Some people are excited about investing, but having to deposit $1,000 or more into an account to begin isn’t always easy. This leaves many to assume that they can’t start investing, but that simply isn’t the case.
In fact, there are options for just investing $20, or even less. If you want to invest small amounts of money, here are a few options to explore.
Invest Small Amounts of Money with a Bank
When people think of investing, options like stocks usually come to mind. However, there are a lot of other options out there, and some can be found at banks.
In some cases, investing $20 in certificates of deposit (CDs) or money market accounts is a great way to begin. You’ll earn a little interest and experience very little risk. And, if you roll your earnings into new investments, you can even make enough to open up other investing doors.
Try an App That Helps Small Investors
There are a number of investment apps, but some cater to those who don’t have thousands of dollars to commit. For example, you can open an account with Betterment with a $100 monthly commitment.
The “robo-advisor” function can even help you figure out where to put your money after it evaluates your preferences. Then, all you need to do is fund the account.
There are a number of newer companies which are geared towards smaller investors. Some that are worth checking out are Robinhood, Stockpile, Acorns and Stash. These are all pretty new and geared towards small investors. They will also give you access to individual stocks and ETFs if you want to get into the capital markets.
Consider Peer-to-Peer Lending
Lending platforms like Lending Club and Prosper rely on investors to fund loans. Essentially, people invest in borrowers and, in return, they get interest.
Some investors manage to reach double-digit returns, so it can be lucrative too.
The initial investment a platform requires can vary. Some, like Lending Club, have a minimum starting point of $1,000. However, other platforms, like Prosper, have lower thresholds.
The peer to peer lending industry has faced a lot of consolidation and peer to peer lenders are increasingly focusing on institutional investors.
Some of these platforms have net worth requirements for investors, so you’ll need to explore those before you begin.
Don’t Ignore Retirement Accounts
If you aren’t maxing out your retirement accounts, then consider directing your small investments there.
Even investing $20 can make a difference over the long run thanks to compound interest, so these little deposits can matter. For example if you invested $20 a month for 15 years at 4% interest, you’d have $4,841.68 – enough for a car down payment or a holiday trip.
In many cases, you can make an extra deposit into an IRA whenever the desire strikes. Or consider using the small amounts of money to fund a new account if you don’t have an IRA.
For employer-sponsored plans, like 401(k)s, you may need to see what options they have available. If you anticipate having some extra cash available on each paycheck, you can always increase your payroll deduction to match if you still have room.
Buy Precious Metals
If you have your retirement accounts maxed out, and you have a spare $20 to invest you could always buy some gold or silver.
Right now an ounce of silver trades for less than $20, which means you can probably pick up a shiny once ounce coin for under $20. You can also buy a 1/15th of a gram of gold in a bar for about $10.
Explore US Treasury Securities
With as little as $100, you can invest in US Treasury Securities. These are issued by the Treasury Department and have maturities ranging from 30 days to 30 years.
As a bonus, you can sell the securities if the need arises without incurring early withdrawal penalties.
The login looks like this:
Click here to start an account.
Ultimately, you don’t have to have a lot of money to start investing. Just explore the options above and see if any of them might work for you.
Do you have a favorite way to invest? Tell us in the comments below!
Ready for more from Fine-Tuned Finances? Here are some articles to try:
- How to Kick Start Investing – An Investing Beginner’s Guide
- Why Investing Should be Part of Your Monthly Money Plan
- 3 Ways to Quickly Improve Your Net Worth
- Motley Fool Stock Picks
Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.