Where to Start Investing When You’re Broke

Where to Start Investing When You're Broke and Have No Money

Since The Broke and Beautiful Life book release, I’ve received a slew of inspiring messages from readers taking hold of their financial lives and “breaking broke” towards a better financial future.

While walking one of these rockstar readers through the process of her retirement account set up however, I stumbled upon a slight snag… minimum balance requirements.


Having saved a significant chunk of change in savings before discovering the power of investing for myself, I hadn’t realized the hurdle of minimum brokerage balances. I just dumped my savings into a ROTH IRA and watched as it finally started enjoying some significant growth (instead of paltry monthly interest payments).

It was then that I realized the true value of investment growth – growth that couldn’t be achieved in checking, savings or even CDs. Growth that could actually outpace inflation thanks to a smart and diversified investment strategy.


The benefits of that kind of leverage had to be accessible to those who needed it most – those with limited earnings and without access to other options, like an employer sponsored 401k plan.

But minimums, even at discount brokerages, can start as high as $1,000 – and for those whose cost of living to monthly income margin is razor thin, waiting around to accumulate a lump sum before investing could mean missing out on real returns for quite some time.


So… Where do you start investing when you’re broke?


Side note: If you’re struggling to find cash to invest, check out How to Budget Without a Budget, and learn to prioritize financial goals so that they become as non-negotiable as your necessities.


What You Shouldn’t Do

Some newbie investors might be looking at a few stock symbols calculating how many shares they can get for their initial $50 or $200 contribution, but let me stop those musings there.

Let’s not forget two key tenets of basic investment strategy – smart and diversified.

Smart meaning low cost. Every time you purchase or sell individual shares of a stock you have to pay the brokerage a fee. The brokerage being the institution that purchases or sells the stock for you.

If you invest a small amount, let’s say $100, and you pay a fee of $5, you lose 5 percent of your investment right off the bat. You don’t want to be down 5 percent from the moment you buy in.

You also don’t want to leave yourself financially vulnerable by putting all your bets in one or two places, which is just what individual stock picking does.

Investing When You're Broke


Unless you’re a pro (and sometimes even then), you’re going to be better off investing your money in low-cost funds, like ETFs and index funds. With such funds, a minimal investment can get you a fully diversified portfolio across hundreds of stocks and bonds.


A Quick Investing Refresh

I want to pause here for a little investing 101 refresh, just in case any of this is beginning to sound like confusing jargon.

If you’re already feeling confident in your foundational investment knowledge and just looking to break through the barrier of too few funds to invest, feel free to skip down to the next section. If not, read on.

To set up your investment foundation, you’ll want to start with the essentials – that is, your retirement accounts.

You can do this either by participating in your employer-sponsored retirement plan, opening an individual retirement account or both.

If you need to open an individual retirement account, you can do that through a discount brokerage or robo-advisor – I’ll give you my low-cost suggestions on those later.


Once you’ve set up your retirement account(s), it’s time to choose the actual investments that will go into them. That’s right, a 401k, IRA, ROTH IRA or any other kind of retirement account is just a holding place for all the investments you’ll choose to fill it.

This is where your smart, diversified portfolio comes in.

I like to keep things simple by investing in a few index funds, index funds being big bundle of stocks from different companies that follow a given index like the S&P 500. Index funds are great investment vehicles because they’re low cost and provide instant diversification.

If I’ve already lost you, no worries, you can still begin investing by taking advantage of tools that make the process even simpler– robo-advisors.

At robo-advisor Wealthsimple for example, you simply go to the website, input your information, then pick a plan that’s best suited to your objectives. You can also do this for non-retirement account investments too.

That’s right, someday when you’re not broke, you can (and should) invest to grow your wealth to meet financial goals beyond retirement – or rather, before retirement.

Money invested in retirement accounts is there for the long haul, age 59.5 to be exact, and you can only invest in those accounts up to their given limits each year.

If you get to the point of maxing out your retirement investments and/or wanting to invest for near-er term goals, like a housing down payment 7 years down the line or an around the world trip in 15 years, you can use the same simple and smart strategy of index fund investing through discount brokerages or robo-advisement platforms to grow that wealth outside the shell of your chosen retirement savings vehicles (IRAs, 401ks, etc.)

Where to Start Investing


Okay, so that’s the quick and dirty investing 101 recap. Back to the matter at hand…


Investing When You’re Broke

One of my favorite discount brokerages for purchasing index funds is Vanguard. The trouble is, most funds at Vanguard, and many brokerages, have a minimum initial investment requirement of $3,000. The Vanguard Target Retirement Funds and Vanguard STAR Fund can be opened with a $1,000 investment, but even then, $1,000 can take a while to accumulate when you’re broke.

There’s always the option of setting aside savings in a high yield online savings account until you reach the required opening minimum, but with new innovations in financial technology and increasingly high competition among brokerages, I set out to find alternatives.

After all, the most important step in any successful investing strategy is getting started.

If you keep waiting around until you feel you finally have “enough” to begin, you’ll be missing out on your greatest asset in your investment arsenal – time.

Here are a number of services to help you start investing now, wherever you’re at, with whatever money you have available.


Where to Start Investing When You’re Broke…


  • Employer Sponsored Retirement Plans. As a freelancer, I don’t have access to an employer sponsored retirement plan like a 401k, but I’d be ALL over that if I did. I’m actually super jealous of everyone enjoys this perk, particularly those of you who have employers that match your 401k contributions in some capacity. That is FREE money! Take advantage of it!

Now I obviously don’t know the ins and outs of your particular 401k plan, but your HR rep does. Don’t hesitate to contact them to see how you can maximize your plan in a way that works with your budget.


  • Betterment – Betterment is a robo-advisor. Newbie investors utilizing the Betterment platform not only benefit from no minimum balance requirements, but also, from a uniquely straightforward and simplified approach to investing for minimal cost.

If you want to automatically deposit money each month and have it properly invested without worrying about anything else, I highly recommend Betterment. It satisfies diversification through ETFs and allows you to adjust your risk level to suit your needs.

The goal-based tools and comprehensive online portal at Betterment make the entire investment process uniquely simple to understand – whether you’re building up your retirement savings or focusing on investment growth beyond your retirement foundation.


  • TD Ameritrade – With no required account minimum, you can start investing at TD Ameritrade with whatever funds you have available – a huge perk for those looking to get into the investment growth game ASAP. With over 100 commission-free ETFs, TD Ameritrade is a great low-cost option.

TD also introduced a new “Education Center” in 2014. As you work on building your investment accounts, you can access the complete curriculum of online courses to become a more educated investor.

Related Reading: How to Save for Retirement When You’re Self-Employed


Stop Waiting – Start Investing

Investing has never been as accessible or low cost as it is today with the tools, technologies and platforms now available. Even if you’re broke, you can and should get in the game ASAP.

Investing is an essential ingredient in any wealth building strategy and getting started as soon as possible is the single best thing you can do.

Don’t get hung up on what you don’t have, whether it’s a large investment sum or the perfect investment strategy, just start by making the most of the smart, diversified and simple investment options available.


42 responses to “Where to Start Investing When You’re Broke

  1. It’s so important for people to know how to get start for next to nothing. Like you mentioned, there are several places to get started. USAA also offers mutual funds with $100 minimums, so there are plenty of options. I’m a fan of starting with a small fund until you reach the point where you can upgrade to a better fund that may have a higher minimum investment.

  2. I hate the minimum balance requirements for trading, but that’s because I hate financial prejudice period. That being said, Motif allows you to trade for a $250 minimum. Also Drive Wealth specifically targets millennials and allows you to trade for a minimum of $50.

  3. OMG, it’s like you wrote this for me! I have to say that I am a huge betterment fan – because I (and they) believe that everyone can save $100 a month. It’s really pushed me to make investing a priority!

  4. Sharebuilder 360 would ends up being pretty high fee if you are at low investment levels but its dang simple and connects to CapitalOne360. I use it, but I should probably jump on that Vanguard bandwagon now.

  5. I know that minimums can be a bit of a bummer when you are first starting out, but to my knowledge when you are investing through a 401k at work there are no minimum requirements. For that reason, I don’t think anyone should really be investing on their own outside of a 401k until they have one in place at work and are at least banking the company match. That should get most people around this small problem.

    1. I know a lot of millennials who don’t have access to employer 401ks (I’m one of them), which leaves the onus of retirement planning on the individual. Even if they eventually get that benefit later down the career line, taking responsibility for retirement and opening an IRA is a great way to make sure valuable time isn’t wasted waiting for a 401k opportunity that may or may not come.

  6. Right now, we’re just trying to fund our IRA and, next year, a SEP IRA. But once we can do that, I’ll probably trust Vanguard to deal with it for me. I hear it has some of the lowest fees, and it has a good history of reasonable returns.

  7. Good post Stefanie! I always hated speaking with people who had little options of where to invest – either because they did not have access to a 401(k) or had little funds to start with. Thankfully, more options are starting to come out now which makes it great in terms of lowering the barrier to entry.

    I know Shannon already mentioned Motif, and Betterment is a good option. Some other ones to look at are OptionsXpress – they’re targeted at options trading BUT they’re a part of Schwab who has about 100 $0 commission ETFs and OptionsXpress does not have a minimum balance requirement. Sharebuilder is another decent option to look at and then there are newer options like Acorns -or Robinhood – but haven’t taken a serious look at the latter two myself. The key, is to not let the amount you’re starting with hold you back but to actually start. Everything will take care of itself after that with the right mindset.

    1. Thanks for the suggestions John. I’m going to have to check out all these alternatives and turn this into a monster resource post. Like you said, don’t let the amount you’re starting with hold you back from starting!

  8. I have heard (haven’t verified) that Fidelity will wave the minimum balance requirement if you sign up for automatic monthly investments. I was able to come up with $1000 for the Vanguard account otherwise I would’ve further investigated this option with Fidelity.

    1. Yes, Fidelity does waive their $2,500 minimums if you agree to a monthly minimum investment with them. (Some accounts have to be $200/month though, which was fine for me but might not be for others.)

      I started my investing with them, and I’m super happy. Plus their customer service is incredible.

  9. Schwab gets over looked a lot, but you can invest in their ETFs (as low if not lower fees than the beloved Vanguard) free and most of their mutual funds are also no Load. I believe the account min is only $1K and it is waived if you just do $100/month transfer, so 10 months in you no longer ever have account fees. You can also sign up for their online checking account which has ZERO ATM fees and ZERO foreign transaction fees which is great if you travel overseas.

    1. Schwab’s new robo advisor Intelligent Portfolios is also a great investment vehicle, especially if you have $5k to invest and don’t want to manually control it.

  10. This is a good article that I hope encourages people to invest some money. Even if you don’t have a lot of money, the earliest money you invest will get the highest return since it will potentially be invested the longest.

    But, I think there needs to be some more clarification on the fees, a little more info is here.

    Betterment is more expensive then presented here. The fees that Stephanie mentioned are the account fees. This does not include the fees for the ETFs themselves. The ETF fees still aren’t that bad, from 9- 17 basis points. This means that your total cost for a small investment (under 10K) could be as high as 0.52%. This is still not horrible. Many employer retirement plans charge more than this for typical funds.

    Betterment is providing service where they help you pick out funds. If you don’t know what to invest in, this could be helpful.

    The cost to invest at TD Ameritrade can be a lot lower, but you don’t get specific assistance to pick investments. For younger people I recommend the Vanguard Small Cap Value fund, VBR (expense ratio of 0.09%). The commission free ETF list is about 100 choices. Most of them look like acceptable choices.

  11. I didn’t have a problem with minimums when I got started with Vanguard because my first “deposit” was a 401K I rolled over from an old employer. I’m now hooked on Vanguard because of their incredibly low cost funds, almost nonexistent fees, and perks.

  12. Just did some research on this myself and Betterment is a great option. Another good one is Acorns, which is a mobile app which invests your “spare change”, similar to Digit. There is so minimum balance fee and it’s a nice way to get into the world of investing.

  13. Robinhood.io is a new startup brokerage with a modern mobile app, zero commission trades, and no minimum balance. They had a long waiting list, but I think they are accepting many account openings, and have a dead-simple application process. Having worked in a large hedge fund and personally traded for years, I definitely recommend them – it’s no scam, and they are really disrupting the discount brokerage industry. Also just want to say I’m impressed with the Brokeandbeautiful message, and confident that whoever finds it will be better off.

  14. Once you find out where you want to invest, I highly recommend an investing newsletter or blog so that you can learn more. The Motley Fool has a good newsletter that will recommend stocks and share why.

  15. My very first investment was just $70 into peer-to-peer lending, and over the years it has paid off for sure. I could have put more into (I had more), but I was more worried about whether it is worth it. Over the years I have increased the amount and diversified.

  16. When I was broke and wanted to invest, I started with a plan and a goal that I could get enough money for me to be able to invest. That was when it brought me to making money online like doing freelance writing and blogging. That experience of mine helped me be an investor.

  17. The minimum investment held me up for a while back when I opened my IRA. I lucked out that I was working at sea then with a largely disposable income, so the $2,000 to open my account was not impossible to come up with. Several companies though will allow you to skip the minimum investment if you’ll agree to $50 or $100 withdrawals direct from your savings account each month. That made me way more uncomfortable, but could work for people with steadier streams of income.

  18. HI Stephanie,

    it’s actually “taking the REINS”.

    Enjoying your blog, your post about selling on ebay was very thought-provoking!

  19. I got to your blog from auditionupdate and now I’m scanning blog posts and I love what I see already. I have a child who is currently in college for a BFA in MT and I’m a single mom making not much money…AT ALL and this all just scares me. I, myself, have NO savings, no retirement fund because losing my job in 2010 and being out of job for 2 years AND still not being back to the salary that I had when I was laid off has devastated me. I want to do better and feel like I can’t but I CAN start even if it’s small. Thank you for this.

    OH and my child is now thinking of leaving college and heading to NYC for training so I shared posts with her too!

    Thank you!

    1. So glad you found it helpful. Big change happens in small steps, keep going and you’ll start to gain momentum toward your financial goals. You are doing better just by reading and learning 🙂

  20. I think the most important fact is actually setting something up with an online broker. Most places will let you establish the account, and you can set up monthly recurring funds held into a cash money market account. After you do that for a few months then you can move over all the money into a index mutual fund or ETF. Most of the options mentioned in the comments are good choices.

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