Updated: Sep 19, 2024

Investing doesn’t require a lot of money to get started – you can begin with just $50. Check out how small investments can grow over time and help you build wealth for the future.

Why Start Investing with Just $50?

You might wonder if $50 is even worth investing. The answer is a resounding yes. Investing isn’t just for the wealthy; it’s for anyone who wants to grow their money over time. Starting with $50 might seem small, but it’s a powerful first step toward building financial security. The earlier you start, the more time your money has to grow, thanks to the power of compound interest.

Compound interest is when the money you earn on your investments starts earning money itself. Over time, this compounding effect can turn a small initial investment into a much larger sum. For example, if you invest $50 and it grows at an average annual rate of 7%, that $50 could grow to over $100 in just 10 years, and much more if you keep adding to it regularly.

By starting with just $50, you’re not only building your financial future, but you’re also developing the habit of investing regularly, which is key to long-term success. Plus, with so many tools and platforms available today, it’s easier than ever to start investing with a small amount.

Step 1: Choose the Right Investment Platform

The first step to investing is choosing a platform that allows you to start with a small amount of money. Thankfully, there are many online brokers and investment apps designed for beginners that require little to no minimum investment.

Some popular platforms include:

• Robinhood: This app allows you to invest in stocks, ETFs, and cryptocurrencies without paying any commission fees. It’s user-friendly and perfect for beginners who want to start with a small amount of money.

• Acorns: Acorns rounds up your everyday purchases to the nearest dollar and invests the spare change. You can also set up recurring deposits starting as low as $5, making it easy to build your investment over time.

• Stash: Stash offers a variety of investment options, including fractional shares, meaning you can buy a portion of a stock instead of the whole thing. You can start with as little as $5 and choose investments that match your goals and risk tolerance.

When choosing a platform, consider factors like fees, investment options, and ease of use. Look for platforms that have low or no fees, as high fees can eat into your returns, especially when you’re starting with a small amount.

Step 2: Understand Your Investment Options

Once you’ve chosen a platform, it’s time to decide where to invest your $50. Here are a few options to consider:

• Exchange-Traded Funds (ETFs): ETFs are collections of stocks or bonds that trade on an exchange like a stock. They’re a great option for beginners because they offer instant diversification—meaning your money is spread across many different investments, reducing risk. You can buy ETFs through most investment platforms, and many have low fees.

• Stocks: If you’re interested in owning a piece of a company, you can invest in individual stocks. With $50, you can buy fractional shares, which allow you to purchase a portion of a stock if you can’t afford a full share. This is a great way to invest in companies you believe in without needing a lot of money upfront.

• Bonds: Bonds are loans you give to a company or government, which pays you back with interest over time. They’re generally considered safer than stocks, but they also offer lower returns. Some platforms allow you to buy bonds with a small initial investment.

• Robo-Advisors: If you’re not sure where to start, a robo-advisor might be a good option. Robo-advisors are automated platforms that create and manage a diversified portfolio for you based on your risk tolerance and goals. They typically require a low minimum investment, making them accessible for beginners.

Understanding the different investment options will help you make informed decisions about where to put your money. It’s also important to think about your risk tolerance—how much risk you’re willing to take in exchange for potential returns. Stocks and ETFs offer higher potential returns but come with more risk, while bonds and savings accounts offer lower returns with less risk.

Step 3: Set Clear Financial Goals

Before you start investing, it’s important to set clear financial goals. Knowing what you want to achieve with your investments will guide your decisions and keep you focused.

Ask yourself questions like:

• What am I investing for? Are you investing for a short-term goal, like saving for a vacation, or a long-term goal, like retirement?

• How long do I plan to invest? The length of time you plan to keep your money invested will influence your choice of investments. For example, if you’re investing for the long term, you might be willing to take on more risk.

• What is my risk tolerance? Understanding how much risk you’re comfortable with will help you choose the right investments. If the idea of losing money in the short term makes you nervous, you might prefer safer investments like bonds or ETFs.

Once you’ve set your goals, make sure to review them regularly and adjust your investment strategy as needed. Remember, investing is a long-term journey, and your goals may change over time.

Step 4: Start Investing Regularly

Starting with $50 is great, but to truly see the benefits of investing, it’s important to invest regularly. Even small, consistent contributions can add up over time and significantly increase your wealth.

One strategy to consider is dollar-cost averaging. This involves investing a fixed amount of money at regular intervals, such as $50 every month. By investing consistently, you buy more shares when prices are low and fewer shares when prices are high, which can help reduce the overall cost of your investments over time.

Many investment platforms allow you to set up automatic contributions, making it easy to stick to a regular investing schedule. Whether it’s $10 a week or $50 a month, the key is to keep investing, no matter how small the amount.

Step 5: Monitor and Adjust Your Investments

Investing isn’t a “set it and forget it” activity. It’s important to monitor your investments regularly to ensure they’re aligned with your goals. Check your portfolio at least once a quarter to see how your investments are performing and make adjustments if necessary.

If you find that a particular investment isn’t meeting your expectations, don’t be afraid to make changes. Rebalance your portfolio if needed to ensure that it’s still in line with your risk tolerance and goals. For example, if one of your stocks has grown significantly and now makes up a large portion of your portfolio, you might want to sell some of it and invest in other areas to maintain a balanced portfolio.

The Power of Starting Small

Starting with just $50 might not seem like much, but it’s the start of something bigger. The key is to get started, build the habit of investing regularly, and keep learning as you go. Over time, your $50 can grow into much more, especially if you continue to add to it regularly.

Investing is about more than just making money—it’s about building a secure financial future. By starting small, staying consistent, and making informed decisions, you can set yourself up for success, no matter where you’re starting from.