For decades, a powerful myth has held people back from building wealth: the idea that you need to be rich to be an investor. Many imagine Wall Street traders or people with huge inheritances, but the reality of investing in 2025 is completely different. Today, you don’t need thousands of dollars to get started. You don’t even need hundreds.
Thanks to modern technology, anyone can start investing with the spare change in their digital pocket. The most important step isn’t having a lot of money; it’s simply starting. This guide will show you exactly how to start investing with little money, breaking down the process into simple, actionable steps.
The Most Important Thing to Do BEFORE You Invest
Before you put your first dollar into the market, it’s crucial to build a stable financial foundation. Taking these two steps first will protect you from having to sell your investments at the wrong time.
Build a Small Emergency Fund First
Life is unpredictable. An emergency fund is a cash cushion set aside for unexpected expenses, like a car repair or a medical bill. Before you invest, aim to save at least $500 to $1,000 in a separate, easy-to-access savings account. This is your financial safety net.
Pay Off High-Interest Debt
If you have debt with a high interest rate (like credit cards, which often charge 20% or more), paying it off is the best “investment” you can make. Paying off a 20% interest debt is like earning a guaranteed 20% return on your money. It’s mathematically impossible to beat that in the stock market consistently.
Step 1: Choose the Right Investing Account
Think of an investment account as the “container” that will hold your money. There are two main types to consider when you’re starting out.
A Brokerage Account (The Most Flexible Option)
This is a general-purpose investment account. You can open one easily at dozens of online firms (like Fidelity, Vanguard, or Charles Schwab) and there are no restrictions on when you can withdraw your money. It’s a great, flexible starting point.
A Roth IRA (The Best Option for Retirement)
A Roth IRA is a special type of retirement account with a huge advantage: your money grows completely tax-free. You contribute with money you’ve already paid taxes on, and when you withdraw it in retirement, you won’t owe a single penny in taxes on all the growth. If your goal is long-term building wealth from scratch, a Roth IRA is an unbeatable tool.
Step 2: Pick Your Low-Cost Investing Strategy
This is where the magic happens. You don’t need to pick individual stocks. Here are three simple, low-cost strategies perfect for beginners.
Option A: Use a Robo-Advisor (The “Set It and Forget It” Path)
A robo-advisor is a digital platform that invests your money for you based on your goals and risk tolerance. You answer a few questions, and it automatically builds and manages a diversified portfolio for you. Most have very low minimums (some even $0) and are perfect for those who want a completely hands-off approach.
- Popular Options: Betterment, Wealthfront.
Option B: Buy Low-Cost Index Funds or ETFs (The DIY Path)
This is the most recommended strategy by many financial experts. An index fund is a type of mutual fund or ETF that holds hundreds or even thousands of stocks. For example, an S&P 500 index fund lets you own a tiny piece of the 500 largest companies in the U.S. It’s instant diversification and has historically provided solid returns.
- Popular Options: VOO (Vanguard S&P 500 ETF), VTI (Vanguard Total Stock Market ETF).
If the idea of DIY investing using index funds interests you, the single best book to read next is “The Simple Path to Wealth“ by JL Collins. This book masterfully cuts through the noise and complexity of the financial world and lays out a clear, simple, and powerful strategy for building wealth. It’s written in an easy-to-understand style, making it the perfect companion for any new investor looking to confidently manage their own money.
Option C: Use Micro-Investing Apps (The “Spare Change” Path)
Micro-investing apps are designed specifically for people who want to invest with little money. They work by connecting to your bank account and rounding up your daily purchases to the nearest dollar, then investing that spare change for you. It’s a brilliant way to start without even noticing the money is gone.
- Popular Options: Acorns.
Step 3: Understand the Power of Fractional Shares
So, how can you invest in a company like Amazon when one share costs thousands of dollars? The answer is fractional shares.
Most modern brokerages now allow you to buy a small slice of a share instead of the whole thing. This means you can invest in any company or ETF you want with as little as $1 or $5. This innovation is what truly unlocked the ability for everyone to start investing for beginners, regardless of their starting capital.
Step 4: Automate Your Investments (The Secret to Consistency)
The secret to building wealth over the long term isn’t about being a genius who can time the market. It’s about consistency. The best way to stay consistent is to make it automatic.
Every brokerage and robo-advisor allows you to set up automatic, recurring transfers from your bank account. You can set it to invest $25 every Friday, or $100 on the first of every month. This strategy, known as dollar-cost averaging, ensures you’re always investing, whether the market is up or down.
Putting It All Together: A Simple Plan to Start Today
Feeling overwhelmed? Don’t be. Here is a simple, concrete plan you can follow to invest with $100:
- Open a Roth IRA with a low-cost brokerage like Fidelity, Vanguard, or Schwab.
- Connect your bank account and set up an automatic transfer of $25 per week (or $100 per month).
- Use that money to buy a single, diversified, low-cost index fund like an S&P 500 ETF (e.g., VOO) or a total stock market ETF (e.g., VTI).
- Keep it up. Let your automated investments do their thing and don’t panic-sell when the market gets shaky.
That’s it. You’re officially an investor.
The Journey of a Thousand Miles Begins with a Single Dollar
The biggest mistake you can make is thinking the amount you start with is too small to matter. It’s not about the amount; it’s about building the habit. An investor who starts with $50 a month is far ahead of someone with $50,000 in cash who is too scared to start.
The best time to start investing was yesterday. The next best time is right now. Use this guide to take that first simple, powerful step.
Whether you’re just starting your career or planning for retirement, the path to financial freedom is open to you. It’s never too early, or too late, to take control of your future. We invite you to discover the specific steps for your stage of life in our guide: 7 Actionable Tips for Financial Freedom in 2025 (For Any Age).