Last Updated: 15th July 2021

How to Start Investing With Little to No Money

So you’ve decided to take the plunge and start investing. First of all, great job! This is one of the most important decisions you will make in your life.

Written by: Piggyy

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How to Start Investing With Little Money

There are many different approaches and styles in investing, but don’t let them intimidate you! Many people claim they have the best investing strategy. Some say that investing is too complicated and better left to professionals. It is not always the case. Keep on reading and I can guarantee your future self will look back and thank you for taking this first step.

The key to investing is creating a plan and sticking to it. This seems simple, but it is much harder than you think. The most important part is spending less than you earn and always allocating a portion of your income, no matter how small, towards investing. Over time this will compound, and you will reap the incredible rewards of compound interest.


Saving and Investing 


The toughest part of investing is getting started. So many people wait until late into their lives to begin investing and lose out on many years of great compound returns. 


As the saying goes, “the best time to invest was 20 years ago; the next best time is today.”


By starting saving and investing right away, you will:


  • Start building great financial habits
  • Create the foundation for your long term wealth accumulation
  • Learn the basics and become more informed and interested in the investment process.


Once you start investing, the path becomes easier. You will learn that it is not intimidating. Then, you will begin to see the slow but steady results. This is incredibly motivating, and it also encourages you to learn more as well as save more. 


The point is that starting with a small sum of savings and getting invested right away is always a great decision. No matter how the market performs, you will learn about investing and likely never look back.


Common Investment Myths


Most of the reasons people are hesitant to invest are based on the many myths about investing we hear from people around us. Luckily these are just myths, and thus they should not hold you back from investing at all once you understand the truth that lies behind them.


It’s too risky 


Investing is inherently risky. That is why it makes a return. However, it is not risky in the way most people think. Just because so many people put their money in high-risk bets like penny stocks or meme stocks doesn’t mean this is what all investing is like. If you buy a diversified portfolio of the entire global stock market, you are simply betting the global economy will improve over the next few decades. That is far from a risky bet.


You have to be rich 


This is an ironic investment myth as investing is the way to become rich, not something you do once you are already rich. The only way to become wealthy is to have your money make money for you, which is exactly what investing is. Without the power of compound interest on your side, you will never build true wealth. What this means is you have to invest to become rich, not become rich to invest.


You have to lock your money away 


The stock market is one of the most liquid investments you can make. This means that you can sell stocks and get your money out as soon as you need the cash, unlike in the case of real estate or other investments. The ability to sell your stocks for cash near-instantly is one of the greatest advantages the stock market provides to investors. Ideally, if you want to compound your wealth, you would buy and hold your investments for nearly your whole life. But if you ever need the money in a pinch, someone is always there willing to buy your shares at the current market price.


You need to be an expert 


Investing is often the simplest strategy that tends to perform the best. Overcomplication only leads to underperformance. The best thing you can do is buy a low-cost index fund, put money in monthly, and never look at it again until you want to retire. This strategy will likely outperform 95% of all other investors in the market. When investing, the simpler the system, the better. It avoids costs and removes chances for user error. 


You have to monitor your investments daily 


Just like the myth of needing to be an expert, it is quite the opposite. The best thing you can do when investing is to buy what you believe in and stop looking at it. If you buy a share of the entire US economy, why would you check daily to see how much it is worth? Just wait for 10 or more years and check back to see how valuable your portion of the countries wealth has become, then stop looking for another 10 years.


You have to know when the right time to buy is 


As is the common theme with all these investment myths, this is the exact opposite of the right strategy. Trying to time the market by buying at the right time is a fool’s game. It is impossible to know what will happen in the future, so it is best to start investing right away. It is much more likely the market will go up while you wait for it to crash than it is for it to crash right after you buy. Additionally, even if it does crash right after you buy, it shouldn’t worry you since you are holding long-term and short-term stocks. Price crashes are irrelevant in the long run. The best strategy is to invest as early as possible and as consistently as possible. Trying to time the market is likely to just lose you money in the long run and stress you out as well.


It’s a quick way to make money 


This seems to be the most prevalent myth about investing out there today. So many new investors are jumping into the market expecting to make quick money. This is far from the case and is also the entirely wrong attitude to go into investing with. As we have discussed already, the best strategy for investing is buying and holding long term. Expecting quick money and taking risks is a much better way to lose money quickly than to make it. 

If you decide to hold reliable stocks, you will experience a continuous wealth increase. Compare this to taking a $1000 bet on the next stock you think will 10x. Once again, there is nothing wrong with gambling, as long as you know you are doing it. Don’t go into investing expecting a quick profit. You might as well go to the casino. Instead, invest in what you believe and hold for the long run; you will become much richer than you ever would have gambled on the most popular stock of the day.


Which account to use?


The best account to start with if you are a legal adult is a tax-advantaged account like a Roth IRA in the USA or TFSA in Canada. These are just accounts created by the government specifically for people to invest in. When you invest in your tax-advantaged account, the investments grow tax-free. They are subject to no capital gains tax when selling and taking the money out. These accounts typically only allow around $6000 per year to be added to them, so start there.


If you end up maxing that account out, you can always invest in a regular taxable account. This is just a standard investing account you can get with any brokerage like Vanguard, Fidelity, Robinhood, or Wealthsimple.


The other important account to be aware of is your 401k in the US or RRSP in Canada. These accounts allow you to put a percentage of your annual income into them to lower the amount of taxable income you make. They also grow tax-free but are taxed if you withdraw them before you are around 65 when you retire. This is more for people with full-time jobs. Ask your employer for more information.


What investing method to choose?


The best investing method for nearly every investor is simple, low-cost index funds. These are funds that you can buy just like any other stock, but they track the entire market.


The reason these are the best investment is because of the two types of risk in investing: 

  • company-specific risk 
  • market risk. 

When you buy an individual stock, you take on the risk of the stock market in general and the risk of that specific company. 


Instead, you can invest in the entire stock market using index funds. This means you only take on the risk of the market as a whole. This is the only way to reduce risk in investing without lowering your expected return.


When you buy index funds, you never have to worry about researching companies or learning about finance. You just buy consistently and let the stock market do its thing. As long as the future economy makes more money overall than it does now, you will be rewarded. History shows this to be a very safe bet.


There are plenty of great ETF index funds out there. It is recommended to buy a total US market ETF, a global stock market ETF, and a bond ETF. 


If you can buy an index fund that tracks the entire global economy like VT (US) or XEQT (Canada),  then you are done with your stock market option.


Buying a bond index with a percentage of your portfolio is just meant to reduce the drawdowns of your portfolio. If the market gets hits hard, the stock portion of your portfolio will drop a sizeable amount. Typically, bonds fall much less. This makes bonds a great way to protect your portfolio from a downturn if you are more risk-averse. However, the trade-off you make is that bonds typically have lower returns than stocks. So, your portfolio is less risky but gets lower returns over time.


What about Robo-advisors?


Robo-advisors have seen a meteoric rise in the past few years, and for a good reason. They are helping tons of new investors access great portfolios for much lower costs than most mutual funds and active managers. 


A Robo-advisor is just a set portfolio of index funds that are rebalanced automatically. You set your risk tolerance, and you get a custom, diversified portfolio to fit your profile. This is a great way to invest. It basically performs the index fund investing strategy mentioned above but does it automatically. 


This can be great for people who don’t care much about the details of investing and just want to put money in and let it grow without being involved at all.


The downside is that these services typically cost more than just buying the ETFs yourself. For example, a typical index ETF portfolio you make yourself would consist of (in the US) 80% VT and 20% BND. All you need to do is buy these two portfolios and rebalance them yearly to their desired allocations.


A portfolio of these low-cost index funds typically costs 0.1% a year or maybe 0.2% at the higher end. This means for every $1000 invested, they charge you $1 or $2 a year.


A Robo-advisor can do this for you, but it will cost a bit more. The typical rate is around 0.5% or 0.75%. While this seems like a minor difference, over time, this adds up. Instead of $2 or less per year for every $1000, now it would be about $7 or so. If you eventually get a portfolio of $100 000 it will cost you $700 a year instead of the do-it-yourself index strategy costing only $200 a year or less.


In summary, Robo-advisors are a great way to invest if you don’t want to be involved at all. Any investing is good investing, and the diversified cheap portfolios they provide are great. However, if you’re going to optimize a bit more, you can create your own index fund portfolio and save a few bucks a year in costs.


Ways to invest with little money


There are tons of ways to invest, no matter how little money you start with. In the past few years, there has been an explosion of firms creating great user-friendly and cheap platforms for everyday people to begin investing.


Some great examples include Robinhood, Webull, Public, M1 Finance, or Acorns.


There are plenty more options, and each brings their specialty to the table. So all you need to do is decide what features you want.


Robinhood and services like it offer a great way to buy and sell stocks for low fees. You can also purchase low-cost index funds and hold them long-term. Robinhood is very basic as you can just buy and sell stocks or ETFs and doesn’t aim to add any extra value besides low-cost trading.


Options like Acorns offer “round-up” investing.  This means each purchase you make with your credit or debit card will be rounded up to the nearest dollar or have a dollar added on, and that will be invested. These services are awesome as they allow you to start investing right away without changing your spending habits. It feels great to see your funded balance growing without feeling like you are taking money away from things you want to spend it on.


Lastly, there are more portfolio heavy services like M1 Finance. This is a great tool to create your portfolio and hold for the long term. It has great benefits like building a custom portfolio for yourself and investing equally into it with the press of a button. This is a great tool for more advanced investors looking to create custom portfolios to buy and hold.


There are tons of great options out there for new investors to get started and dip their feet into investing. Try out one, and if you don’t like it, try out another. Compare what features you want and those you don’t care for and find what works for you. The most important thing is to start investing early and buy and hold long-term, so whatever strategy you choose, make sure you can stick with it!


Start small, end up massive


It is a common misconception that you need lots of money to start investing. This is far from true. It is quite the opposite. You need to start investing to earn a lot of money.


This is due to the nature of compound interest. Compound interest just means that you are earning a return on your investment. That return then earns a return and the snowball effect makes it grow faster and faster over time.


Once you have a decent amount of money invested, the effects of compound interest take over and do the heavy lifting for you. For example, a $10 000 portfolio earning a 6% return gets you $600, while if you had a $100 000 portfolio, you would make $6000 instead.


This effect gets even more extreme as that $6000 you earned in a year would then make interest on itself next year. The point is due to compounding, you can make incredibly outsized returns over time. The majority of this excessive return comes from the money earned from your small initial investment.


The power of consistently investing money cannot be understated. While it may seem minor at first, over a decade, those small additions will grow more than you can imagine. It is not unrealistic to expect to become a millionaire before you retire if you continue to invest consistently over your working career. 


The best part is as your balance gets larger and larger, your investment returns will do more work than the additional investments you make. Meaning you will get to a point where you are earning more income off your investments than you do from working your job. This is called being financially independent and is an amazing accomplishment. While it may seem impossible now, starting small today will create incredible results given time. Don’t underestimate the power of compounding. It will amaze you if you give it a chance.


Real estate investing


Real estate investing has been a reliable investment throughout history and has created amazingly wealthy individuals over time. 


There are a few different ways to invest in real estate, all with various benefits and drawbacks.


Rental Properties


The first is the most difficult but the most talked-about strategy, buying and managing a rental property. This could be a house, duplex, or even an apartment building. This strategy takes a ton of work and is a higher risk. You need to find great tenants consistently to avoid vacancy and any annoying legal battles that could be costly. You will also need to perform any maintenance and pay the bill if something goes wrong. While this may be a challenging investment strategy, it makes up for it with its incredible rewards. You can end up with an incredibly valuable asset paying you hundreds a month in nearly passive income if you play your cards right.



  • Great monthly cash flow
  • Get a very valuable property with very little money down (leverage)
  • Build equity over time
  • Great inflation hedge



  • Lots of work (Maintenance and finding tenants)
  • Higher risk (Maintenance and potential legal issues)




REIT stands for a real estate investment trust. These are companies that you can buy into just like stocks in your investment account. The difference is these companies hold a portfolio of real estate properties and payout 80% or more of their monthly income to shareholders. This provides them with a way smaller investors like you can access a broadly diversified portfolio of real estate and reap the benefits. 


REITs are a great way to get started investing in real estate. They get you diversified exposure to the real estate market and provide a stable monthly income for each share you own. If you want to get started with real estate but don’t want to buy a property for yourself, this is a great option!



  • Simple & Easy, just buy and hold and collect payments
  • Diversification, multiple property holdings instead of one
  • Managed professionally



  • Can’t leverage with a mortgage
  • Some of the profits go to the company and underlying management
  • Risk is correlated with stock market returns, can lose lots of value in a downturn.




Cryptocurrency has exploded in popularity as an investment in recent years and especially in 2021. This is likely due to its meteoric rise in value. Many people see the incredible profits made in crypto by others on the internet and jump in thinking they can achieve the same results.


Do you want to get started investing in cryptocurrency?  Then, the first and most important step is to start learning about the underlying technology. Conduct research on the use case behind the coins you will buy and understand the value they are providing to society.


Most would recommend you buy Bitcoin and Ethereum to start with. These are proven technologies that both have a clear use case in today’s society. The key here, just like in traditional investing, is to buy what you believe in and hold for the long term.


Trying to day trade cryptos or 10x your money in a few weeks is gambling, not investing. Don’t gamble with any amount you aren’t willing to lose all of.


Holding crypto is also a difficult subject. There are two main options: self custody or holding with a trusted third party. 

For beginners, it is recommended to start by holding with a third party. Blockfi is a great way to start. They have tons of heavy-duty security. They pay you monthly interest on the coins you hold with them, which adds a nice bonus of passive income to your crypto portfolio.


Overall, crypto is incredibly risky but has high potential. It is a very risky move to put the majority of your net worth into crypto. A safer strategy would be to invest the majority in safe traditional investments such as low-cost global index ETFs. Then, you can put a small portion of the money you can invest into crypto for a chance at outsized returns. 


Crypto is incredible technology and has great potential, but betting your entire financial future on it is likely too much risk for most investors. Do your own research, understand what you are buying, hold for the long term, and don’t invest more than you are willing to lose.


Dividend Investing


Dividend investing is one of the most popular long-term investment strategies throughout history. It is very simple, you buy companies with consistent dividend payouts that are growing at a good rate. Typically you want companies that have paid a dividend consistently for well over 10 years straight and have raised their dividend by around 10% each year.


By following this strategy, you can create yourself a portfolio of companies paying you consistent income growing each year. If you reinvest the dividends, you receive into more dividend stocks, you can create a snowball effect. As your dividends grow more, they buy you more shares that pay more dividends. Over a decade, your yearly income from dividends can develop rapidly, sometimes enough to replace your full-time income!


One of the best arguments for dividend investing is how well they perform even if the stock market decreases in price. If the shares of your companies are getting cheaper but still paying the same dividend, it is a benefit to you. This is because you can spend less for the same amount of income. This effect is even better if you are reinvesting these dividends. Each dividend you get paid buys you more shares than it would have if the prices were rising. In this way, a down market can grow your wealth faster than an upmarket if you pick great dividend payers!

Frequently asked questions

How do I buy stocks without much money?

The best way to start is by opening an account with an investment platform you like.


There are 3 main categories…


Robo Advisors

  • Wealthsimple (Canada)
  • Wealthfront
  • Betterment
  • Personal Capital


Round up investing apps

  • Acorns (USA)
  • Wealthsimple (Canada)


Brokerage Accounts

  • Robinhood
  • Webull
  • Wealthsimple Trade (Canada)
  • Vanguard
  • Fidelity


Whichever method you pick is up to you. If you struggle to find money to save each month, round-ups may be the most effective way to start. If you want to create your portfolio, go with a standard brokerage account. Want to just set it and forget it? A Robo-advisor is likely the best pick. There has never been a better time to get started with so many options out there for new investors today, there has never been a better time to get started!

How much should I invest to start?

As much as you can afford to. The best strategy is to look at your monthly income and expenses and figure out how much you can invest monthly. Consistent monthly investment into a balanced portfolio will make you incredibly wealthy if you stick with it for the long run. Even if you can only invest $50 or $100 a month to start, start with that. It’s not about putting crazy amounts of money away. It’s more about building the habit and creating a strong financial foundation for yourself.

How much money do I need to make $500 a month?

A good rule of thumb used in personal finance is the 4% rule. This means it is fair to assume you could make 4% off your portfolio a year consistently in income. While this is just a rough estimate, it is a great tool. This means for whatever amount of yearly income you want, multiply that number by 25, and that is how much you need to be invested.


So in this example, $500 a month is $6000 a year.


Multiply $6000 x 25 to get $150 000.


This means to get $500 a month from your portfolio, you would need to invest $150 000. This is very realistic if you invest consistently over a few years.

What should a beginner invest in?

The best thing a beginner, and even an experienced investor, can invest in is low-cost global index funds. These will grow steadily as the global economy grows, giving you a very diversified and thus very safe portfolio that will capture the rewards of the amazing global economy.


These are the lowest cost and the lowest risk you can get when investing in the stock market. Funds like VT from vanguard track the total global stock market and rebalance automatically for you. This means you can just buy and hold these ETFs forever and know you have a steady growing claim to the profits of the entire global economy.

Can you make a living off stocks?

You definitely can, but probably not in the way you think. Attempting to trade stocks for a living is akin to gambling for a living. It’s not impossible, but I would not risk trying it.


The real way to live off of stocks is to build your portfolio to a point where its annual return can sustain your yearly expenses. Using the 4% rule we discussed above, you can figure out how much you would need to be invested to completely cover your lifestyle.


If you spend $40 000 a year, you would need a 1 million dollar portfolio. This may seem like a lot, but with the power of time and compound interest on your side, it is very attainable even before the standard retirement age. If you want to get there sooner, you can lower your annual expenses or invest more money each month.


Reaching a point where you can live off of your investment portfolio is called achieving financial independence. This is the point where working becomes optional, and you have complete control over your time. This is the ultimate goal in personal finance. Once you are financially free, you have essentially beaten the game of money.

What are the 4 main types of investments?

While there are tons of different investments in the world. There are 4 main ones most people stick to.


These are…


  • Stocks are a claim on the future earnings of a business.
  • When you own a share, you own a small percentage of a company and are owed a share of its earnings.
  • These earnings may be reinvested to grow the companies value, pay a dividend to shareholders, or buy back shares to increase the ownership percentage of each shareholder.


  • Bonds are a claim on money in the future.
  • Either through payment of interest or by paying a discount today for money in the future.
  • A way to spend money today to receive more money in the future.
  • Typically much less risky than stocks as they are debt and legally must be paid.

Real estate

  • The most popular asset in history.
  • Ownership of property somewhere in the world
  • Can be improved and renovated to increase the value
  • Can produce cash flows in the form of rent
  • Great inflation hedge

Alternative assets (Crypto, Gold, Art)

  1. Held to sell in the future for more than you paid.
  2. Inherently riskier than stocks, bonds, or real estate.
  3. You need to get educated and know what you are buying
  4. Much less backing the value of these assets
Is it worth it to invest with only a little money?

Yes! Investing is about starting early. Even small amounts now can grow into incredibly large quantities in the future due to the wonders of compound interest.


For example, say you can only afford to invest $100 a month right now. If you stick with this plan consistently and invest that $100 monthly for 25 years, guess how much you would end up with?


At a rate of 8% growth a year, you would have nearly $100 000 at the end of those 25 years. That came from only $30 000 you invested personally.


If you continued for 40 years, this amount would have grown to over $335 000!


Say instead you found a way to invest $500 a month. This would grow to over $473 000 in 25 years and over $1.67 million in 40 years.


The point here is when you take advantage of compound interest by investing, you let your money do the hard work for you. By investing whatever you can monthly, you can build a portfolio that generates money annually with no work required from you.


Time is your greatest ally in investing. So no matter how small the amount, start investing now, and you will thank yourself in the future.

What is a reasonable rate of return to expect?

Historically the stock market has returned around 8% a year. This is an incredible return and will create massive wealth over time for you as an investor.


However, with stock prices so high currently and bond yields very low, many experts predict that the next decade will have slightly lower returns.


It would be safer to predict a return of around 6% per year. Still a great return that can create great wealth in the long run, but not as stunning as the past returns over the last few decades.


The thing about investing, though, is nobody ever truly knows what the future will hold. For all we know, the stunning market performance could continue. We could see 8% or greater returns over our lifetimes. On the other hand, the market could tank for many years and give us a measly 3% or so annual return over a decade. There is no way to know.


We know that if you don’t invest your money, it will earn no return. It will lose its value due to inflation. No matter what the future holds, the best solution is to start investing. Yes, this is the solution, no matter how little the amount. Start early and use the power of compound interest to build your wealth. Your future self will thank you.


״The secret of happiness, is not found in seeking more, but in developing the capacity to enjoy less״ - Socrates

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