How to start investing with little money
You don't need thousands of dollars to start investing. Many brokers let you start with $1 and buy pieces of shares. What matters most is starting and sticking with it.
Key points
- $100 a month at 10% could grow to about $206,000 in 30 years.
- Fractional shares let you buy part of a share, so any amount works.
- Build a small emergency fund and pay off high-interest debt first.
Step 1: Get ready
- Save a small emergency fund. Even $500 to $1,000 helps you avoid selling investments when something breaks.
- Pay off high-interest debt. A credit card at 24% costs more than investing usually earns.
Step 2: Pick an account
- 401(k) at work: if your job matches, put in at least enough to get the full match.
- Roth IRA: great for beginners. You pay tax now, and growth can be tax-free later.
- Regular brokerage account: no limits and you can take money out any time.
Step 3: Pick something simple
A low-cost index fund is a popular first choice. One fund can own hundreds or thousands of companies. Examples include S&P 500 funds like VOO or FXAIX, or total market funds like VTI.
Look for a low yearly fee, under 0.10% if you can.
Step 4: Make it automatic
Set up an automatic deposit on payday. You won't miss money you never see. Turn on dividend reinvesting too.
What small amounts can become
| Monthly | 10 years | 20 years | 30 years | 40 years |
|---|---|---|---|---|
| $100 at 8% | $18,012 | $56,900 | $140,855 | $322,108 |
| $100 at 10% | $19,986 | $71,826 | $206,284 | $555,035 |
Even $25 a month at 10% for 40 years could grow to about $139,000. $50 a month could reach about $278,000.
Example rates only. Real returns go up and down and aren't guaranteed.
Beginner mistakes to avoid
- Panic selling. Markets drop sometimes. Selling in a dip locks in the loss.
- Chasing hot tips. A boring index fund beats most stock picks over time.
- Waiting for the "right time." Time in the market usually beats timing the market.
- High fees. A 1% fee can cost hundreds of thousands over a lifetime.
See what your first $25, $50 or $100 could grow into.
Open the calculatorQuick answers
Can I start investing with $100?
Yes. Many brokers have no minimum and offer fractional shares, so you can invest $100 or even less.
What should a beginner invest in first?
Many beginners start with a low-cost, broad index fund, like an S&P 500 or total stock market fund.
Is it better to save or invest?
Do both. Keep an emergency fund in savings. Invest money you won't need for at least five years.
How much should I invest each month?
Start with any amount you can stick with. Many people aim for 10% to 15% of their pay over time.
Sources
Keep learning
This article is for learning only. It is not financial, tax or legal advice. Example returns are not promises. Talk to a licensed professional about your own situation.