How to Invest in Stocks with Little Money
You don't need a lot to start investing. With just $1, you can begin building wealth today. Learn the best ways to invest small amounts.
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Here are six ways you can invest in stocks with a lower capital:
Savings accounts are a great place to park your money. However, the interest most offer just isn't enough.
Investing, on the other hand, gives you the potential to build wealth over time. And even a few dollars can go a long way.
In this guide, learn how to invest in stocks with as little as $1. Additionally, you could explore non-stock alternatives like real estate or bonds.
Before You Start Investing
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Before you put any money down, give yourself a financial checkup. You should be on solid ground before investing any money. This means:
- Paying off your credit card debt
The interest accumulating on your credit cards could negate any returns you'll make on investments. You're better off putting any extra funds toward your debt compared to trying your hand at investing. - Setting up an emergency fund
At a minimum, you should have $1,000 for minor emergencies. Eventually, you want to save 3 to 6 months' income. This protects you against an unexpected emergency like losing your job.
J.P. Morgan Self-Directed Investing - Get Up to $700
- Get up to $700 when you open and fund a J.P. Morgan Self-Directed Investing account with qualifying new money.
- $700 when you fund with $250,000 or more
- $325 when you fund with $100,000-$249,999
- $150 when you fund with $25,000-$99,999
- $50 when you fund with $5,000-$24,999
- Get unlimited commission-free online stock, ETF, fixed income, and options trades when you open an account.
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- Choose an account that's right for you: General Investing, Traditional IRA or Roth IRA.
- Access our secure, easy-to-use trading experience online or through the Chase Mobile® app.
- Our powerful tools and resources are built to help you take control of your investments.
INVESTMENT AND INSURANCE PRODUCTS ARE:
Options for Investing in Stocks with Little Money
New investors today have plenty of ways to start investing in stocks, even with small amounts. Here are some accessible options.
| Investment Type | Best For | Risk Level |
|---|---|---|
| Robo-Advisors | Hands-Off Investing | Medium |
| Fractional Shares | Investing Small Amounts | High |
| Exchange-Traded Funds (ETFs) | Diversification | Medium |
| Mutual Funds | Long-Term Investing | Medium |
| Index Funds | Long-Term, Passive Investing | Medium |
| Dividend Reinvestment Plans (DRIPs) | Compounding Growth | Medium to High |
| Employer 401(k) | Retirement Savings | Low |
Yes, many brokerages allow fractional share investing, meaning you can buy a small portion of a stock for as little as $1.
Robo-Advisors
Best For: Hands-off investing
Risk Level: Medium (depends on portfolio risk level)
Robo-advisors automate investing by creating and managing a curated portfolio of ETFs based on your financial goals and risk tolerance. They use algorithms to select investments, rebalance your portfolio, and reinvest dividends—removing the need for manual decision-making.
Unlike traditional brokerages, most robo-advisors do not let you pick individual stocks or ETFs. Instead, they invest your money in pre-selected ETF portfolios that provide exposure to stocks and bonds. This makes them great for passive investing, but less flexible for those who want full control over their investments.
For example, Betterment offers a diversified ETF portfolio, but you can't buy individual stocks. Acorns automatically rounds up your purchases and invests the spare change in a pre-built ETF portfolio.
In exchange for their services, most robo-advisors will charge a management fee. For example, Acorns starts at $3 monthly.[1] Betterment is $4 a month for balances under $20,000, and then 0.25% annually for balances of $20,000 or more, or if you set up recurring monthly deposits totaling $250 or more.[2]
Betterment: Compare Pricing
$20 Investment Bonus
- Open an Acorns account (new users only)
- Set up the Recurring Investments feature
- Have your first investment be made successfully via the Recurring Investments feature
Fractional Shares
Best For: Investing small amounts in individual stocks
Risk Level: High (depends on the stock chosen)
Micro-investing apps make it affordable to purchase individual stocks with fractional shares. Instead of needing hundreds or thousands of dollars to buy whole shares, you can buy a portion of a stock for as little as $1.
Let's say Amazon (AMZN) is trading at $150. Instead of needing the full $150 for one full share, you can invest $10 and own 1/15th of a share. This dollar-based investing approach makes it easier to diversify with less capital.
This means that on Robinhood, if you have $20, you can invest $1 in 20 different stocks, spreading your risk across multiple companies. Small investors can gain high exposure to high-priced stocks like Apple or Tesla without a large upfront investment.
Exchange-Traded Funds (ETFs)
Best For: Diversification
Risk Level: Medium (varies based on fund type)
Exchange-traded funds (ETFs) are investment funds that hold a mix of stocks, bonds, or other securities and can be easily bought and sold through stock exchanges. They provide instant diversification
, high liquidity, and lower expense ratios than actively managed mutual funds.
ETFs also follow different investment strategies. For example:
- Index ETFs like VOO track the overall market.
- Active ETFs like JAVA aim to outperform the market.
- Thematic ETFs like AIQ focus on specific industries like AI.
Additionally, an S&P 500 ETF invests in the 500 largest U.S. companies, reducing the risk of investing in a single stock.
To get started, you can open a brokerage account and search for low-cost ETFs (e.g., S&P 500 ETFs like VOO or SPY). Buy them like stocks—many brokerages allow fractional shares, so you don't need a full share to start.
Beginners should look for blue-chip stocks or index ETFs. These options offer diversification and lower risk compared to picking individual stocks.
Mutual Funds
Best For: Long-term investing
Risk Level: Medium (depends on fund strategy)
Mutual funds are collections of stocks, bonds, or other assets, similar to ETFs, but they trade differently. Unlike ETFs, which can be bought and sold anytime during market hours, mutual fund transactions are processed only at the end of the trading day. This means they're less flexible and less accessible than ETFs.
One of the biggest advantages of mutual funds over ETFs is active management. While some ETFs are actively traded, mutual funds are often professionally managed to try to outperform the market. This may justify their higher fees, especially for investors who prefer a hands-off approach.
Additionally, not all brokerages offer mutual funds. Instead, you'll need to invest directly with a mutual fund company like Vanguard or through mutual fund marketplaces like IBKR or Fidelity.
Once you open an account on a brokerage that offers mutual funds, pick one that aligns with your goals and set up automatic contributions.
Index Investing
Best For: Long-term, passive investing
Risk Level: Medium (varies by index)
The stock market has a 10-year historical return of over 11%.[3] So if you want a long-term, hands-off approach, consider index investing—a passive strategy for tracking a specific market index.
Index investing can be done through ETFs or mutual funds. It works best if you practice dollar-cost averaging and hold your investments for the long run, ideally until retirement.
To get started, invest in index ETFs like Vanguard S&P 500 ETF VOO) or Invesco NASDAQ 100 ETF (QQQM) through a stock broker. Many brokers offer fractional shares, so you can start with just a few dollars.
For index mutual funds, you can purchase them directly from the mutual fund company or through mutual fund marketplaces like IBKR. Mutual funds typically require a high minimum investment, but some Fidelity mutual funds, such as FNILX or FZROX, have no minimum.
Dividend reinvestment plans (DRIPs)
Best For: Compounding growth
Risk Level: Medium to High (depends on the company)
Dividend stocks are shares of companies that pay dividends to investors, typically on a quarterly basis. This allows you to earn passive income, even with fractional shares. Companies like Apple (AAPL) and Microsoft (MSFT) are well-known for paying consistent dividends.
Many brokers, including Robinhood, Webull, and Fidelity, offer automatic dividend reinvestment plans (DRIPs). When enabled, this feature automatically reinvests your dividends into more shares instead of paying out cash—helping your portfolio grow faster through compounding.
Not all stocks pay dividends, so DRIPs only apply to dividend-paying stocks like Apple (AAPL), Microsoft (MSFT), and Coca-Cola (KO). To use a DRIP, buy shares of these stocks and enable automatic dividend reinvestment in your brokerage settings.
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Make a net deposit of $2,000 or more to receive 30 draws, each for a free stock worth $2 - $2,000 each. Maintain average assets totaling $2,000 or more for 60 days to unlock the free stocks.
This offer is available to new and existing customers who have not opened a brokerage account before January 15, 2025, 04:00 ET, or who have opened a brokerage account but have not made a deposit or an ACATS transfer yet and plan to make the first deposit or ACATS transfer that settles before March 31, 2025, 23:59 PM ET. Terms and conditions apply.
Employer 401(k)
Best For: Retirement savings
Risk Level: Low
Never pass up free money. If your employer offers a 401(k) match, contribute enough to get the full match—it's an instant return on your investment.
Maximize your contributions to take advantage of your employer's match. If you can't afford the maximum yet, try to work up to that point. Even a small percentage of each paycheck will build up over time through compounding.
Most 401(k) plans invest in mutual funds, ETFs, and index funds, many of which hold stocks. This gives you broad exposure to the stock market and allows your money to grow over time as companies increase in value.
Non-Stock Investment Options
Looking for ways to invest outside the stock market? Here are some solid alternatives.
| Investment Type | Best For | Risk Level |
|---|---|---|
| Real Estate | Passive Investors | Medium |
| Treasury Securities | Conservative Investors | Very Low |
| Bonds | Fixed returns | Varies |
| Alternative Investments | Unique Opportunities | Low to Medium |
Real Estate Crowdfunding
Best For: Passive investors looking to diversify
Risk Level: Medium (market fluctuations affect property values)
Real estate crowdfunding lets investors buy shares in real estate projects without owning physical property. Your money funds rental properties, commercial buildings, or new developments, and returns come from rental income and property appreciation.
One of the most popular platforms is Fundrise, which allows investors to start with as little as $10.[4]
Fundrise builds a diversified portfolio of private real estate assets, including apartment complexes, industrial properties, and commercial developments. Investors earn passive income through quarterly dividends and potential appreciation over time.
Invest in Real Estate with $10+
- Only $10 minimum investment
- Get a diversified portfolio of real estate projects across the US
- Open to all investors
Treasury Securities
Best For: Conservative investors looking for ultra low-risk options
Risk Level: Very low (backed by the U.S. government)
Treasury securities are government-backed bonds that provide guaranteed interest payments. They're one of the safest ways to preserve capital and earn a small return. Types of Treasury securities include:
- T-Bills:
Short-term (matures in 4 weeks to 1 year)
- T-Notes: Medium-term (2 to 10 years)
- T-Bonds: Long-term (20 to 30 years)
You can buy Treasury securities directly with no broker required. Alternatively, you can invest in Treasury securities through ETFs or mutual funds offered by major brokerage firms like Vanguard or Charles Schwab for more flexibility.
Yes, U.S. Treasury bonds are one of the safest investments since they're backed by the government. They offer predictable returns and can be purchased with as little as $25.
Bonds
Best For: Investors seeking fixed returns with flexible withdrawals
Risk Level: Varies (depending on the type of bond)
Bonds are a great way to invest in fixed-income securities, where you lend money to a government, corporation, or institution in exchange for regular interest payments and the return of your principal at maturity. They're generally less volatile than stocks and can provide steady returns over time.
Most bonds fall into three main categories:
- Government Bonds: Issued by the U.S. Treasury or municipal governments (e.g., Treasury bonds, municipal bonds).
- Corporate Bonds: Issued by companies to raise capital. Higher yields but more risk.
- High-Yield Bonds: Also called "junk bonds," these offer higher returns but have a greater risk of default.
Platforms like Worthy Bonds offer a simple way to invest in bonds. It allows you to invest in private business loans, providing a fixed interest rate with no early withdrawal penalties. Unlike traditional bonds, which often require $1,000 or more, Worthy lets you start with as little as $10 per bond.[5]
Alternative Investments
Best For: Investors who want more unique opportunities
Risk Level: High (prices can be volatile and difficult to predict)
Platforms like Public allow investors to buy alternative assets, providing exposure to non-traditional markets—some of which appreciate independently from stocks. For example:
- Art: Invest in fractional shares of blue-chip artwork from artists like Banksy and Picasso.
- Crypto: Buy Bitcoin, Ethereum, and altcoins.
- Private Equity: Gain exposure to early-stage startups before they go public.
- Farmland: Own shares in agricultural land, which generates passive income from leasing and crop production.
Alternative assets are less liquid than stocks, meaning they can take longer to sell. Some are highly speculative, with values that fluctuate based on demand rather than fundamentals.
Start Investing on a Small Budget
Starting out small can feel overwhelming, but understanding the basics will help you make smarter decisions. Continue reading to find out everything you need to know—from how much you need to start to common myths, tax implications, and expert advice.
How Much Money Do You Need to Start?
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You no longer need hundreds of dollars to start investing. Micro-investing apps and fractional shares make it possible to buy into top companies with as little as $1 to $5.
Most brokerages have eliminated trading fees and removed account minimums, lowering the barriers to entry even further. That means you can buy, sell, and build your portfolio with zero commission costs.
Many platforms also offer automated investing tools, helping beginners invest consistently without manual effort.
$20 Investment Bonus
- Open an Acorns account (new users only)
- Set up the Recurring Investments feature
- Have your first investment be made successfully via the Recurring Investments feature
How to Start Investing
Investing is easier than ever, but getting started the right way is key. Follow these steps to make sure you're making smart investment choices.
- Set aside money you won't need soon
Only invest money you won't need for at least 5 years so you have time to ride out market fluctuations. You don't need a large sum—starting with as little as $10 per week can build wealth over time. - Choose the right investment platform
Look for a platform that supports fractional shares so you can start small. Compare investing apps to find one that fits your needs. A good platform makes investing easy and convenient.Need help choosing an app to get started with? Check out CreditDonkey's best investment apps for beginners. - Open an investment account
Decide whether you want a taxable or retirement account (IRA). Taxable accounts have no limits and are ideal for flexibility and short-term goals. IRAs are good for tax benefits, but note that they have withdrawal restrictions. - Define your goals and risk tolerance
Are you investing for long-term growth (retirement) or a short-term goal? Younger investors can afford more risk with stocks, while those nearing retirement may want bonds and low-risk options. - Do your research before buying stocks
Never invest blindly. Look at company financials, leadership, and competitors before making a decision. No one can predict the market, but research helps you make informed decisions.
Start by choosing a company you understand and believe in. Look at its financials, growth potential, and industry trends.
20 Free Fractional Shares
Open a new Webull individual brokerage account. Make a qualifying single initial deposit of $500 or more during the promotional period to get 20 fractional shares, each valued between $3 - $3,000. Maintain a balance of $500 or more in the account for 30 days or more. Terms and conditions apply.
Pros & Cons of Investing With Little Money
Investing small amounts may not make you rich overnight, but it helps build long-term wealth, develop good habits, and gain investing experience. However, it also comes with limitations.
Pros:
- Build the habit of investing
Regularly contributing—even small amounts—makes investing part of your routine. Over time, you'll feel comfortable increasing contributions as your income grows. - Long-term growth potential
Even small investments can compound significantly over time. If you invest $20 per month at an average 9% return, it could grow to around $37,000 in 30 years—though actual results depend on market conditions and fees. Try this compound interest calculator to see how your money could grow. - Lower risk exposure
Small investments limit total potential losses, but the level of risk still depends on where you invest. Broad-market ETFs and index funds are lower risk than individual stocks, even if you're investing in small amounts. - Gain hands-on experience
Investing small amounts lets you learn about different asset types, fees, and market behavior without putting large sums at risk. This knowledge makes it easier to invest larger amounts later.
Cons:
- Won't make you rich quickly
Small contributions take time to grow. While you can build wealth, significant returns require larger investments over time. - Patience is required
Investing is long-term. Small investments need years or even decades to see meaningful returns. Avoid investing money you may need soon.
Fund Account and Get Up to $12,000 Bonus
Open a new eligible Webull account. Fund the account with one or more qualifying deposits totaling $5,000 or more. Maintain a net qualifying funding amount of at least $5,000 in the account until the payment of the final installment of the offer reward. The offer reward will be credited to the eligible Webull account in 12 equal monthly installments, with the first installment issued within 45 days after the end of the offer period. To participate in this offer, you must click “Enroll Today” on the website. Terms and conditions apply.
| Net Qualifying Funding Amount | Offer Reward Amount |
|---|---|
| $5,000 - $25,000.99 | $100 |
| $25,001 - $100,000.99 | $750 |
| $100,001 - $250,000.99 | $1,500 |
| $250,001 - $500,000.99 | $3,750 |
| $500,001 - $1,000,000.99 | $5,000 |
| $1,000,001 - $5,000,000.99 | $8,000 |
| $5,000,001+ | $12,000 |
Common Myths About Investing
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Many people put off investing because of outdated beliefs or misconceptions. Here are some of the biggest myths—debunked.
Myth 1: You need to be rich to invest
Many brokerages have no minimum deposit and platforms like Robinhood let you start with as little as $1.[6] Apps like Acorns even invest your spare change automatically.
Myth 2: You can only afford penny stocks
Fractional shares let you invest in established companies with as little as $1. You don't need hundreds of dollars to buy Amazon stock—you can buy just $10 worth instead.
Myth 3: Diversification requires lots of money
With fractional shares, you can spread $50 across 50 different companies. ETFs also allow instant diversification, investing in hundreds of stocks with a single purchase.
Myth 4: Mutual funds require thousands to start
While some mutual funds have high minimums, others—like Fidelity's no-minimum mutual funds—let you start with any amount.
Investing Secrets for Small Investors
Investing can be exciting, but emotions can lead to bad decisions. Here are a few smart investing rules to live by to build long-term wealth.
- Start early
Time matters more than the amount you invest. Thanks to compound interest, small contributions made early grow significantly over time. Investing $50 per month for 30 years can yield far more than investing $500 per month for just 10 years. - Avoid timing the market
Trying to predict market highest and lows rarely works and often leads to buying high and selling low. Instead of chasing short-term goals, focus on consistent, long-term investing. - Think long term
Wealth is built by holding quality investments over time. Pick solid companies or ETFs, invest regularly, and avoid checking your portfolio daily—short-term market fluctuations don't matter in the long run. - Diversify your investments
Spreading investments across 15-20 stocks reduces risk. If buying multiple stocks is too expensive, fractional shares let you buy small portions of companies. Alternatively, you can invest in ETFs for instant diversification.
Invest and Earn $150 Bonus
Open a new account using promo code TSTVAGLL. Fund the account with new and qualifying assets of $5,000 or more. Maintain a balance of $5,000 or more in the account for 60 days.
How Taxes Work for Stocks
When you sell a stock for profit, you pay capital gains tax. If you owned the stock for less than a year, your profit is taxed at your regular income rate (which is usually higher). But if you hold it for over a year, it's taxed at a lower rate of 0%, 15%, or 20%, depending on your income.[7]
If a stock pays you dividends, those are also taxed. Qualified dividends (from most major companies) get the same lower tax rates as long-term capital gains. Non-qualified dividends (from certain investments) are taxed at your regular income rate.[8]
If you invest through a 401(k) or IRA, you won't pay taxes on gains or dividends while your money grows. With a Traditional IRA or 401(k), you pay taxes later when you withdraw the money. But with a Roth IRA, your withdrawals are tax-free in retirement.[9][10]
- 1099-B for capital gains and losses
- 1099-DIV for dividend income
- 1099-INT for interest income
- 1099-R for distributions from retirement accounts
What the Experts Say
CreditDonkey asked a panel of industry experts to answer readers' most pressing questions. Here's what they said:
Bottom Line
Investing is for everyone, and starting early—no matter the amount—gives your money more time to grow. Even small, consistent contributions can build wealth over time.
Be patient, and don't expect overnight results. Small investments won't grow quickly, but with regular contributions and time, they add up.
Before investing, make sure you have an emergency fund and avoid investing money if you're carrying high-interest debt, like credit card balances. A solid financial foundation comes first.
References
- ^ Acorns. Acorns Pricing, Retrieved 02/03/2025
- ^ Betterment. Betterment Pricing, Retrieved 02/03/2025
- ^ S&P Global. Equity U.S. Equity U.S. Market Cap S&P 500, Retrieved 02/20/2025
- ^ Fundrise. What is the minimum initial investment?, Retrieved 02/03/2025
- ^ Worthy. Worthy Bonds, Retrieved 02/03/2025
- ^ Robinhood. Fractional shares | Robinhood, Retrieved 02/04/2025
- ^ IRS. Capital gains and losses, Retrieved 02/05/2025
- ^ IRS. Dividends, Retrieved 02/05/2025
- ^ IRS. Traditional and Roth IRAs, Retrieved 02/05/2025
- ^ IRS. 401(k) plans, Retrieved 02/05/2025
Jeremy Harshman is a creative assistant at CreditDonkey, a personal finance comparison and reviews website. Write to Jeremy Harshman at jeremy.harshman@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.
Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.
Fundrise, LLC ("Fundrise") compensates CreditDonkey Inc for new leads. CreditDonkey Inc is not an investment client of Fundrise.
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