Nearly 4 in 10 Americans are missing out on a major way to build wealth because of an expensive myth: They think investing requires thousands of dollars just to get started. Meanwhile, their money languishes in an account earning 0.38% APY — or nothing at all at big banks like Chase, Bank of America or Wells Fargo — all while inflation quietly eats away at the buying power of their dollars.
The truth? You can start investing today with whatever you’ve got in your pocket. The days of needing serious money to join the rich person’s investing club are over, thanks to modern investing platforms.
The damaging ‘investing is for the rich’ myth
Personal finance educator Thomas Maluck calls this single misconception one of the most damaging pieces of bad advice people follow.
“There is a common misconception that investing is only for rich people, either because financial institutions will refuse service to people in one’s income bracket or because of a perceived fee for entry,” Maluck says. But what most people don’t realize is that “the most popular retail brokerages offer no-fee, fractional share trading for as low as $1. In other words, anyone can invest these days,” he adds.
It’s a myth that used to be true, which is why it’s stuck around. Old-school investment firms once required minimums of $3,000 or more just to invest in mutual funds. Buying individual stocks required full shares costing hundreds of dollars for companies like Apple or Google. To diversify across multiple stocks, you needed thousands just to buy a single share.
Cue best of technology. Fractional shares mean you can now buy into any stock with pocket change. Want Apple with only $50? You can grab a quarter share and still cash in on this tech giant’s success.
Learn more: Common investing myths that keep people from building wealth
Why starting small beats waiting for “enough” money
Waiting until you have thousands often means never starting at all. Life has a way of coming up with new money drains just when you think you’ve saved enough.
Starting with any small amount builds the investing habit, which often proves more valuable than the specific dollar amount. This habit allows you to learn how markets work, develop emotional discipline during volatility and benefit from dollar-cost averaging by regularly investing the same amount regardless of market conditions.
Say you start investing $100 monthly in a broad market index fund earning an average 8% annually. Here’s how that grows over time:
Total contributions | Portfolio value | |
10 years | $12,000 | $18,500 |
20 years | $24,000 | $59,400 |
30 years | $36,000 | $150,100 |
Notice that last row. Starting with just $100 monthly — about $3.30 per day — could build a six-figure portfolio over three decades from $36,000 contributions. Plus, the psychological win of seeing your money grow, even modestly, often motivates you to invest more as your income increases.
Learn more: How I started investing with just $100
How can you start investing?
While it would be exciting to charge onto the New York Stock Exchange trading floor, you can start investing from home in a few steps:
1. Pick a platform
There are many modern investment platforms that eliminate traditional barriers. Popular options include:
SoFi Invest. This platform offers both automated and self-directed investing with free financial advisor consultations.
Robinhood. One of the most popular investing apps since it pioneered commission-free trading with an ultra-simple mobile interface. Today, it offers self-directed investing and professionally managed portfolios.
Acorns. This robo-advisor automatically builds a portfolio for you and invests your spare change through round-ups from everyday purchases to add to your regular contributions.
2. Open an account
You’ll need basic information like your Social Security number, address and employment details. The whole process takes 10 to 15 minutes on your phone or computer. Most platforms verify your identity instantly, though some may take up to 24 hours.
3. Link your bank account and set up automation
Connect your checking or savings account to transfer money, then set up automatic contributions to remove emotion from the equation. Choose an amount to invest regularly — even $25 weekly adds up over time.
What can you invest in?
You don’t need to overthink your first investment. Take it from the Oracle of Omaha himself. Warren Buffett consistently recommends simple broad market funds.
These funds work like giant baskets, each holding hundreds or thousands of different company stocks. When you buy a share of one of these funds, you’re automatically investing in all the companies it includes.
For example, an S&P 500 fund tracks the 500 largest U.S. companies. One purchase gives you a tiny slice of Apple, Microsoft, Amazon, Google, Tesla and 495 other major U.S. businesses. If Apple has a great quarter, you benefit. If one company struggles, the other 499 help balance things out.
3 popular funds that offer different diversification
There are hundreds of excellent funds that cover different markets. For example, each of these three funds gives you broader access than the last, from large U.S. companies to the entire U.S. market to the whole world.
Vanguard S&P 500 ETF (VOO). Gives you access to the 500 largest U.S. companies with just a 0.03% annual management fee, meaning that you’d pay $3 a year for every $1,000 you invest.
Fidelity Zero Total Market Fund (FZROX). Covers the entire U.S. stock market with 0% management fees. Yes, zero. That’s because Fidelity uses this fund to attract customers and makes money from other services they offer.
Vanguard Total World Stock ETF (VT). Provides global diversification across developed and emerging markets. This single fund gives you exposure to over 9,000 companies across dozens of countries — from Japanese tech firms to European banks to emerging market manufacturers.
Learn more: What are mutual funds? And how they work
5 biggest investing traps you should avoid
Thomas Maluck has spent years teaching people about money, and he’s noticed that certain mistakes tend to repeat over and over again. Here are the most common investing traps he warns against:
Don’t think you can beat the market. “People can shift dangerously fast from acknowledging the stock market is full of large, dangerous players to thinking they alone have the expertise to somehow beat everyone else,” Maluck says.
Don’t try to spot patterns in market movements. “There are a dozen reasons a stock or fund can go up or down at any given moment,” he explains. “Dividends, earnings reports, day traders and many more factors influence the price. Looking for distinct patterns in a jagged line is a fool’s errand.”
Don’t let FOMO drive your decisions. “Fear of missing out drives a lot of the worst investment decisions,” Maluck warns. “If someone takes a large risk and it pays off, so much the worse, because people will convince themselves they can win one more payday. That’s a casino mindset, and the house always wins.”
Don’t think the market is rigged against you. While Maluck acknowledges that “the retail investor is outnumbered, outgunned and lacks a lot of crucial information,” he adds that “the situation isn’t hopeless as anyone can use low-cost, diversified funds to secure the market average.”
Don’t react to every headline. “Investors would love to believe they have the reflexes and savvy to respond to headlines and perceived trends to swerve with the times,” he says. “Investing is a test of patience, so it pays to zoom out and remember why you chose the strategy you did.”
Learn more: Useless investing advice that experts warn against
More stories about investing and growing your wealth
Common investment fees that eat away at your returns
What is a bear market? And how to navigate one
What happens to your investment account after you die
Is gold a good investment?
Best ways to invest and grow $50,000
📩 Have thoughts or comments about this story — or ideas on topics you’d like us to cover? Reach out to our team.
