Updated February 15, 2024

Small Investments That Make Money

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You don't need to be rich to start investing. Here are 15 easy ways to invest small amounts of money.

#1 regret you'll hear from investors: Starting later rather than earlier and missing out on years of growth.

The truth is, the biggest factor is when you start investing, not how much you have to start. Even a few dollars can go far if you know what to do with it.

Now, for the million-dollar question... how do you make your first move?

Check out this list of beginner-friendly ideas to grow your savings on a small budget.

1. Robo-advisors

If you're new to the market, looking at investments can be scary. But you can get guidance without having to sit down with a financial advisor and pay them for their time. Enter the robo-advisor.

Robo-advisors use a computer algorithm to manage your portfolio for you. They'll choose investments based on your age, when you plan to use the money, and your risk tolerance.

Best of all, it's completely hands-off.

Best for: People who are relatively new to investing, looking for guidance, and want to follow the average market returns

Old-school online brokers like Vanguard and E*TRADE don't offer the next investment in this list. Find out how you can invest in big name companies with a much lower price tag.

2. Fractional Shares

Single share of high-performing stocks (such as Amazon or Tesla) could cost hundreds or even thousands of dollars. That's way too expensive for most investors.

However, with fractional shares, you can buy a slice of a company's share with just $1. A fractional share means you're buying a piece of one share instead of the whole shebang.

This makes things more affordable for new investors who don't have a ton of cash lying around. But not all online brokers support fractional shares.

Robinhood lets you buy fractional shares as small as 1/1,000,000 of a share. They have no fees and 100% commission-free trades. That said, the investing app is completely self-directed and best for investors with at least some experience.

Best for: People interested in buying popular, high-value stocks who might not have a ton of extra cash to spare

FYI, you can also invest stock dividends into fractional shares. See below for how to turn that $0.40 from Coca-Cola into more shares.

3. Dividend Reinvestment Plans (DRIPS)

With DRIPS, you only need one share to get started. Some big companies distribute profits - called "dividends" - to its shareholders. You can automatically reinvest dividends by buying more (whole or fractional) shares of stock from that same company.

This allows your money to grow faster with compounding interest.

For example, if you have one share this year and two shares over time, the dividends you receive in year 2 will be more than what you earned in year 1. Your earning potential accelerates if a stock increases its dividend from $1 to $1.10 the next year.

There's no work on your end - just hold onto the stock. Many online brokers offer free dividend reinvestment plans to investors.

Best for: People who feel strongly about a particular stock and are comfortable with riding out the market

Ally Invest offers free automatic dividend reinvestments (DRIPs) with the ability to purchase fractional shares. You can apply automatic DRIPs to all - or select - stocks in your diversified portfolio. In addition to commission-free trades, you have a wide variety of investment options.

For real though, stock trading isn't for the faint of heart. It's emotional. If you want to grow your money without the rollercoaster ride, check out mutual funds and ETFs.

4. Mutual Funds and ETFs

Mutual funds and ETFs are a great way to diversify your portfolio and lower your risk. They're both professionally managed by fund managers, and allow you to invest in a range of companies and industries.

You can invest in Mutual Funds and ETFs with robo-advisors and self-directed brokerage accounts.

M1 Finance is best for semi-experienced investors. You pick your own stocks and ETFs for fully customized portfolios (called "Pies"). The app automatically buys stocks for you according to your Pies and manages your portfolios. Plus, M1 Finance supports fractional shares.

Best for: People with some previous experience in investing; people who want a reliable way to diversify their investments

With the next option, you can diversify your portfolio outside of traditional investments.

5. P2P Lending

Instead of loaning your neighbor Joel $100, lend money as an investment and earn interest from the borrower. That's how peer-to-peer (P2P) lending works.

Investors provide unsecured personal loans to people who may not be able to secure funds from other lenders.

There is a risk of loss to your principal if a borrower does not repay the loan with interest. To minimize the risk of someone defaulting on their repayment, P2P lending platforms will split your investment into small investments of $25 or $50 to a group of different people.

A popular option is Prosper. Prosper has a minimum $25 investment in each loan with average historical returns of 5.7%.

Best for: People who can afford to make a larger upfront investment and are comfortable with the risk of loan default

Being a creditor isn't for everyone. If you'd rather make money with tangible assets, take a peek at real estate crowdfunding.

6. Real Estate Crowdfunding

Did you know: Over the last 30 years, real estate investing performed better on average than stocks. Yes, buying and flipping houses is good money.

If you want to flip houses straight from your laptop, real estate crowdfunding might be the way to go.

These platforms pool funds with fellow investors to purchase real estate. You earn returns by renovating undervalued real estate to increase rent or property value. (No dealing with real estate brokers or tenants required.)

Groundfloor lets you do all this for just $10. They boast average annual returns of above 10%.

Best for: People comfortable with higher-risk investments or those who might not be able to afford traditional real estate investments

But before you start hardcore investing, experts recommend having 3-6 months of expenses in an emergency fund. In the section below, discover the best place to stash your fund.

7. High-Yield Savings Account

Not ready to throw money into the market but still want to earn some interest? High-yield savings accounts are your best bet.

Online banks offer much higher interest rates (as much as 20x or more) compared to traditional banks.

Plus, your savings are completely risk-free as long as you choose an FDIC-insured bank. Even if the bank defaults, the government will pay back the amount in your account (up to $250,000).

You can access your money at any time for an emergency fund, a down payment for a house, or other uses.

Best for: People who want a short-term investment for a specific expense; also good for people who find a bank or credit union offering a generous rate

One popular option is CIT Bank since they encourage saving by rewarding active savers with a high APY. The minimum opening deposit is $100 and if you save $100+ every month, you get the top APY tier. Like many online banks, they do not have monthly service fees.

8. Certificates of Deposit (CDs)

CD rates are another super-safe option.

You can get higher interest rates than with a normal savings account, but you can't touch your money for a fixed amount of time (also called a "term").

Your term can be as short as a few months or as long as several years. Usually, the longer the term, the higher the interest rate earned. But if you withdraw money before your term expires, you'll lose a few months' interest as penalty.

Similar to savings accounts, CDs earn low returns but also are very low risk.

Best for: People who plan to spend the money at a specific date in the future (for example, you're buying a new car in 5 years) and are okay with fairly low returns

9. Pay Off Debt

Time to get rid of any credit card at all before investing.

By paying off debt, you lock in a rate of return on your money. So, if your credit card balance is $10,000 with an interest rate of 18% per year, you're guaranteed an 18% rate of return on that $10k.

In contrast, the average rate of return for stock investments is only about 9%.

Compare personal loans from different companies to find the best way to consolidate your debt. You'll get out of debt much faster with the lower interest rate and you just have one bill to pay every month. (Whew, so much more manageable.)

Best for: People who have a lot of high-interest debt; paying off debt sooner will ensure that the interest charged on your debt isn't canceling out any returns you may earn in a separate investment

Dreaming of toes in a sandy beach or a lake house by the mountains? The next two options break down long-term investing for retirement.

10. Employer-Sponsored Retirement Plan

A 401(k) is one of the easiest ways to invest small amounts of money. If you haven't already, talk to your employer or HR department to opt into the plan.

Here's why: When you contribute part of your paycheck into the 401(k), the money is taken before any income taxes are deducted. That way, your savings grows tax-free and when you eventually withdraw funds from your account during retirement, you're taxed at a lower rate.

Best for: Younger workers who may not have other investments in place. Get your 401(k) set up sooner and your future self will thank you.

If your company matches, it's an even better perk. Every 401(k) plan is different, but "employer matching" means that if you contribute money into your plan, your employer will put some too - up to a limit, which is usually a portion of your total salary.

11. Your Own Retirement Plan

Don't just rely on your employer's retirement plan! You can also set up your own retirement nest egg.

With a Roth IRA, your withdrawals are tax-free after you turn 59 ½. You contribute money that has already been taxed in your paycheck so all investment gains will never be taxed again by Uncle Sam.

Fidelity is one of the most well-known and popular Roth IRA providers available. There's no minimum to open account, annual fee or commission fees. They support Traditional, Roth, SEP, SIMPLE, and rollover IRAs.

Best for: People who want more flexibility with their retirement savings than a 401(k) can offer; employees who aren't offered a 401(k) by their employer

Keep in mind if your account is less than 5 years old, withdrawals may be subject to taxes and penalties. And if you withdraw earnings from a Roth IRA before age 59 1/2, you may owe income tax and a 10% penalty.

12. U.S. Treasury Securities

Don't want to deal with the ups and downs of the market? Then invest in U.S. Treasury Securities. The United States Treasury Department issues debt obligations to fund the national debt, and you can get a cut of the pie.

Treasury notes and bonds are securities that pay a fixed rate of interest every six months until the security matures. Terms range from 30 days to 30 years.

You can buy securities directly from the U.S. Treasury Department with the TreasuryDirect portal. From there, you can buy Treasury securities in $100 increments.

You can also sprinkle bonds into your investment portfolio with robo-advisors, depending on your risk tolerance.

Best for: People looking for a very low-risk investment and are okay with keeping it invested for a specific amount of time

At the end of the day, personal fulfillment is the key to happiness. Don't forget to take care of numero uno - you.

13. Invest in Yourself

It's easy to get caught up in day-to-day chores (laundry, meal prep, work - the list goes on). Take this time to visualize where you want to be in the next few months or years.

What skills could help bring your A-game to your career? Do you want to pivot to a new industry? Maybe tackle a passion project?

Level up by taking online courses, reading books, or go back to school full time. It'll open new opportunities to you and enable you to kick butt at whatever you do.

Best for: People who already have stable investments in place and are looking to level up their career

14. Start Your Own Business

Being your own boss is tough, but it's rewarding to build something of your own. If you like the sound of that, try investing some money into your dream venture.

You could sell handcrafted greeting cards on Etsy. Or create a pinball empire à la Warren Buffett. You might even open a restaurant with your cherished family recipes.

There are more tools than ever for starting a business from home, even on a shoestring budget.

Best for: People who are already in decent financial shape and looking to make a career change

15. Micro-Invest Spare Change

Speaking of starting small…

Micro-investing apps "round up" everyday purchases and help you invest, even if it's a few dollars.

Let's put it this way: If filling up on gas costs $24.34, the app will add that $0.66 loose change into a portfolio for you. Over time, the amount you save from each transaction can really add up.

The money can be invested for a vacation fund, emergencies or even retirement. They're perfect for those who aren't knee-deep in Wall Street lingo or don't have time to figure out the stock market.

Best for: Younger people looking to invest or pick their own stocks for the first time without a big upfront investment

For 100% hands-off investing, Acorns will automatically choose investments and manage your portfolio. If you want to learn how to invest with some hand-holding, Stash can provide guidance. This micro-investing app helps you choose investments based on your goals but lets you manage your own portfolio.

16. Invest in Cryptocurrency

Cryptocurrency shows no signs of slowing down, and there are more ways than ever to get in on the action.

Investigate different cryptocurrency exchanges and determine how you'd like to invest. Many people simply buy coins to hold, waiting for them to increase in value.

Others open crypto interest accounts and earn interest on their coins.

Whatever you choose to do, be sure to thoroughly research the platform you plan to use. Look into their security policies, which coins they offer, and, of course, the fees they charge.

Best for: Those who want a longer-term investment and are okay with taking on moderate risk

How to Choose the Best Investments for You

Investing is easier than ever, but it's still smart to do research before you start. Here are the top four things to consider before choosing your investments.

  1. What are your investing goals?
    Think about why you're investing. Maybe it's for retirement, a house down payment, or a nice vacation next summer.

    Goals like retirement are good for long-term, higher-risk investments, while a down payment or vacation is best for short-term, safer investments.

  2. What is your risk tolerance?
    Your risk tolerance is how much risk you can afford to take. It's determined by your investing goals and your age.

    If you're younger or have long-term goals, you can afford riskier investments like stocks. If you're older or have short-term goals, you'll want a safer investment like bonds.

  3. How much do you have to invest?
    If you can afford a larger upfront investment, you have more options. Besides stocks and ETFs, you might check out real estate crowdfunding or even invest in fine art.

    If you have a smaller amount to invest, consider signing up with a micro-investing app or opening a high-yield savings account.

  4. How much work do you want to do?
    If you can put in more time doing research, you might dive deep into platforms like Robinhood or Coinbase to choose your investments by hand.

    If you're looking for something more hands-off, robo-advisors may be a better choice.

How to keep track of your investments If you have multiple investments, having one place to track them all can be a big help. Consider checking out a money management platform like Empower. You'll have a single place to view your investments and even get access to handy tools like a retirement planner and portfolio performance tracker.

Investing FAQs

If you're relatively new to investing, you may have some questions. Review these FAQs to get up to speed before deciding where to put your hard-earned cash.

Is it worth investing small amounts?
Here's the thing: How much you invest isn't as important as how soon you invest. A small investment can grow significantly with the power of compound interest.

What can I invest in with $100?
$100 will go a lot farther than you think. Consider opening an account with a robo advisor to start investing in stocks and ETFs. You might also try a peer-to-peer lending or real estate crowdfunding platform with a lower minimum.

What are some safe investments with high returns?
The highest-yield investments are probably not the safest. A good happy-medium would be to choose a safer investment with lower returns, like a high-yield savings account from an online bank, a certificate or deposit or Treasury securities.

Should I invest, save, or pay off debt first?
Paying down debt is important, but savings are too. If you run into an emergency, you'll want to pull from a dedicated emergency fund (i.e., savings) before using a credit card.

Once you have healthy savings and your debt is manageable, consider investing your money in a diversified portfolio.

What are the best short term investments for small amounts of money?
If you have a small amount of money, the best short term investment options are probably high-yield savings accounts and money market accounts. You're guaranteed interest and you can easily withdraw your money at any time.

What the Experts Say

Investing for the first time can be daunting. But you don't have to go it alone. As part of our series on investing and saving, CreditDonkey asked a panel of industry experts to answer readers' most pressing questions. Here's what they said:

Bottom Line

If you don't start investing now, when will you? Everyone needs to take their first step at some point.

And there's no better time to start than right now. Imagine if you bought a share of Amazon in 1997 for the hefty cost of $1.97.

Just remember, no one's "too broke to invest." You can start with small amounts of money as you get into the swing of investing. Use this guide to diversify your investing strategies and don't put all your eggs in one basket.

Amber Kong is a content specialist at CreditDonkey, a personal finance comparison and reviews website. Write to Amber Kong at amber.kong@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

Empower Personal Wealth, LLC (“EPW”) compensates CREDITDONKEY INC for new leads. CREDITDONKEY INC is not an investment client of Personal Capital Advisors Corporation or Empower Advisory Group, LLC.

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