How to Start Investing With $1,000 or Less

How to Start Investing With $1,000 or Less

37 13987

Start InvestingI regularly get asked “How can I start investing with $1,000 or less?” Many believe that because they don’t have a lot of money they simply have to wait to start investing.

Having more money to invest in the stock market is obviously better though that doesn’t mean you need to wait. It just means that you have to find the options that work best for your specific situation.

I believe that the most important step to grow your wealth is actually starting – regardless of the amount you have to begin with. If you’re looking to start investing with $1,000 or less I’ve put together some of the best ways to do so – even as low as $250.

Pick the Right Discount Brokerage

As I shared in my initial post on investing in the stock market, choosing an online brokerage is a key part to investing. The problem is not all brokerages have the same minimum balance requirements, not to mention the fact that the number of options can be overwhelming.

If you want to start investing with $1,000 or less you will be somewhat limited, but not as much as you think. In fact, you can even invest at several of the three more well- known online brokerages. Below are their minimum requirements:

  • Vanguard – you’re subject to their fund minimums, of which some are $1,000
  • Schwab – you can open most accounts for $1,000
  • Fidelity – you need to have $2,500 to open an account with Fidelity

Outside of those major brokerages, there are still many others that will allow you to open an account with under $1,000. Many of the more well-known ones, such as Scottrade allow you to open various account types with less than $1,000. You can also check out our TradeKing review for a brokerage that has no minimum balance require to start.

If you’d rather have someone manage the investing for you that is even possible. You can look at Betterment vs Wealthfront as both robo-advisors manage investments and you can open accounts for $500 or less.

Point being, you do have viable options when you start investing with $1,000 or less. I will give the disclaimer though that you want to be very mindful of fees when you have little money to start investing. Fees can be a drain on an investment portfolio, and this is even more so when investing with little money.

Start Investing by Buying Fractional Shares

When you first start investing you may be overwhelmed when you look at certain stocks which trade at hundreds of dollars per share. You may think it’s impossible for you to invest, but that’s a myth. What many don’t know is there are ways to buy fractional shares of stocks.

While this will not make you a millionaire overnight, the point is that it allows you access to start investing in the stock market so you can grow your money. The two main options to choose from if this is the direction you want to take is Sharebuilder and Motif Investing.

Sharebuilder is the better known of the two options and with them there is no account minimum to start investing. After opening an account with Sharebuilder, you set up what’s called an Automatic Investment Plan. This plan allows you to set up an interval for your investing – weekly, monthly, etc. You establish how much you want to spend with each interval and what stocks, ETFs or mutual funds and it invests the money in those, even buying fractional shares if need be.

With Motif Investing, you set up what’s called a motif for as little as $250. This can be a grouping of up to 30 stocks or funds you like and they also have pre-made ones. This essentially allows you to create your own ETF and invests in fractional shares. For a further breakdown of how Motif works, here’s our Motif Investing review.

What I like about both of these options is they allow you to start investing in the stock market with less than $1,000 and make it simple to manage. The beauty is that you can start with something like this and use it as a base to get more serious with your investing as time and finances allow. Of the two, Motif Investing is my personal favorite as they allow you to create your own fund (and thus everything in one place) as opposed to buying a bunch of individual stocks as you would through Sharebuilder.

Buy Direct from the Company

The final main way to start investing with $1,000 or less is to buy shares directly from the given company. I will say that there are a few drawbacks to this, mainly that not every company sells its shares directly and that it can lead to having shares that are too spread out. While this is a viable option, I prefer not to buy direct as it can overcomplicate things – I’d much rather have everything in one location.

In most cases, you won’t buy directly from the company but through a Transfer Agent – usually through ComputerShare. Most companies have a minimum of either $100 or $500 and some will allow you to buy shares for free, though some will charge a nominal fee.

I personally wouldn’t choose to go with this route, as I’d rather not have different investments all over the place. However, if you’re a long-term investor and plan little change in approach this can be a viable option to consider.


What challenges did you face as you started investing in the stock market? How would you start investing if you were starting with $1,000 or less?


Additional resource: If you’re looking for an online broker to start investing but have limited funds check out my favorite brokerage that allows it – Motif Investing. You can open an account for as little as $250. I personally invest with Motif as they provide instant diversification and make it easy to invest in what you know.

Open an account with Motif Investing today and get up to $150 cash back!


Photo courtesy of: 401(k)2012

If you enjoyed this post, please consider leaving a comment or subscribing to the RSS feed.


  1. I use Vanguard myself. I like their low-cost funds anyway. If you have a brokerage account with them, you can buy their ETFs commission free and there is not a minimum required purchase.

    Computershare and Loyal3 also look great for low-cost dividend investing.

  2. Fantastic article John!

    This is a great incentive for those who are ‘waiting’ until they have more money to invest – you really don’t need much to get started. And the sooner you invest a bit of real money, the sooner you really start learning how to become a better investor.

    Even though you can jump in quickly with little money, I think it’s still important to educate yourself and invest in something you understand to start with – a good quality business or an index fund are usually ideal. I’ve seen too many people dip their toe into the market on a ‘hot tip’ from a friend, only to end up badly burnt and not wanting to ever invest again! The two recommended books from your first post on investing are definitely great starting points – I also like “One up on Wall Street” by Peter Lynch as a good one to start with.


    Jason @ Islands of Investing recently posted…What’s a ‘P/E ratio’, and how can it help me become a better investor? (Part 1)My Profile

    • Thanks Jason!

      I agree, you really don’t need a ton to get started and if you do it right that small amount will build to where you can do more with it.

      That education aspect is huge as many allow that to hold them back. I’ve spoken with far too many individuals who followed that hot tip idea only to have it blow up in their faces and throw your hands up altogether.
      John recently posted…Common Money Mistakes We’ve All MadeMy Profile

  3. This is exactly where we started when we got going on investing. We did not have much to put away so we started out buying fractional shares at Sharebuilder. We really liked their service and it was a great way to get started since we could buy small portions of some of the more expensive stocks like Apple and Berkshire Hathaway. We later rolled our Sharebuilder account into TD Ameritrade when we rolled over a former employer’s 401K there, just to make things more streamlined. But this is a GREAT way to start investing.
    Dee @ Color Me Frugal recently posted…Is Some Degree of Lifestyle Inflation Inevitable (and Necessary)?My Profile

  4. For our Roth, we saved the $1000 to get started at Vanguard. You can do many of the Target Retirement fund or the Star fund with that amount and then switch when you get to $3000. I also have used Sharebuilder and Betterment because they ran offers of a bonus for opening an account. The majority of our investing in done in tax advantaged accounts at the moment, but I’ve kept contributing to the Betterment one just to have some diversity. They just make it really easy.
    Kim recently posted…Cost of Fostering a DogMy Profile

  5. My DH and I also deal with Vanguard for our IRA’s and I’ll likely open my SEP with them also. For my Canadian RRSP I use Questrade and I’ve had a positive experience so far. I purchased some ETF’s due to the low MER and there are no trading fees on ETF purchases.
    Kassandra recently posted…Living Below Your Means, Your Way!My Profile

  6. We opened a custodial account at Schwab for our 13-year-old son so he could invest half of his savings account ($500) in their total stock market ETF (SCHB). There is no commission if purchased through Schwab, and the expense ratio is a super low 0.04%. I told our son he could lose money in the stock market. He asked then why did we invest so much in the market. I told him that over the long term, meaning 20 years, almost nothing has beaten the returns from the stock market. I also told him the real way to make big bucks is to not just watch his $500 increase in value, but that he needed to continue putting new money as he earned it into the market. He said, “OK,” and then went off to play his favorite computer game called Minecraft. He hasn’t mentioned putting more money in the market, and I figure he has probably forgotten about his investment. I will talk to him about putting more in after he gets some monetary gifts next Christmas.
    Bryce @ Save and Conquer recently posted…Carnival of Retirement, April 28, 2014My Profile

  7. I invest in Vanguard and Fidelity. You can’t really beat Vanguard and since I already have my 401(k) with Fidelity I decided to do some investments with them as well to keep it all in one account, aside from my Vanguard fund. I have large cap index with Vanguard and mid cap index with Fidelity to diversify a little more.
    Aldo @ MDN recently posted…The Powerful Force of Compound InterestMy Profile

    • That’s a great way to start out Tre! Depending on how much you have in the account now, you now have different options to look at. I love USAA as we have numerous banking and insurance products through them. In terms of investing though, there are definitely some lower fee options out there to consider.
      John recently posted…How Do You Prepare Financially for a New Month?My Profile

  8. Great post, John! I need to share this with some family members. I’ve been using Vanguard and I started by purchasing a few of their low-cost index funds. Now I’m buying individual stocks through them because I like having my investments in one place. I’m still fairly new to investing, but I’ve realized how important it is to just get started!
    Addison @ Cashville Skyline recently posted…Holding Myself Accountable: The April ReviewMy Profile

  9. Good tips, yes you can start investing from little to no initial investment. Yes there are brokerages like that. I mainly dabble in mutual fund but high risk or high yield. Withdrawing those money gained will be used to pay for my retirement options later on. I really liked the Sharebuilder, where you set up what’s called an Automatic Investment Plan for mutual funds. Because i always forget or miss out putting money in every month.
    Jeff @Project Ikonz recently posted…Ebay side hustle is awesome and crap at the same timeMy Profile

  10. Personally the way I like to start investing with small amounts of money is to simply buy 1 or 2 high quality dividend stocks and let the snow ball effect take root. It doesn’t take much to start but it does take consistency and patience. You cannot sell if your stock goes down. Just dollar cost average. With a couple good companies you are off to a start for long term investment and dividend cash flow.

    • That’ a great approach to take DivHut! I generally say that if you don’t know what to invest in to look at the products you use in your day to day life as many of them are quality dividend payers. If you start with this, it’ll grow exponentially as you begin to add more money to it.
      John recently posted…What’s Keeping You From Chasing Your Dreams?My Profile

Leave a Reply

CommentLuv badge