14 Strategies for Investing Modest Sums

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In "9 Ways to Invest $100," I shared tips on how to invest with just a few dollars. Now, let’s explore how you can invest when you have more than a few dollars but still not the thousands that traditional investments might require. Also, feel free to check out my post on the best short-term investments for your money!

Before I started investing, I thought you needed thousands of dollars to get started. My questions were always about how to invest $10K or $100K. Now that I have more experience, I can help you get past these same doubts. I was surprised to learn that I could get into the stock market through mutual funds with just $50 a month. Even though those mutual funds were just okay, the important thing was that I started investing in myself. Taking that first step is crucial for building wealth.

Investing in yourself doesn’t require a huge sum; you just need to get started. For this article, let’s define "small amounts" of money as more than $100 but no more than $1,000. With that in mind, here are 14 ways to invest small amounts of money.

1. Automate Investing With Betterment ETF Portfolios
   Betterment is a great option for small investors looking for professionally managed portfolios with low fees. After completing an online questionnaire, Betterment creates a customized portfolio for you with a mix of ETFs. These portfolios include popular options from Vanguard and iShares. You can start investing with Betterment without an initial deposit, and just by committing to monthly contributions as low as $250. The management fee is 0.25% of your account balance for balances under $100,000, and they even offer a no-fee checking account.

2. Balanced Stock Portfolio With M1 Finance
   M1 Finance offers a fresh approach to automatic investing. Like Betterment, it allows you to invest in various categories, but also permits free trading of stocks and ETFs. You can even purchase fractional shares, making it accessible to invest in high-priced stocks with as little as $50. M1 Finance also offers a free financial analysis before you start investing.

3. Build a Real Estate Portfolio With $10
   Fundrise simplifies real estate investing. Instead of flipping houses or managing rentals, Fundrise invests your money in real estate projects. Historically, investors have seen average returns of over 6% over the past four years. You can start with as little as $10, though typically, $1,000 is required.

4. Paying Off Debt
   Repaying debt, especially high-interest debt, can be one of the best investments you make. Paying off a credit card with a 15.99% interest rate, for example, is like locking in a 16% return on your money. Consider taking out a low-interest personal loan through platforms like Fiona to pay off high-interest debt.

5. Savings Accounts
   While not exciting, savings accounts are a risk-free way to grow your money, albeit slowly. They are a good place to accumulate capital for future, higher-risk investments.

6. Your 401k Plan
   If your employer offers a 401k plan, this is an easy way to start investing small amounts of money through payroll deductions. Contributions are tax-deductible, and any income generated is tax-deferred. Employer matching contributions are like free money, so take advantage of them!

7. Get a Roth (or Traditional) IRA
   If you don’t have an employer-sponsored plan, set up a Roth or Traditional IRA. Both offer tax advantages, and you can contribute up to $7,000 annually. Platforms like Betterment, M1 Finance, and Fundrise offer Roth IRA accounts with low entry costs, making them accessible for small investors.

8. Prosper
   Prosper allows you to invest in personal loans with as little as $25. The average annual return on a note is around 16%. Be aware that there is a risk of default, and investments aren’t FDIC-insured.

9. US Treasury Securities
   For a conservative investment, consider US Treasury Securities. These government-backed investments can be bought in denominations as low as $100 through TreasuryDirect. They offer safety and are free from early withdrawal penalties.

10. Investing in Your Own Skills
    Investing in learning new skills can lead to career advancement and higher earnings. A few hundred dollars towards a course or certification could pay off significantly.

11. Dividend Reinvestment Plans (DRIPS)
    DRIPS allow you to invest in stocks of companies that pay dividends without paying investment fees. You can start with small contributions and slowly build your investment.

12. Low Minimum Investment Mutual Funds and ETFs
    Some mutual funds and ETFs allow you to start investing with less than $1,000. Check out options like the Schwab Total Stock Market Index (SWTSX), which requires a low minimum investment.

13. Online Brokerage Firms
    Many online brokerage firms allow you to open accounts with $1,000 or less. For instance, Charles Schwab requires a $1,000 initial deposit, which can be waived with a $100 automatic monthly transfer. TD Ameritrade has no minimum initial deposit.

14. Your Own Business
    Starting your own business could be the best investment. For a few hundred dollars, you could start a lawn care business, a website, or sell items on eBay or Craigslist. Advances in technology make it easier than ever to start a home-based business on a small budget.

In conclusion, there are various ways to start investing even with little to no money. The key is to start early and consistently invest. This way, you can take advantage of compound interest. Always do your research and consider consulting a financial advisor before making any investment decisions.