3 Ways to Invest in the Stock Market When You Don’t Have Lots of Money

Many people don’t seriously consider the idea of investing in stocks because they feel that they have too little money to invest. Of course, when you think about the cost of stocks such as Amazon AMZN, Apple AAPL, or Tesla TSLA; it appears that you’ll need a great deal of money to start investing. However, having a small amount of money in investments in ultimately better than not having any money in investments. While there’s an element of risk to investing, there’s also the upside potential of gains.

The savings game, in contrast, is rigged against you from the start, the best-case scenario is that the value of your savings remains intact; in reality, inflation will corrode the real value of any money you have saved over time. This piece provides insight into three ways to start investing in stocks even with small amounts of money.

1. Invest Directly in Stocks

To invest directly in stocks, you’ll need to start by opening a brokerage account, which provides you access to the equities market. Choosing a stockbroker requires some critical thought because you’ll need to consider factors such as transaction costs and fees, the quality of customer service, type of equities available to you, and how long it takes to deposit and withdraw funds. Looking through a stock brokers list can give you an headstart in comparing different firms. You’ll also want to zero in on the industries that interest you and make a list of the stocks of the companies you want to buy in those industries.

Pro tip: When buying stocks, think about the underlying business, how well it is being managed, and its chances of sustainable profitability.

2. Use a Low Initial Investment Mutual Fund

If you don’t want to undergo the stress of conducting due diligence on individual stocks, a low-initial investment mutual fund might be a better way to gain exposure to the stock market. A mutual fund is an investment vehicle that allows you to access a broad portfolio of stocks or bonds with a single transaction. The fund managers bear the burden of choosing the shares in the portfolio and making the portfolio profitable in exchange for an asset management fee.

Many mutual fund companies will ask for initial investments of between $500 and $5,000, but you might be able to open an account for a smaller fee if you are investing through your payroll or employer’s retirement plan.

3. Try Out an Automated Investment Platform

If you want a completely hands-free stock investing experience, fintech investment apps such as Betterment, WealthSimple, and RobinHood might be the way to go. These solutions take the complexities out of stock investment to present a user-friendly interface that simplifies the investment process. You don’t have to worry about charts, financial reports, and market sentiment because these automated investment platforms leverage AI to understand your investment plans to determine how your money should be invested. These platforms usually charge a platform fee, but the plus side is that there are no minimum investments.