While investing has historically been left up to the big guys at big banks managing big money, that’s not the only way to invest today. 

Investing is accessible to everyone with every size bank account. There are plenty of small investment ideas for as little as $20 or as much as $1000.

Everyone needs to start somewhere. In fact, if you’re just beginning your investing journey, it’s a good practice to start small.

When it comes to money, “small” means something different to everyone, so I’ll walk you through a few small investment ideas based on your budget. 

Over time, even small investments can reap big returns. 

You may be surprised to learn just how easy it is.

With the right strategy, starting small can be an advantage rather than a shackle. Read on for how to invest in stocks for beginners with little money.

A Strategy for Making Small Investments

Before we dive in, it’s important to know what investing is in the first place and how to get the greatest return on your investments.

Whether you’re investing with small money or big money, you will follow the same basic investing strategy. 

The best way to invest $1000, $500, or even $20 is the best way to invest $10,000. 

Investing is always investing.

The value of the investment is always the top priority. 

You first want to consider how much the thing you want to invest in is actually worth. 

What is its real value? Then, what is the price? If the price is less than the value, then you’re off to a good start.

But let’s dive into a couple of other factors at play when you’re figuring our your small investment strategy.

Determine The Best Type of Small Investment for You

There are lots of different types of investments you can make, but not all investments are great for small amounts of money. For example, you can’t invest in real estate with $500, and even though you can invest $500 in Exchange Traded Funds and bonds, it doesn’t mean you should. 

If you put $500 in ETFs or mutual funds each year for the next 30 years and get the long-term historical return of 7%, all you’ll have in 30 years is $45,000 (less fees for mutual funds). 

Take bonds next; with a historical return of 5% over the next 30 years, your investment will grow to around $35,000. Bonds may be the safest way to invest, but how safe is a retirement of $35,000?

If you ask yourself, “What will make me the most money?” The answer is investing in stocks. 

Later, I’ll show you how to calculate how much you can have in 30 years if you invest $500 in the stock market. Hint: it’s a lot more than the other options.

But first, let’s talk a bit about the number one thing I hear beginners say that holds them back from making even the smallest investment: fear of the stock market.

Overcome Your Fears of Investing in the Stock Market

The stock market can be scary and risky if you don’t know what you’re doing, but one of the key principles of Rule #1 investing is to invest only in businesses you understand. 

You can overcome the fear and risk of the stock market if you understand what you are investing in. 

Putting money into things you don’t understand is NOT investing. 

It’s SPECULATION and speculating stocks is equatable to gambling. 

Frankly, that’s the way most retirement accounts are managed. 

The account managers are speculating on someone being willing to pay more for a stock tomorrow than you paid today. 

This is likely to be true in the long run, but you have to ask yourself, “How long is the long run?” and “How much more will you make?”

That’s why you should consider learning how to invest (real investing, not speculation). 

Real investing is when you buy wonderful businesses you understand at undervalued prices that guarantee great returns.

If you do this, you will be able to overcome your fear of investing and set yourself up for success. 

Bottom Line: “Risk comes from not knowing what you are doing.” – Warren Buffett 

Understand How Small Investments Pay Off in the Long Run

You’re here, so I’m preaching to the choir, but I can’t stress enough how important it is to just start. 

It is better to start with small investments and add to them over time than to wait and lose out on great returns as well as the power of compounding interest.

Every day you don’t invest you are losing out on compound interest. With compound interest, when your money grows, its growth is also invested. 

There’s a tool I like to use called The Rule of 72 that does a good job of explaining the power of compounding interest and will show you just how fast your money can double. 

This is how even small investments can pay big dividends. 

What Can I Invest in to Make Money Fast?

The answer to this question might disappoint you. Investing and making money fast go together about as well as oil and water… 

If you used the rule of 72 I mentioned above, you’ll see that it will probably take a few years for your money to double, but if you’re investing the Rule #1 way, which is for the long term, a few years is nothing. 

If you want to make money fast, go to Las Vegas, bet everything on black, and hope you come out on top. When you’re taking risks just to make money fast, you’re not investing, you’re gambling.

Remember, we don’t gamble with our money here. We buy wonderful companies at attractive prices.

So, I propose a new question: 

What Can I Invest in to Make More Money?

If you really want to learn how to invest, it takes a good amount of due diligence and patience but the long-term payoff is worth it. 

people like Warren Buffett extremely wealthy, you may not make money fast but you will make more of it.

Warren Buffett started with a small amount of money too, and he turned it into $30 billion. 

This goes to show that it isn’t about the money you have, it’s about the knowledge you have.