Investing

How to Start Investing With Less Than $500

Aliyyah Camp
Written by Aliyyah Camp

Did you know you can start investing with as little as $500? In fact, you can invest with much less than that on certain platforms. If you’ve been missing out on investing because you thought you needed large amounts of money, now’s the time to change that.

In this article, I discuss six great options to invest with less than $500. Depending on your financial goals, some options may be more attractive than others.

Before You Start

Before we explore options for investing with less than $500, it’s important to consider times when you should hold off on investing.

High interest debt should take priority over investing. If you invest while you have high interest debt, you’ll likely still be losing money. Based on historical data, you can expect to see a 7.25% return on your stock market investments. If you have debt at a higher interest rate than that, it’s best to pay off the debt first. Otherwise, the return on your investment will be cancelled out by the interest on your debt.

Building an emergency fund should also take priority over investing. An emergency fund is money set aside to be used in the case of financial difficulty – such as an unexpected expense, a large bill, or job loss. It’s best to have three to six months of living expenses saved in an emergency fund. If you don’t have that amount saved, using your $500 to build an emergency fund would be putting it to better use. You can always invest later once your emergency fund is where you want it to be.

If you don’t have any high interest debt and have a healthy emergency fund, it’s time to start investing. There are plenty of ways to invest with less than $500. Here are six options:

Option 1: Retirement Account

The first option is to invest in a retirement account. According to the American Benefits Council, nearly 80% of employers offer retirement plans. If you are one of many who have access to an employer-sponsored retirement plan, investing in it is a great idea.

About the author

Aliyyah Camp

Aliyyah Camp

Aliyyah Camp is a personal finance writer who specializes in writing about ways to save money, make money, build credit, and invest. She has a Bachelor’s Degree in Communication from the University of Pennsylvania.

10 Comments

  • Great advice about when to start investing. Those emergency funds are often overlooked by many and so important to have. None of us are immune to life’s crazy curves. 6 months is a good amount to strive for.

  • There are several options out there, such as direct investment plans that have the drip plan.. Do some research, GOOGLE is your friend..

  • I’m so amazed at all the knowledge I am taking in, My credit is gone way up and now this investing. I have put a lot of thought behind investing, and now that I have read this article. I need to get off my butt and get it done. After all, I’m not getting younger. Now that I have quit smoking after 50 years, I’ll be able to invest $35 a week. Things are really looking up Thanks again Credit Solution

  • Hi, I’m a little confused, The article caught my eye. with investing with just $25.00, however I continued to read more of the article and it had different options with more than one company. I have no clue where to start with investing my $25.00, I mean do I start with vanguard, open an account there, and go from there, is a step by step guide for this

    • article caught my eye. with investing with just $25.00, however I continued to read more of the article and it had different options with more than one company. I have no clue where to start with investing my $25.00, I mean do I start with vanguard, l will open an account there, and send me information go from there, is a step by step guide

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