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23 Small Investment Ideas to Cultivate Wealth

Large fingers building a tiny brick wall symbolizes using small investment ideas to cultivate wealth.There’s no shortage of small investment ideas now that financial platforms are finally catering to investor demand. 

Many of the asset classes we take for granted today weren’t readily available to beginner investors more than a decade ago.

Access to commission-free online brokers, fractional shares, and innovative exchange-traded funds (ETFs) has broadened the universe of investments available to new investors with only small dollar amounts to invest. 

Now you can spend your time identifying profitable investments instead of figuring out how to buy them. 

Starting small is far better than not starting at all. I’d rather see you consistently invest $5 or $10 in stocks or ETFs than stay out of the game. 

Fortunately, you can now get started investing for $1 with fractional investing. If you aren’t already, it’s time to begin cultivating the foundations of generational wealth.

The list below contains 25 different small investment ideas. You’ll find some of these familiar. But you may not have known that you can get started for so little. 

I’ve loosely grouped the list items into five categories:

  • Individual stocks
  • REITs
  • Mutual Funds and ETFs
  • Cash and Treasuries
  • Alternative ideas

Start investing in what you know best and diversify from there. Continuously improve your investment knowledge as your portfolio grows. 

Fractional Share Investing

Many small investment ideas on this list have a low minimum investment threshold thanks to fractional share investing.

Fractional share investing used to primarily be only available through dividend reinvestment plans (DRIPs) and mutual funds (often with high minimum investments to open an account).

But more discount online brokers are now offering fractional share investing for free.
 
My favorite is M1 Finance, which helped to pioneer fractional share investing for diversified portfolios, along with Stash, Motif, and Betterment.

M1 Finance takes the best of DRIP investing (buying and reinvestment of individual stocks) and applies it to most individual stocks and ETFs
 
Instead of waiting to have hundreds or thousands of dollars to buy a single share of a high-priced tech stock, you can buy a partial share for as low as $1.
 
Other brokers are finally starting to catch up to M1 Finance and offering fractional shares, but it’s often an afterthought.

  • FidelityStocks by the Slice” offers fractional share investing for a $1 minimum investment for 7,000 stocks and ETFs. But it’s only available on the mobile app.
  • SchwabStock Slices” has a $5 minimum. Only S&P 500 stocks. No ETFs. 
  • Robinhood has a $1 minimum investment threshold, but it’s still rolling out the functionality to customers. 

Check out my best brokers page for more brokers offering fractional share investing. 

The minimum to open an account with M1 Finance is only $100. But once the initial funds are deposited, the minimum investment per stock or ETF is $1

In the coming year, look for widespread adoption of fractional share investing, lower minimums, and better ease of access.  

Read more: M1 Finance review

With that, here’s our list of 25 small investment ideas to start building wealth.

Note: Not all of these small investment ideas are right for everyone. Mentions here do not equal a recommendation to buy. Please perform due diligence aligned with your investment objectives. 

Individual Stocks

1. Dividend Stocks

No surprise here. My favorite passive income stream is dividend growth stocks.

Dividend growth companies typically pay investors quarterly and usually raise the dividend every year. That means, once you buy the stock, you earn an income while the stock appreciates over time. 

Dividend stocks are more accessible than ever now that almost all online brokers are commission-free.

You’ll either need to save enough money to buy one share of a stock or invest with a fractional share brokerage to diversify your portfolio.

Many of the best long-term dividend stocks are members of the Dividend Aristocrats list — a group of 50+ blue-chip companies that have paid and increased dividends every year for at least 25 years.

If eligible, invest through a Roth IRA to eliminate taxes on the dividend income. Own high yield dividend stocks to get more bang for your dollar. 

Minimum investment: $1 via fractional share investing

Read more: How to Invest in Dividend Stocks

2. Growth Stocks

Growth stocks trade the same as dividend stocks, but many don’t pay a dividend. These companies invest all profits back into the business, so the company, and their stock price, continue higher. 

You can buy these companies with any online brokerage account. However, growth companies sometimes have high share prices. So you may need to save $1,000 or more before you can afford a share.

Fractional share investing empowers you to own the most exceptional growth stocks of our time for as little as $1. I recommend investing with a lot more than a dollar if you can to increase return potential.

Since they often don’t pay dividends, investors reduce their tax burden when investing in taxable accounts.  

The best place to find stock tips on growth stocks worthy of your investment dollars is the Motley Fool Stock Advisor newsletter. They give recommendations on the new best growth stocks a few times a month.

I’m a subscriber myself. Use this link to get half-off the regular subscription price.

Over the past year, two growth stock recommendations (RDFN, TTD) that I bought in my IRA have doubled. Another (ZM) has almost tripled. The subscription has easily paid for itself. 

Minimum investment: $1 via fractional share investing

Read more: Motley Fool Stock Advisor Review

3. Initial Public Offering (IPO) Stocks

Initial Public Offerings (IPOs) are a good example of an asset class once reserved for the wealthy but are now available to ordinary investors. 

During bull markets, there’s a constant flow of new companies that become publicly traded. When they have their IPO, there’s sometimes a one-day “pop” that sends the stock upwards. 

Those who get access to the high-demand future IPO investments such as Impossible Foods may score profits.

The larger brokers only provide IPO access to their wealthiest customers (assets over $1 million).

However, two more nimble online brokers now offer IPO access to all of their customers with low minimum investment amounts. They are TradeStation, a full-service broker for active traders, and Webull, an app-first mobile trading alternative to Robinhood (which doesn’t provide IPO access).

Both have partnered with a company called ClickIPO to give their customers access to IPOs for as little as $100. 

Robinhood and SoFi are now offering IPO access as well. 

Long-term investors should only invest in IPO stocks if you understand the company business model and intend to hold on. Active traders can be less fussy. But be careful, IPO stocks are higher risk in the first day or two of trading. 

Another strategy is to buy future IPO stocks earlier in their lifecycle by participating in venture capital investing

Webull minimum IPO investment: $100
TradeStation minimum IPO investment: $500

Real Estate Investment Trusts (REITs)

4. Real Estate Traded REITs

Real estate investment trusts (REITs) are similar to stocks because they are regulated and trade on stock exchanges. However, they are classified differently than regular U.S.-based companies. 

REIT status means the companies receive some tax benefits to pay their investors at least 90% of profits as dividends. 

To qualify as a REIT, the company must:

  • invest at least 75% of its total assets in real estate, and
  • derive at least 75% of its gross income from rents from real property, interest on mortgages financing real property, or from sales of real estate.

There are about 225 traded REITs registered with the Securities and Exchange Commission (SEC). 

You can buy them individually or through an ETF that invests in several all at once. 

Minimum investment: $1 via fractional share investing

Examples of REITs: Realty Income (O), and Simon Property Group (SPG), American Tower (AMT)
Examples of REIT ETF: Vanguard Real Estate Index (VNG), iShares Core US REIT ETF (USRT)

5. Real Estate Non-Traded REITs

Non-traded REITs are similar to traded REITs, but you cannot purchase them on a stock exchange. They are regulated like other securities, but you buy them on a crowdfunding platform instead of the stock market. 

Real estate crowdfunding is a relatively new way to own high-quality real estate by pooling your funds with other investors to buy larger properties, such as multifamily residential and commercial properties. 

The most innovative crowdfunding platform and by far the most popular is Fundrise. Other platforms with similar offerings include RealtyMogul and Streitwise

Fundrise enables ordinary investors to create a starter real estate portfolio for $10 minimum investment. You’ll own top-notch rental apartment complexes for rental and intermediate-term development properties. 

A decade ago, you could not invest in such high-quality properties without thousands of dollars. Fundrise now makes it possible for nearly everyone.

Minimum investment: $10

Read more: Fundrise Review — Passive Income via Real Estate

Please note: This is a testimonial in partnership with Fundrise. We earn a commission from partner links on RetireBeforeDad.com. All opinions are my own.

ETFs and Funds

6. Micro-Investing Apps

Micro-investing is a relatively new concept popular with beginner investors. It’s inherently about starting small, and eventually building those initial seeds into more significant wealth. 

Fractional share investing is one way to micro-invest. But the term micro-investing was brought the mainstream by a company called Acorns.

You may have heard of Acorns from Cramer and CNBC. The company has made it possible for anyone to “invest spare change” into a portfolio of ETFs, based on age and risk tolerance. 

When you spend money on your credit or debit card, Acorns rounds-up to the nearest dollar. Once you’ve surpassed $5, it transfers that amount to your account and invests based on your selected portfolio. 

Individual stock investing is not available at Acorns — customers own stock and bond index funds, which are excellent investment choices for beginners. There’s a $1 per month fee for accounts under $5,000 (0.25% above $5,000).

Acorns is an easy way for beginners to start investing, even if you’re clueless about the stock market.

Minimum investment: $5

Learn more at Acorns.

7. Employer 401(k) or Equivalent

The tax benefits of investing through a 401(K) are extraordinary. You immediately give yourself a long-term tax and market advantage. 

Use a traditional 401(k) to reduce your taxes in the current tax year, or a Roth 401(k) if available, for after-tax contributions. 

Aim to invest in low-cost total stock market and bond index funds or ETFs. If your employer plan doesn’t have index funds, demand them. These kinds of funds mimic market returns and have very low fees. 

The minimum investment amount to get started is usually 1% of your salary per pay period. So if you make $50,000 per year, that’s about $19 per paycheck. 

If there’s a match, make sure to invest the minimum required to receive the match. Even if there isn’t, I recommend setting a goal to max out your 401(k). The decision to do so will eventually make you wealthy. 

If your employer doesn’t offer a sponsored plan, open a Roth or traditional IRA for similar tax benefits.  

Minimum investment: about $15-$40 per pay period, depending on your salary. 

Read more: Nerding Out with my Employer-Sponsored Retirement Plan

8. Stock Index ETFs

Index funds and ETFs invest in all of the stocks in a given market index. The most popular index fund is the SPY, which follows the S&P5 500 index, or the 500 largest U.S.-traded stocks.

I prefer a broader index ETF, such as the Vanguard Total Market Index (VTI), which holds around 5,000 stocks. 

Stock index ETFs are similar to stock index mutual funds. The difference is that ETFs trade like stocks, while mutual funds trade at the market close. 

Mutual funds often have high minimum investment amounts, putting the best funds out of reach. 

ETFs, on the other hand, can be purchased as whole or fractional shares. 

Index funds are recommended over managed mutual funds (when analysts pick the stocks) for most investors because of lower fees. 

Plus, a study by Vanguard found that about 80% of managed funds underperform the S&P 500 over long periods. 

Minimum investment: $1 via fractional share investing

Example stock index ETFs: SPY, VTI, IWM

Read more: Individual Stocks vs. Index Funds

9. Dividend-Focused ETFs

I’m a long-time dividend growth investor. I aim to generate enough income from dividends to cover a significant portion of my living expenses in retirement.

Choosing the best dividend growth stocks takes a lot of time. Some investors don’t have the knowledge or time to research the best stocks, but still want the benefits of dividend income. 

Dividend growth ETFs fill this need for investors. 

Some of these funds aim to hold the companies committed to growing their dividends every year, while others choose stocks with high yields

These factors make dividend-focused ETFs a good option for those investing for income without the time, knowledge, or stomach to buy individual stocks. 

Minimum investment: $1 via fractional share investing

Example dividend-focused ETFs: SCHD, DVY, VYM, SDY, NOBL, VIG

10. Diversified Bond Index ETFs

Individual bonds don’t make sense as a small investment idea. The minimums are too high, and diversification is out of reach.

If you’re buying bonds with small amounts, it’s better to diversify with a mutual fund or bond ETF.

Diversified, or “aggregate” bond ETFs give you investment exposure to thousands of bonds with just one purchase. These funds contain a variety of bond types, yields, and maturities.

Buying a diversified bond ETF gives you broad exposure from one purchase. 

Make sure the fees are below 0.2% to keep your costs down. Also, pay attention to the fund yield. Higher yield means lower-quality bonds. Lower yields mean safer for your money. Choose the type that fits your investment objectives. 

Aim to invest in both domestic and international-focused ETFs to diversify further. 

Minimum investment: $1 via fractional share investing

Example diversified bond ETFs: BND, BNDX, AGG

11. Municipal Bond ETFs

Investors allocating non-tax-advantaged accounts looking for bond income without taxation should consider municipal bond ETFs.

States and local jurisdictions issue municipal bonds to help pay for roads, bridges, schools, and other infrastructure projects for the public good. Interest paid on municipal bonds is tax-free, reducing your overall tax burden. 

Since governments have the legislative authority to increase taxes on their citizens to cover liabilities, municipal bonds are relatively safe. 

Instead of purchasing individual municipal bonds with a high minimum, it better to buy a pool of diversified municipal bonds through an ETF to lower your investment risk. 

Minimum investment: $1 via fractional share investing

Example municipal bond ETFs: VTEB, MUB

Note: I’ve recently purchased VTEB in my taxable brokerage account to diversify my investment income.

12. Corporate Bond ETFs

Similar to the previous bond-related small investment ideas, corporate bond ETFs help investors diversify among hundreds of companies to spread risk and increase income potential.

Corporate bond ETFs are categorized into different groups for varying bond ratings and maturities. Higher-yielding bonds, known as junk bonds, carry higher risk but pay more.

Investment-grade bonds typically pay lower interest but are less likely to default. Utilize ETFs to build the right corporate bond holdings for your specific objectives. 

If you’re considering an investment in corporate debt ETFs, you’re not alone!

Example corporate bond ETFs: LQD, HYG, VCSH, JNK

Minimum investment: $1 via fractional share investing

13. Inflation-Protected Securities ETFs

Inflation-protected bonds are U.S. Treasury securities that protect against inflation. Here’s how the Treasury Department explains it:

The principal of a TIPS (Treasury Inflation-Protected Securities) increases with inflation and decreases with deflation, as measured by the Consumer Price Index (CPI). When a TIPS matures, you are paid the adjusted principal or original principal, whichever is greater.

If you buy TIPS bonds individually, the minimum investment is $100. But using ETFs lowers the entry point and immediately diversifies your holdings. 

The concept of inflation-protected bonds is a bit confusing. The main takeaway is they are like holding regular Treasury bills, bonds, and notes, but adjusted for inflation. 

Minimum investment: $1 via fractional share investing

Example inflation-protected bond ETFs: TIP, STIP, SCHP, VTIP

14. Gold ETF

Physical gold and jewelry aren’t suitable for small investments. Gold is expensive, and you need to store it safely. 

But you can own gold through an ETF. 

The SPDR Gold Shares (GLD) gold ETF is hugely popular with investors. It’s easy to buy, and a massive stash of physical gold secures the investment. Storing all of that gold is expensive. The ETF carries a 0.40% expense ratio.

Gold often rises when the stock market falls or during bouts of inflation because it’s an age-old asset that investors and sovereign nations trust — whether its right for your investment objectives is up to you. 

Minimum investment: $1 via fractional share investing

15. Silver ETF

The iShares Silver Trust (SLV) is the “GLD” of silver. Similar deal, but a slightly higher expense ratio at 0.50%.

Minimum investment: $1 via fractional share investing

16. Diversified Commodities

For broader exposure to commodities, there’s an ETF called the Invesco DB Commodity Index Tracking Fund (DBC). This ETFs comprises 4 of the highest trading volume commodities in the U.S., including gold oil, wheat, sugar, soybeans, copper, and natural gas.

Though this investment sounds interesting for diversification and pays an OK yield, its performance is lousy vs. GLD and SPY since its inception in 2008.  

The asset class could be an epic turnaround candidate or a perpetual loser. 

17. Zero-minimum Index Funds

I like investing in mutual funds because trades complete after the market closes, so I don’t have to pay attention to intra-day price fluctuations. 

Unfortunately, many mutual funds have high investment minimums, preventing young investors with small amounts from getting started. High minimums have been a roadblock for decades. 

However, Fidelity has stepped up its game in competition with Vanguard and now provides about 25 zero-minimum low-cost index mutual funds. Similar funds at Vanguard have minimum investments of $3,000.

It’s one of the reasons I transferred some retirement assets from Vanguard to Fidelity

Read more at Fidelity.

Cash and Treasuries

18. Savings or Money Market Account

Idle cash loses value to inflation over time. One way to reduce the effect of inflation is to keep your money in a high-yield savings account. 

Unfortunately, since COVID-19, rates have plummeted. My account with Marcus is down to paying 1.05% interest. But that’s better than nearly all checking accounts. 

It’s a mistake to ignore cash as a low-yielding safe investment. Make it a habit to keep idle cash in a safe place that pays you interest. 

Minimum investment: $0 at some online banks

19. Certificates of Deposits (CDs)

Longer-term CDs usually pay a higher yield than a regular high yield savings or money market account. If you’re going to use CDs, I suggest using a CD ladder to space out the durations and keep your cash liquid. 

You’re not going to get much traction with high yield savings or CDs these days, but a few years from now could be a different story. 

I do not recommend buying a CD ladder at this time of ultra-low interest rates. 

Minimum deposit for a CD: $500 (at Marcus)

Read more: I explained how a CD ladder works in this article for U.S. News & World Report. 

20. Individual U.S. Treasuries ($25 minimum)

U.S. Treasury notes, bills, and bonds are paying some of the worst yields in our nation’s history. Treasuries are safe as they are backed by the taxation power entrusted to our leaders. 

I prefer to get diversified bond exposure via ETFs, but you can purchase U.S. Savings Bonds through the federal website TreasuryDirect.gov. The minimum investment is surprisingly low

Minimum investment: $25

Alternative Small Investment Ideas

21. Master Limited Partnerships (MLPs)

Master limited partnerships (MLPs) are similar to stocks and REITs. But they combine the tax benefits of a Limited Partnership business entity with the ease of liquid trading on the stock market. 

Publicly traded MLPs are typically oil and gas pipeline companies. They distribute virtually all of their cash flows to investors as dividends, making them excellent income investments.

MLPs have units instead of shares and have different tax consequences, making them both tax-efficient and liquid. Investors in MLPs need to file a form K-1 with their tax return at the end of the year.

The MLP provides these at tax time, but increase the complexity of your tax return. 

MLPs tend to have much higher yields than common stocks, so they pay bigger dividends.

Examples of MLPs: Energy Transfer (ET) and Enterprise Products Partners (EPD)

Minimum investment: $1 via fractional investing. 

22. Pay Down Debt

I’ve never regretted a paid off debt. 

When you pay down a credit card, mortgage, or other loans, the interest rates serve as the “return” on your investment. 

The stock market has historically returned about 9% to long-term investors. If you owe any money at a higher rate than that, you have no business investing. 

Pay off high-interest debts first. Paying off debt is a guaranteed rate of return. 

Mortgage rates are usually much lower than credit card debt. That’s why most advisors recommend keeping a mortgage because when you can pay 3.5% on a mortgage and earn 9% in the stock market, it makes sense. 

Though I’m not against extra mortgage payments, and I’m definitely for risk-free returns. 

Minimum investment: $0.01

Read more: Are Extra Mortgage Payments Smart When Interest Rates are Low?

23. Personal Investment

Perhaps the single best investment you can make is in yourself. Learning a new professional or life skill can help you earn more money and make smarter money decisions.

A college education isn’t needed. Plenty of in-person and online courses exist on whatever topic you think can improve your earning capability. Books at the library are free. 

If you’re eager to earn more money and change your life trajectory for the better, invest in yourself. These investments yield the highest returns. 

Library books: $0
Minimum online course investment: $9.99 at Udemy

Conclusion — Small Investment Ideas

Keep in mind, investing $1, or even $100 at a time, isn’t going to give you much traction. Increase your investment amounts from there. 

The key is to get started building. Those early seeds will grow, but it’s the beginning momentum that’s more important. 

This list is by no means exhaustive. I chose these small investment ideas because they are accessible to a broad audience, understandable, and I believe some will help jump-start your investing journey.

Almost all investments carry some risk. So perform due diligence and research on all investments before you get started. You may lose money. If you start with small amounts, the losses will be tolerable. 

But your chances of success increase over time. Start small. Consistently add more funds to your accounts and reinvest dividends to ignite the power of compound interest. 

Soon you’ll be laying the foundations of generational wealth. 

Can you recommend any small investment ideas to add to this list? Leave your ideas in the comments section below. 

Disclosure: Long VTEB, VTI, SPY, O, Fundrise eREITs, TGT, CMG, SBUX, T, RDFN, TTD, ZM
Photo via DepositPhoto used under license


Favorite tools and investment services right now:

Sure Dividend — A reliable stock newsletter for DIY retirement investors. (review)

Fundrise — Simple real estate and venture capital investing for as little as $10. (review)

NewRetirement — Spreadsheets are insufficient. Get serious about planning for retirement. (review)

M1 Finance — A top online broker for long-term investors and dividend reinvestment. (review)

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7 Comments

  1. This is a really great article! I sometimes think that to a new investor the decisions PF bloggers normally talk about must feel so out of reach. They don’t necessarily see how they can transfer small amounts and still benefit from the market – I’m really glad that you’ve taken the time to discuss how a beginner can take advantage of these different strategies. I originally started out with ‘micro-investing’ – letting an app (In the UK called moneybox, an equivalent to Acorns), to collect extra money from my purchases and invest it.

    Really great article – and I think you’ve done well to show people that you can start anywhere with investing!

    1. Thanks All Round Investor. I’m sometimes criticized on social media for suggesting investment ideas that are out of reach for a lot of people. In particular, investment platforms only for accredited investors. At the same time, I’m hesitant to say “anyone can invest”. But with minimums so low these days, it’s true. Anyone really can invest. Small investments may not make a lot of headway at first, but once you get started, it’s addictive. People start to spend less so they can invest more. I hope this article shows there are a lot of options out there now with fractional investing.

  2. Christopher S says:

    The Bumped app currently does not let you link any Capital One credit cards to the app. I waited over 9 months to join, then found I couldn’t link the only credit card we use. Just wanted to let everyone know so they aren’t as disappointed as I was.

    1. That’s a bummer. I have Chase and Wells Fargo linked now. Had Capital One a while back and it worked, but I closed the card. I’m hopeful Bumped is shaking out the kinks because this is a high-value service. They are highly regulated and need to have several partnerships in place to make the service work.

  3. After an emergency fund, a broadly diversified mutual fund is the best way to go with a small investment (you can set up automatic investing of $100 per month and that gets you into brand-name funds). I think if the average person looks at too many options they will have analysis paralysis, like the jam study which is the gold-standard example of too many choices: https://hbr.org/2006/06/more-isnt-always-better

  4. How long is the wait for Bumped? I have seen many bloggers talk about the app, but I find that it seems like this waitlist is crazy long. I know it is in a beta phase, but I have been waiting 9 months to be approved. I was wondering if you had any insight at all.

    1. A lot of people have the same question. I last heard from Bumped in an email on April 16, 2020. It sounded promising, but my guess is COVID is keeping things uncertain. Here is the full text of the email below:

      Our team is preparing a major update to the Bumped platform that will help make stock rewards more available — namely, reducing the waitlist and creating access to stock rewards from even more brands.

      Preparing to move from the pilot and into general availability first requires a few changes to the current experience Bumped users have in-app.

      What is happening?
      Reward percentages in the Home Improvement category are decreasing. From today, purchases made at The Home Depot and Lowe’s will receive a 0.5% stock reward.

      We’re also changing reward types in the Club Warehouse category, and offering ETF rewards for purchases made at Sam’s Club.

      What do I need to do?
      If you had previously selected Sam’s Club, you’ll need to visit the Loyalties section of Bumped and reselect your loyalty to receive an ETF reward.

      What’s next
      Bumped is preparing to launch to the general public. As we continue to grow, we will implement additional changes to how the platform works; this is just the first of more forthcoming changes.

      No spoilers, but we’re really excited about what these shifts will set the stage for — delivering more opportunities to get stock rewards from even more brands, banks, and businesses.

      We’ll announce and explain further updates as they come, but don’t worry, our aim remains the same. We are committed to rewarding loyal customers—like you—with free fractional shares of stock, and look forward to expanding the ways to do this.

      If you have any questions, email [email protected], or send us a message through the app.

      Thank you so much for your patience and support as we work to fine-tune our platform through the Bumped pilot.

      –The Bumped Team