How to invest $500 : Start Investing With $500 Or Less

Are you thinking about how to invest $500? Do you doubt the possibility of investing $500? Do you know it is possible to start investing with as little as $500 and even with much less than that on certain platforms? If you’ve been missing out on investing because you thought you needed large amounts of money, now’s the time to change that. Here’s how to invest $500.

In this article, we will show you six great options to invest with less than $500. But before we explore options for investing, it’s important to consider times when you should hold off on investing.

When you invest while you have high-interest debt, you will likely lose money. Based on historical data, you can expect to see a 7.25% return on your stock market investments.

If your debt is at a higher interest rate than that, then you should pay off the debt first, else, the return on your investment will be cancelled out by the interest on your debt.


Investing is the smartest way to secure your financial future.The easiest way to grow your money is to invest! Do you still think that you need millions to start investing? Learn how you can start investing with $500 or even less


It is possible for an emergency fund to also take priority over investing. An emergency fund is that money set aside for use in case of financial difficulties – such as unexpected expenses, large bills, loss of jobs. It’s safe to have three to six months of living expenses saved in an emergency fund.

But, in cases where such amount is not available, using your $500 to build an emergency fund is putting it to better use. Investment can be made later once your emergency fund is where you want it to be. And, of course, if you don’t have any high-interest debt and have a healthy emergency fund, it’s high time you started investing.

In this post, you will learn how to invest $500 or less.


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How to invest $500: Start Investing With $500 Or Less


1. Motif Investing

Motif Investing is new in the world of investing. It offers professionally-built stock portfolios that revolve around themes such as technology, medicine, and real estate. With Motif Investing, you can purchase theme-based stock holdings for a single trading fee.

You can also build your own stock holding or “motif”, with up to 30 different stocks for $9.95. This is a great deal compared to brokerages that charge up to $9.99 to trade a single stock. Whether you purchase a professionally-built motif or build your own, you’ll enjoy not having to pay any maintenance fees on the stock holding.

All you need is $250 to start trading. And after that, you can learn how to invest $500.


2. Retirement Account

According to the American Benefits Council, nearly 80% of employers offer retirement plans. If you are one of many who has access to an employer-sponsored retirement plan, investing in it is a great idea.

Whether it’s a 401(k) or 403(b), it is left to you to decide how much you would like to contribute from each paycheck. If your employer matches a portion of your contributions, even better! An employer-sponsored retirement plan is a safe bet for your first investment. You can start investing with as little or as much as you want.

If your employer doesn’t offer a retirement plan, you’re not out of luck. Most brokerages offer individual retirement accounts (IRAs) that you can contribute to outside of your employer. Unlike 401(k)/403(b) contributions, the money you put in an IRA won’t be pre-tax. You can still reap tax benefits by investing in a Roth IRA.

Contributions to a Roth IRA are post-tax, but withdrawals once in retirement are tax-free.


3. Robo-Advisor

Robo-advisors are now more popular these days. It is based on your risk tolerance that these services create portfolios and automatically manage your funds without inputs from a human financial planner. They’re a great option for investing with less than $500 due to their low fees and low minimum investment requirements,

You can consider Betterment. It is an excellent robo-advisor. With this, there is no minimum deposit required. You can start investing with as little as $10. There’s a low annual fee of 0.35% if you set up monthly deposits. Without monthly deposits, the fee is $3 per month.


4. Individual Stocks

You can invest in individual stocks with less than $500. It is a lot easier.  One of the advantages of investing in individual stocks is that you reduce fees. You get to pay a fee once when you buy the stock and once when you sell it. There’s no ongoing maintenance involved, as there is with other investment vehicles.

Also, you get to understand exactly where your money is going. When you pick a stock, you know you own a share of that company. On the other hand, when you invest in funds, you don’t have complete control of which stocks are chosen. There are plenty of brokerages you can use to invest in individual stocks.


5. Peer-to-Peer Lending

You can start investing with less than $500 by funding peer-to-peer loans. Here’s how peer-to-peer loans work:

  • A borrower applies for a loan
  • If the borrower meets certain underwritten criteria, the loan is listed on the platform for investors to consider
    Investors put up as little as $25 to fund a fraction of the loan
  • All investors’ monies are pooled together, to issue the loan to the borrower
  • Within the next month, investors start seeing monthly payments come in from the borrower – with interest of course

Prosper and Lending Club is the leading platforms for peer-to-peer lending.

Just like others, peer-to-peer lending comes with its risks which are borrower default. Borrowers might stop paying back the loan and leave you out of your money. Though it’s possible to screen borrowers by their risk ratings, you can never be certain that the borrower will pay back the loan in full.

Therefore, through multiple loans investment, it is easy for you to protect yourself from having one default destroy your returns


6. Exchange-Traded Funds

Exchange-traded funds (ETFs) are similar to mutual funds but often have low minimum investment requirements. In fact, you can buy an exchange-traded fund for the price of a single share; whereas mutual funds tend to require initial deposits of $1,000 or more. ETFs are a great option if you want to diversify your investment.

They give you the ability to invest in hundreds, sometimes thousands, of stocks or bonds in a single, professionally managed fund.


To start investing, it's best to get started sooner than later. There has never been a better time to become a self-made millionaire, taking a bold step to start investing with $500 or less will be the best decision you can ever make . Here's how exactly to go about it.


After Investing

Here are two things to do after you choose an option and make your initial investment:

  • Continue adding funds. Investing with less than $500 is just the beginning. If you contribute money on a regular basis to any of your investments, your money will grow much faster.
  • Wait it out. Don’t worry about fluctuations in the value of your investment. When you invest money, you should be in it for the long haul. Even if you see the amount dip a little bit, know that time is on your side. Eventually, your investments will give you decent returns. You just have to let it grow over time.


Now that you have learned how to invest $500, don’t just sit on the information. Try it out and see it work. You won’t see results if you don’t try things out. Also, do share with your friends and colleagues.

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