks you’d like to invest in. This choice will changes the amount of money that is invested each time Acorns takes the spare change from your checking account. Acorns has six different investment portfolios:

The Acorns Core Portfolio: This 100% passive portfolio takes your spare change as soon as you complete any purchases on your credit card or checking account.

The Acorns Growth Portfolio: Stocks in the growth portfolio often appreciate more quickly than other stocks. As a result, you may find that your initial investments make a bigger difference in this portfolio.


Robinhood has been making waves in the stock market world ever since it launched. Robinhood is a brokerage platform that allows you trade stocks for free.

There is no cost on your part, so that means there is no commission to worry about from Robinhood. In fact, it’s even possible to earn and gain money on a variety of stocks with Robinhood.

Stash Invest

Stash Invest is a platform that takes the expensive and complicated world of investing and distills it down to a few simple (and we do mean simple!) actions. There’s no minimum deposit amount, and you can start investing in minutes after signing up.

Stash Invest allows you to invest automatically in three different ways:

  • On a set schedule
  • With any amount changes

Step 6. Use Robo Advisors With No Minimum Initial Investment Requirement

Robo advisors are online investment platforms. They are basically computer programs that use algorithms to manage your investment portfolio. The robo advisor will provide you an allocation of investment funds and will be doing the re-balancing of your portfolio.

They usually charge between 0.15 – 0.5% of the value of your portfolio per year. This will range depending on the size of your portfolio.

Because there is no human interaction, the fees charged are higher than if you are to invest through a traditional advisor. If you are trying to invest with little money, you may have to settle for robo advisors because of their low minimum initial deposit requirement.

However, if you are a small investor with a small portfolio, robo advisors will be a better fit because their fees are much lower than a typical advisor.

There are lots of good robo advisors and I always recommend that you go with one that is well known and one that is transparent in their fees.


M1 Finance

M1 Finance offers what we think to be the most innovative tool on the robo-advisor market. The M1 platform has an interesting mix of features that allows you to build a customized, diversified, automated portfolio for just a fraction of the cost of any comparable service.

The company’s primary mission is to make investing accessible to everyone. By doing so, M1 Finance makes a strong case for being of the best investment sites out there.

Traditionally, automated investment advisors are either free but require high operating fees, or are a flat rate service that’s more expensive.

But M1 Finance takes things to the next level, lowering costs by charging a fraction of what you’d spend elsewhere while still offering automation and customization.

How does the M1 Finance investment platform work?

M1 uses an approach that’s quite similar to traditional brokerages like E*Trade and TD Ameritrade.

Your account is always fully funded, which means that your investment choices are unlimited. In other words, you won’t have to worry about having the money to invest in the first place. You simply withdraw from your checking account or credit card for the desired amount, and M1 invests the funds for you.

Now is the Time to Invest. Even with Little Money

Investing money is a scary concept for many people because they don’t see the results immediately. They want to know that their money has made a difference, and they want to be able to see the difference they are making in their investment. Investing with little money and proving that it can be done takes faith and some hard work.

Unlike big-time investors, you probably have a lot of things to juggle – bills, childcare, personal time, social lives, and more. So fitting in investing can be hard, especially if your regular life commitments leave you feeling depleted.

If you are one of those people who would be intimidated by the thought of putting all of their money into one stock, or you’re hesitant to take risks, you can still learn to invest.

One of the most important lessons you need to learn is that branching out with your investments doesn’t have to mean terror and stress.

When you hear about how investors like Richard Branson, Sara Blakely, and Mark Cuban have taken a little money and turned it into millions, you may wonder why you don’t do the same.

Yes, some of them made a lot of lucky moves and they were all very smart, but they also learned investing lessons along the way that helped them build their fortunes.