A lot of us are guilty—at some point in our lives—of holding off on investing. For some, it’s the idea of putting our hard-earned money at risk to the market’s volatility; for others, it may be the lack of knowledge in terms of where to invest or the insufficiency of funds. The silver lining in all of these is that you recognize the value of making your money work for you—regardless of how limited your funds are.
Thankfully, we’re here to shed some light on this matter. We asked help from some of our friends in the industry for tips on how to start investing with little money. Here are their responses:
Invest in Stock Slices
If you’re a new investor with limited funds, the best way to get started is investing in stock slices. Typically, stocks are traded in 100 share units. This can be quite expensive, especially on pricier stocks. Stock slices allow investors to trade any fractional unit regardless of the price of the stock. There are only a handful of brokers that offer stock slices at this time. Two of the more reputable ones include Robinhood, and Charles Schwab.
– Vic Patel, Founder, Forex Training Group
Enroll in a Dividend Reinvestment Plan (DRIP)
One of the easiest ways to start investing with little money to enroll in a Dividend Reinvestment Plan or (DRIP). A DRIP allows you to buy the common stock of some of the best run companies in America without having to open a brokerage account or pay a commission to buy or sell stocks. DRIP plans also allow you to purchase fractional shares and to dividend reinvestment dividends. Reinvesting dividends is a key to building wealth. It’s reported that Albert Einstein referred to compounding as The 8th Wonder of the World.
– Marc Davenport, Chief Executive Officer, RMI Capital LLC
Explore Low-Cost Investment Apps
The best way to start investing with little money is via a low-cost investment app such as Acorns. For just a few dollars a month you can get access to low cost diversified investment funds. Also, you have the option to select your risk appetite and a relevant portfolio. Once you start to build your fund, you can deposit cash injections into your chosen funds.
That truly is a remarkable way to wet your feet in the financial industry and start to make your money work for you. No longer is investing just a pastime for the rich and wealthy.
– Chris Panteli, Founder, LifeUpswing
Capitalize on Peer-to-Peer Platforms
I started building my investments from the ground-up, having literally no extra income other than my salary. I made my first investments in peer-to-peer (P2P) platforms and only invested a few hundred bucks at a time. Having very little funds, P2P opened the perfect door into the investment world by providing the freedom to invest just ten or twenty dollars. Sure, it seems futile to invest so little but everything’s better than just having the money sit on the bank account and see how inflation eats it away.
P2P investing doesn’t require massive knowledge either. In the beginning, I only chose secured loans or the ones with a buyback guarantee, so I could be sure I’d receive my funds later. Of course, the peer-to-peer niche has its own troubles but to me, it was the one thing that kicked off my investment portfolio since I didn’t have enough money yet to start buying stocks.
After a few years of peer-to-peer investing, I had built up enough funds and then dove into stocks too. But to a beginner with little money, my main recommendation is to explore P2P investing.
– Viktoria Krusenvald, Co-Founder, Zerxza
Sell Wholesale Real Estate
Wholesaling real estate is perhaps one of the easiest ways with little risk and no money needed to invest in real estate. This is basically getting a property under contract at a discount and selling the contract/deal to another investor for more. Typically, the transaction can be funded with the end buyer’s cash and the spread between what you put it under contract for and what the end buyer paid is your profit. The better the deal, the bigger the spread. You can also invest in real estate easily by using credit card cash at 0% interest or using private lenders to fund your deals where they bring most of the funds needed to close. But wholesaling is by far the easiest way to make money fast in real estate.
– Henry Angeli, Owner, Henry Buys Homes LLC
After reading these responses from our peers, it makes you realize the possibility of doing a lot with a little. It doesn’t really matter if you have $2,000, or $200, or even $25 to spare, the key in all of these is start investing—in your own small way—today.
Be sure to comment down below and share with our readers your idea of how to invest with limited funds. We always look forward to hearing from you.