10 Smart Ways to Invest $500 or Less

Investing

Many people believe that you need thousands of dollars at your disposal to start investing. However, this couldn’t be further from the truth. For example, you can even begin investing in the stock market today with $500 or less.

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If you’re looking for some other ways to invest, but don’t have much cash, here are ten of the best ways to invest $500 or less.

1. Try Micro Investing

With micro-investing, you can start investing with as little as $5. This makes it the perfect option for college students or anyone who wants to invest but doesn’t have much disposable income.

There are plenty of micro-investing apps you can choose from to invest $500 or less. These apps are easy to use and cater to brand-new investors. To learn more about micro-investing, here are five apps you can look into.

Robinhood

Robinhood is a great option for new investors. There’s no minimum balance to open an account with Robinhood, and the company doesn’t charge any trading fees. And the company’s app is fairly intuitive to use.

Plus, Robinhood is one of the few micro-investing platforms that let you trade full stocks, mutual funds, options, and cryptocurrencies.

Acorns

Acorns is one of the easiest and most low-cost ways to start investing. There’s no minimum balance required to sign up for Acorns, and the company only charges $1 per month.

After you sign up, you’ll connect your Acorns account to a credit or debit card. Then, every time you make a purchase, Acorns will round that purchase up to the nearest dollar. Once you hit $5, Acorns will begin investing that money for you.

Stash

Stash caters to all different types of investors. When you sign up, you’ll take a brief survey to determine your level of risk tolerance when it comes to investing. From there, you’ll pick how much and how often you want to invest.

And Stash lets you choose the types of companies you want to invest in. So, for instance, if you’re only interested in investing in eco-friendly companies, you can specify this in your profile.

Betterment

Betterment is a good option for anyone interested in micro-investing but wants to have a little more control over their investment portfolio. The company does the investing for you but gives you the option to work with a financial advisor and have more say in your investments.

There are no minimum balance requirements to sign up for the company’s most basic plan. However, the company does charge a 0.25% monthly fee on your investments.

Rize

With Rize, you can save or invest money. Even if you just want to set up a savings account, Rize will pay interest on your account, and your returns will be much better than what you would earn at a bank.

To get started, you’ll set up your savings goals and timeline. From there, the company recommends how much and how often you’ll want to save to meet your goals.

2. Try Commission-Free ETFs

If you have some interest in investing, you may want to learn how to do it yourself. In that case, commission-free ETFs are a great option if you want to invest $500. In addition, ETFs are a type of mutual fund, so you can purchase several different investments in one transaction. This allows you to diversify your investment more than if you just bought individual stocks, and you can do it even with a small amount of money.

3. Buy Bitcoin

For some, investing in cryptocurrency may be too risky and volatile for their taste. However, Bitcoin has had an average growth of over 100% per year for the past 12 years! In fact, if you would have invested $500 in Bitcoin five years ago, you’d have approximately $90,000 today.

If you’re interested in getting into crypto, Coinbase is a great place to start. They’ll give you $10 in free Bitcoin when you buy or sell $100 or more in crypto. They also offer ways for you to earn up to $32 worth of crypto for free.

4. Open a Roth IRA

If you haven’t started saving for retirement, then you should seriously consider opening a Roth IRA. This is a retirement savings plan that allows you to contribute after-tax money to your account. So eventually, when you reach retirement age, you can withdraw that money tax-free.

However, there are a few things you’ll need to know before opening a Roth IRA. First of all, you should only open an IRA if you’re prepared to leave the money there.

If you withdraw the money before you’re 59½, you’ll end up paying penalties. So if you think you’ll need to take your money out early, you should consider one of the other options on this list.

5. Start an Online Business

If you’re looking for an unconventional way to invest your money, why not try starting an online business? Traditional brick-and-mortar businesses require a lot of capital to get up and running, but the same cannot be said for an online business.

You won’t need office space, a warehouse, or expensive equipment. In all likelihood, you won’t need to invest $500. It will cost much less than that. Here are some popular online business ideas:

  • Starting and monetizing a blog
  • Selling things on eBay or Craig’s List
  • Selling services like freelancing writing, editing, or graphic design
  • Opening an e-commerce store
  • Buying items and flipping them for profit

6. Use Robo-Advisors

And finally, you might consider using a robo-advisor to invest your money. A robo-advisor is a simple online investment platform.

When you sign up, you’ll fill out a list of questions, and the company will create an investment portfolio for you. Robo-Advisors tailor your investment portfolio to you and how conservative or risky you are.

A robo-advisor will have fewer capabilities and services than you’ll receive if you work with a financial advisor. For example, you won’t receive personalized advice based on your financial goals.

But the fees are low, and it’s a great way to invest $500 in the stock market. Robo-advisors also offer several investing options, including:

  • Roth IRAs
  • Traditional IRAs
  • Solo 401(k)s
  • Taxable accounts

7. Open a High-Interest Savings Account

If you’re not quite ready to start investing, then you could try opening a high-interest savings account. This is an easy, low-risk way to start earning interest on your money. The average high-interest savings account pays about 1% in interest.

Of course, you’re not going to get the same kinds of returns that you would if you invested that money in the stock market. But this is a better option than doing nothing, and your savings account could serve as a long-term emergency fund.

8. Pay Down Your Debt

Paying down your debt is one of the best investments you can make in your future. This is especially true if you have high-interest credit card debt. According to the Federal Reserve, the average interest rate on a credit card is just over 15%.

And if you don’t have a good credit score, your APR will likely be much higher. A high APR can add up to hundreds of dollars in interest every month. So by paying down your debt, you’ll be saving yourself thousands of dollars over the next year.

9. Try Peer-to-Peer (P2P) Lending

Peer-to-peer (P2P) lending is an alternative to traditional lending. Instead of taking out a loan from the bank, borrowers use services like Prosper that connect them to investors like you.

P2P lending platforms allow you to earn a fixed monthly income by lending to individuals or companies. The money is deposited directly into your account.

10. Invest in Your Financial Education

Perhaps the best investment you can ever make is investing in yourself and your financial education. For $5-$15, you can buy some of the best personal finance books or audiobooks. For example, great books like Rich Dad Poor Dad are available on Amazon for $11.36 for the paperback edition, $6.82 for the Kindle version, or $14.95 a month for an Audible membership.

You can learn how to invest in real estate, how to make money in the stock market, how to manage your money, how to get out of debt, how to achieve financial freedom, and so much more.

If books aren’t your thing, there are plenty of inexpensive online courses. It’s truly amazing how much incredible education you can get for less than $500.

Bottom Line

Hopefully, this article has shown you that investing doesn’t have to be confusing or expensive. You can get started right away with very little money. And if you aren’t ready to invest just yet, you can focus on paying down high-interest credit card debt, boosting your income, and saving an emergency fund.

Jamie Johnson
Meet the author

Jamie Johnson is a freelance writer who has been featured in publications like InvestorPlace and GOBankingRates. She writes about a variety of personal finance topics including student loans, credit cards, investing, building credit, and more.