How to Invest With Little Money or Credit

There is a popular phrase that says, "It takes money to make money." Although some investors start with a bigger pile of cash than others, every successful investor had to begin somewhere. If your goal is to build a fortune, but now you have little money or credit, it’s time to roll up your shirtsleeves and begin digging for opportunities open to people without big bucks. You’ll be surprised, when you start looking, how easy it is for someone with a little money to start investing.

Step 1

Write out reasonable goals. Some small investors are too protective with money and others want to gamble their funds, hoping to get rich quickly. The National Endowment for Financial Education recommends avoiding these pitfalls by creating actionable goals, with a fixed time frame, for your investments. This will help you build an investment portfolio successfully, rather than regret making half-baked decisions, down the road.

Step 2

Invest in your 401k plan for retirement. If you have a workplace retirement plan, such as a 401k, 403b or SIMPLE IRA, these allow you to place a percentage of your investment away for retirement. In some cases your employer may match your contributions, throwing some free money your way. As an additional bonus, these plans are tax sheltered, allowing your money to grow without a tax bite taken out.

Step 3

Buy a mutual fund. Some mutual fund families allow you to purchase shares with as little as $50 per month. Use online mutual fund screeners to find a list of funds that will allow minimal investments. While you’re screening, look for a fund that’s well-rounded, until your portfolio grows bigger. Some investors like lifestyle funds that invest in many different sizes and types of investments, giving them a pre-diversified portfolio like those of investors with more money.

Step 4

Research the stock market. Although buying stocks may be too volatile for some investors, others would love the ability to purchase a few shares of stock, because historically the stock market has been a good long term investment opportunity. Many companies offer dividend reinvestment programs that allow you to purchase a few shares with a small amount of money. Whenever the stock pays a dividend to investors, the firm automatically uses it to buy more shares on your behalf. Dividend reinvestment plans may be available from the individual company, a transfer agent or outside service.

Step 5

Join an investment club. These groups of amateur investors meet regularly to explore potential investment opportunities. They pool funds to buy a diversified collection of stocks each member might not have been able to afford on her own. Some groups allow minimal monthly contributions to the pool. To find a group, visit the National Association of Investors Corp. website.

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