Many people are under the misguided notion that you need a lot of money to begin investing. That may have been true years ago. But with the explosion in the number of niche-type investment platforms in recent years, you can begin investing with as little as $5.

Interested? You need to be – seriously!

Why You MUST Invest with “Just” $5

It all revolves around the time honored saying you’ve got to start somewhere. That’s as true with investing as it is with anything else, and probably more than most.

There’s a critically important investment concept called the time value of money. Its not just the amount of money you have to invest, but the amount of time your money is invested.

Let’s work an example to prove the point…

You’re 25 years old, and you’re in the classic situation of having so little extra money in your budget that you decide not to bother investing at all.

You decide to wait until you have $10,000 to begin investing. Unfortunately, as life tends to go, you’re 50 years old before you have that kind of money – maybe you came into a windfall. You invest it in a balanced portfolio of stocks and bonds, with an average annual return of 7%. By the time you’re 65, your $10,000 grows to $27,591.

But let’s say you choose a different course. No, you don’t have much money. But you can probably manage to come up with $10 per week to invest, or about $500 per year.

If you invest $10 per week for the next 40 years, again, with an average annual rate of return of 7% on your money, you’ll have $103,586 by the time you reach 65.

By not waiting until you’re 50 to begin investing – and by starting now with small amounts of money – you end up with nearly four times as much money at 65.

That’s the power of the time value of money. And it’s the reason why you need to begin investing right now, right where you are, no matter how much or how little money you have.

And you can.

Turning $5 into an Investment Habit

There’s another dynamic involved in investing with no more than $5, and it’s powerful.

More than anything else, investing is a habit – a financial habit. The sooner you embrace it, the better it works for you.

Sure, you may start out with just $5. But once you get used to investing $5 per week, you’ll already have your investment plan in motion. As you begin to build up your account, your motivation will increase. Soon you’ll be contributing $10 per week, and then $20.

It’s all about inertia, and getting it moving in your favor. $5 is just the start. From there, you’ll find yourself carving out more room in your budget. And over time, as your income increases, you’ll dedicate more of that increase to savings and investing.

But none of that happens until you get started, and you can do that with as little as $5.

Where Can You Invest with $5?

We’re not going to promise you the sun, the moon, and the stars here. $5 is enough to get started investing on some pretty popular platforms. But you’ll be starting small, so that will limit the options.

The best platforms to begin investing with as little as $5 are micro-investing apps and some robo-advisors. They’re uniquely designed for small investors. With just a few dollars, a micro-savings app or a robo-advisor can design a fully diversified portfolio of stock and bond funds, as well as manage it for you. Your only responsibility will be to fund the account on a regular basis.

Let’s look at the two categories of investment platforms to help you decide which is right for you.

Micro-Investing Apps

Best for: People who are unable to save to begin investing

Micro-investing apps are exactly what you might imagine them to be. They’re investment apps for new investors, to begin investing with very small amounts of money. The primary attraction of these apps is that they employ a micro-savings strategy. This enables people who have not been able to save in the past to be able to do so on a largely passive basis.

In fact, micro investing apps are the perfect way for a non-investor to become an investor, and with very little effort.

One very popular micro-investing app is Acorns. It allows you to build savings without even trying. They do this through a process called “Round Ups”. The app connects to your bank account. When you purchase an item for, say, $5.25, the app charges your bank account an even $6, then moves 75 cents into savings. Once the round ups reach $5, they’re transferred to the robo-advisor account, where your money is invested in a fully diversified portfolio.

There is no minimum investment to join Acorns, and the service has an advisory for of $1 per month to manage your investments. The app is available for Android and iOS devices, and enables you to set up either a regular taxable account or an IRA.

Another micro-investing app is Stash Invest. Instead of using round ups from your spending activity, you actually make direct contributions of $5 at a time. You do this by directly linking the app to your bank account, and have the money transferred periodically.

Stash Invest doesn’t actually manage your account. Instead, they provide you with investment recommendations. They even enable you to invest in stocks through what are known as “fractional shares”. These are small slices of stocks, but you can actually build a portfolio with them.


Best for: People who can save and are ready to begin investing with
very little money

Robo-advisors are automated, online investment platforms that allow you to invest with very little money. They build a fully diversified portfolio, then manage it, which includes periodic portfolio rebalancing and dividend reinvestment. They come with very low management fees, and can be used for both taxable accounts and IRAs.

Robo-advisors have become quite popular in the past decade. And while they’re available for all portfolio sizes, some of them specialize in new and small investment accounts. In many cases, you can open an account with no money at all, or with just a few dollars.

Betterment is largest and best-known independent robo-advisor. In many ways, it sets the standard for the industry. You can open your account with no money at all, and fund it with periodic deposits. In fact, once you open an account with Betterment, your only responsibility will be to fund the account. They’ll handle everything else for you.

There are other robo advisors you can consider as a new investor. For example, WiseBanyan requires a minimum of only $1 to open an account (but you must have at least $10 in your account before you can begin investing) and they provide their investment management service for free.

Robo-advisors have also become highly specialized in recent years. For example, Ellevest is a robo-advisor designed specifically for the financial needs of women. Not only do they invest in a higher percentage of companies led by women, but it also accounts for financial variances, such as the fact that women outlive men, and will need to provide for themselves for a longer period of time. There is no minimum initial investment to open an account, and you can start either a taxable account or an IRA.

Micro-Investing vs. Robo-Advisors – Which is the Best to Start With?

For many investors, the best choice is going to be micro-investing apps. You can begin investing with as little as $5, and the apps will even help you to accumulate that money. Micro-investing apps are particularly useful for anyone who has had difficulty saving money, let alone investing it.

Robo-advisors can also work well for brand new investors, at least the ones that require little or no money to begin. However, they don’t have the capacity to help you save money. That’s a skill you’ll need to develop on your own, so that you can fund the account.

But the advantage with robo-advisors is that they’re better suited to grow with you, as your small investment pile begins to get bigger. They can manage accounts with tens of thousands of dollars, which micro-investing apps are less suited to.

In general, if saving money is the main problem, micro-investing apps are the better choice. But if you do have a workable plan to save money on a regular basis, robo-advisors will be the better option.

 Micro-Investing AppRobo-Advisor
Best ForPeople who are unable to save to begin investingPeople who can save and are ready to begin investing with
very little money
Minimum Investment$0 - $5$0 - $10
Fees$1 per month to 0.25% per year0.25% - 0.50% per year
Automatic DepositsYesYes
Fully Design PortfolioYesYes
Ongoing Portfolio ManagementYesYes
Available for IRAsSomeYes

Moving on to Bigger and Better Things

Some of these investment platforms, like Betterment, WiseBanyan and Ellevest, can grow as your financial ability grows. But accounts like Acorns and Stash Invest are mostly starter accounts. And that’s perfectly fine, because you need to start somewhere.

But as your account balance grows, and your weekly or monthly contributions expand, more investment options will open up. Eventually, you may be able to move some of your money into a self-directed investment brokerage account, where you can trade stocks and even options.

But you have to walk before you can run, and any of the investment platforms listed above will enable you to do just that, and with $5 or less.

Where NOT to Invest with Just $5

Throughout this article we’ve covered where to invest with $5 or less. But let’s close this analysis out by looking at some of the places you shouldn’t invest, and the reasons why. Examples include:

  • In a “cookie jar”. This is a very basic way of saving money, but it offers no way for your money to grow. That completely disqualifies it as an investment.
  • In the bank. The interest being paid on bank products is barely visible to the naked eye, especially on very small balances. Like the cookie jar, your money just doesn’t grow in a bank.
  • Individual stocks. Some of the investment apps in this article do allow you to invest in stocks, using fractional shares. But to seriously invest in individual stocks, you’ll need several thousand dollars to build a well-diversified portfolio.
  • Mutual funds. Good concept, but many require a minimum of $3,000, though you may find a very small number that will let you in with as little as $1,000.
  • Collectables. Ironically, it’s the higher value collectables that tend to have the best appreciation potential. Whether it’s numismatic coins, stamps, or artwork, you’re unlikely find investment-worthy collectables with just a few dollars.

Any of these may prove to be investment-worthy once you have a larger nest egg, and you’re looking to diversify. But with just a few dollars, you have to concentrate the funds that you do have in growth-type assets. Micro-investing apps and robo-advisors are the places to do that in 2020 and beyond.

Save the other stuff for later. But start investing nowwherever you are, and however little money you have.

Your future self will love you for it!

Note: This article provides advice on how to invest $5, but the strategies are equally relevant for investing $10, $20, $25, and $50. If you have more than more than $95 to invest, find the article in the list below for advice more relevant to your specific financial situation.