When most people want to invest, they never start because they think you need thousands of dollars to start. That’s not true — and it’s just another psychological barrier to keep lower- and middle-income folks out of the investing game.
You actually don’t need a lot of money to start. The key is to invest a little and keep on investing a little. One of the first investments I made was a bond fund that let me chip in $25 a month. Initially — as you can imagine — it was slow going. That’s another barrier. People want to make millions overnight an retire. That certainly didn’t happen, but during the last few years — over a decade after my initial investment — I am starting to see a pay off. The dividends that are automatically reinvested every month are now more than double my own monthly investment and the balance has grown nicely, even though this was a horrible investment era.
I mentioned another tip. Reinvest all of your dividends and other profits.
Over the years I have branched out into other investments. I own direct-investment stocks (stocks I buy without a broker) and mutual funds. I like to trade using cheap discount stock brokers, like Sharebuilder. I also own precious metals and precious metal ETFs. All of this was started with a small initial investment that I’ve built up over time.
I also buy penny stocks with a few extra bucks, but I consider that more gambling than investing. Still, an individual investor can mess with penny stocks with little risk and little money.
Here is a great article from Investor Junkie about how you can start investing with about $500.