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.