How to Start Investing With Little Money

You don't need a lot of money to start investing. With $0 commissions and fractional shares at most large brokers, you can begin with as little as a few dollars. What matters most is starting early and investing consistently.

Before you invest: three checks

1. Pay off high-interest debt. Credit card interest usually costs far more than the stock market has historically returned. Paying it down is a guaranteed return.
2. Build a small emergency fund. Keep a cushion in a savings account so a surprise bill doesn't force you to sell investments at a bad time.
3. Grab any employer match. If your employer matches 401(k) contributions, contributing enough to get the full match is effectively free money.

Where to put small amounts

• A broad index fund or ETF: one purchase gives you a slice of hundreds of companies. A fund tracking the S&P 500 or the total market is a common first investment. See what is an ETF.
• A Roth IRA: if you have earned income, a Roth lets your investments grow tax-free. See Roth vs. traditional IRA.
• Fractional shares: many brokers let you buy a slice of a share, so even an expensive stock or ETF can be bought with $5 or $10.

Make it automatic

Set up a recurring transfer and purchase every payday, even if it's only $25 or $50. Investing a fixed amount on a schedule is called dollar-cost averaging; it builds the habit and removes the temptation to time the market. Increase the amount whenever your income rises.

How small amounts add up

Investing $100 a month for 30 years at a 7% average annual return would grow to roughly $120,000, from $36,000 of contributions. Returns are never guaranteed and will vary year to year, but the example shows why time matters more than the starting amount. Try your own numbers in the compound interest calculator, and read how compound interest grows your investments.

Mistakes to avoid

• Waiting for the perfect moment. Nobody can time the market reliably.
• Putting everything in one hot stock. Small accounts can still be diversified through funds. See how to diversify.
• Paying high fees. On a small balance, account fees or high expense ratios eat a big share of your returns.
• Checking too often. Daily swings are noise for long-term money.

Next steps

Compare brokers with $0 commissions, no minimums and fractional shares on our best stock brokers page, then follow how to buy stocks for your first purchase.

This article is educational and not investment advice.

Frequently asked questions

Can I start investing with $100?

Yes. With $0 commissions, no account minimums and fractional shares at many brokers, $100 is enough to buy a diversified index fund or ETF.

What should I invest in first?

Many beginners start with a low-cost fund that tracks a broad index such as the S&P 500 or the total US market, after building an emergency fund and paying down high-interest debt.

Is it better to save or invest small amounts?

Keep money you may need soon in savings. Money you won't need for at least several years has historically grown more when invested, though returns are never guaranteed.