How to Start Investing When You Have No Clue

You can learn how to invest with little money!

You don’t have to be rich to invest. If you learn how to invest with little money, you’ll see how easy it is to make your money grow. It becomes habit-forming and exciting to reach your financial goals, no matter how large. The key is to start somewhere, though, even if it means investing your spare change alone.

Learn more about investing with our completely free course! Taking this small step will better both your and your family’s financial future. You can also learn more about investing and other personal finance topics by tuning in to the Clever Girls Know podcast and YouTube channel.

Diversify with an ETF

Another possibility for small investors is an exchange-traded fund. ETFs work similarly to mutual funds. One significant difference is you can trade an ETF throughout the day. You can only buy and sell mutual funds once per day.

As with mutual funds, ETFs can provide diversification to help you avoid concentrating risk in a single stock. ETFs may also come with lower fees in some cases. They require you to have only enough money to purchase a single share of the ETF. Companies that allow fractional share investing may not have this limit.

If you’re looking for a place to invest in ETFs, consider opening an account with Stash. This service allows you to invest in stocks and ETFs with no minimum investment. Stash does charge a monthly fee to use its service, but it starts as low as $1 per month.


Short-term investments: Safe but lower yield

The safety of short-term investments comes at a cost. You likely won’t be able to earn as much in a short-term investment as you would in a long-term investment. If you invest for the short term, you’ll be limited to certain types of investments and shouldn’t buy riskier assets such as stocks and stock funds. (But if you can invest for the long term, here’s how to buy stocks.)

Short-term investments do have a couple of advantages, however. They’re often highly liquid, so you can get your money whenever you need it. Also, they tend to be lower risk than long-term investments, so you may have limited downside or even none at all.

Purchase U.S. Treasury securities

Some people decide to invest in U.S. debt through Treasury securities, which are debt issued by the federal government. The U.S. has a stellar track record of paying back its debt. The likelihood of a default is extremely low. It can happen though.

If you want to invest in treasury securities, you can start buying them through The smallest purchase on most offerings is $100, but you can buy Series I and EE savings bonds starting at $25.

Can I Invest As Little As $100?

With $100, you can invest in fractional shares, group real estate projects, savings and retirement accounts, or even start a side hustle or business. Thanks to living in the 21st century, there are investing apps that allow you to invest in just about anything you want.

For more detailed options, read our post on How To Invest $100.

Saving And Investing Tips

Besides understanding the basics, the hardest part of saving and investing is having enough money to actually do either. Here are some ways you can free up some funds so you can save and invest wisely:

Avoid Fees

The less you pay in fees, the more money you have to grow. Avoid fees tied to late payments, ATMs and overdrafts at all costs.

When it comes to investing, some common charges include a management fee, expense ratios, brokerage fee, trade commission, and front- or back-load fees. Make sure to scour the fine print and ask plenty of questions before investing.

Look Into High-Yield Savings Accounts

High annual percentage yield accounts usually can be found at online-only banks. Whereas you don’t need to lock your money for an agreed-upon amount of time, such as with a CD, there are usually higher account minimums.

Take Advantage Of Your Employer Match

If your employer offers a match on your 401(k) plan, contribute enough to at least get the full match. Otherwise that’s money you’re leaving on the table.

Slash Living Expenses

To have more money for saving and investing, cut back on living expenses. This could be anything from housing to food to the cable bill. Go through each spending category and determine whether you can cut back somewhere. It might mean adjusting your lifestyle so that you spend less on eating out, entertainment, or buying clothes.

Start with the big wins, which means saving on the big three: housing, food, and transportation. Then go for the easy wins, which are steps you take to save that require a little bit of work but will save you a lot in the long run. For instance, saving $20 a month on your car insurance if you bundle it with your renter’s insurance adds up to $240 a year.

Side Hustle

Besides cutting back on your living expenses, take on a side job or two to rake in extra cash. Depending on your interests and skills, you can do anything from dog walking to reselling items. No matter what you earn, whether it’s $200 or $1,000 a month, save or invest all of it.

Commit To Saving ‘Extra Cash’

Extra cash might come in the form of a gift for your birthday or during the holidays, or from a work bonus or raise. Put some of that money toward a savings or investing goal. That way you can enjoy some of that money now, and the rest can go toward building financial security.

Target-Date Funds

Target-date funds, as the name implies, target your retirement date by changing the percentage of stocks and bonds to assure that your money remains safe as you approach retirement age.

Some of these funds require a minimum investment of $1,000, but they may serve as great products for investors who don't want to manage their portfolios on their own. But make sure you use caution when picking a target-date fund because of the high fees that some of these vehicles charge.

9. Prosper

Prosper works much the same as Lending Club.

You can invest as little as $25, so you can spread a few hundred dollars across many different loans. There is also a state-by-state minimum net worth requirement here as well.

Prosper reports that the average annual return on a note approaches 16%, which is an incredible return on a fixed-rate investment.

In the case of both Prosper and Lending Club, there is a risk of loss to your principal in the event that one or more loans you’re holding go into default.

There is no FDIC insurance protecting your investment the way it would with bank investments.  I also did Prosper reviews for both borrowers and lenders.  You can get full details of the platform there.

Get Started with Prosper

3) Invest With a Robo Advisor

The term “robo advisor” probably conjures an image of an animatronic Jordan Belfort picking stocks for you. While robo advisors haven’t quite taken physical form (yet), they are essentially AI-powered portfolio managers.

For decades we’ve relied on human financial advisors to invest and multiply our money for us. And while they generally do a good job (Jordan Belfort notwithstanding), human wealth advisors still have to earn a living and occasionally go to sleep. AI advisors don’t.

So how does investing with a robo advisor work?

When you sign up with a robo advisor like Betterment, the program will ask you for the same basic info that a human financial advisor would:

  • Your age and personal information
  • Your investment goals (e.g. buy a house by 2025)
  • Your risk tolerance
  • Your investment account preferences (e.g. no international stocks, focus on bonds, etc.)

Then, the AI goes bleep bloop and chooses the ideal portfolio to match your goals, tolerance and stated preferences. In many cases these portfolios aren’t 100% bespoke for each client, but minor variations on existing portfolios that the AI or its human overlords have already designed for high performance.

Most robo advisors can also perform automatic portfolio rebalancing. If you change up your investing goals, increase your risk tolerance or simply want to “tighten up” your portfolio, you can do all three in just a few short clicks. A human financial advisor might need a day or two to see your message and then manually readjust the portfolio.

All in all, “hiring” a robo advisor is a convenient, affordable and accessible way to maximize a passive investing strategy — whether you’re investing in an IRA or a more aggressive midterm portfolio. They’re not a 100% replacement for a human advisor who can better understand your personal goals and guide you with a human touch, but they’re undeniably a cheaper and more convenient place to start.

Find out more >>> Best Robo Advisors Guide


  • Removes all the guesswork from investing:  Why risk choosing your own stocks and exchange-traded funds (ETFs) when you can have a highly sophisticated AI do it for you?
  • Nearly free: Robo advisors can charge as low as 0.1%, which is just $1 for every $1,000 invested. This is virtually negligible as far as management fees go.
  • Automatic portfolio rebalancing: With a single click (or even on an automated schedule), you can have your robo advisor tweak or tighten up your portfolio to stay zeroed on your investment goals.


  • Flexibility may be limited: Depending on which robo advisor you go with, you may not have much input regarding which stocks and ETFs you’re investing in.
  • Minimum initial deposit requirements: Some robo advisors require an initial deposit amount of $500 or more to get started.
  • Can’t replace the human factor: While some robo advisors do offer à la carte access to human financial advisors, you may not get all the benefits of building a long-term, 1-1 relationship with a human-led firm.

How To Automate Your Savings

The easiest way to save is to “set it and forget it,” that way you can make sure you’re saving regularly and are on track with your goals. To automate your money in your savings accounts, just set it up once and you’re good to go. The process can vary slightly depending on the savings account and bank, but for the most part, you set a target date and amount. Next, you set up an auto-transfer for certain amount each day, week, or month to hit your goal.

After you auto-save, you’ll want to monitor the account activity every so often to make sure the amount you’re setting aside works with your budget and other money goals.

7. Get a Roth (or Traditional) IRA

If you don’t have an employer-sponsored reti

If you don’t have an employer-sponsored retirement plan, you can almost always set up your own retirement plan. All you need to qualify is earned income.

The two best plans for most people are either a traditional IRA or a Roth IRA. Much like an employer-sponsored retirement plan, any returns on investment that you earn are tax-deferred until you begin withdrawing the funds in retirement.

Also, contributions to a traditional IRA are generally fully tax-deductible.

Roth IRA contributions are not tax-deductible, however, withdrawals will be free from taxes as long as you are at least 59 ½ at the time the withdrawals are made, and you have participated in the plan for at least five years.

Roth IRA’s offer tax-free money at retirement – Holla! 🙌🏼

And though there is no employer matching contribution (since there is no employer), a self-directed traditional or Roth IRA can be held in a brokerage account that offers nearly unlimited investment alternatives.

You can contribute up to $6,000 per year to either a traditional or Roth IRA ($7,000 if you are age 50 or older), which means you can build up a substantial portfolio in just a few years. 

Also with the best Roth IRA providers, there is a very low entry cost. Of the investment ideas we’ve offered so far; Betterment, M1 Finance and Fundrise all offer Roth IRA accounts. This is huge for all the small investors out there!

1) Use a Microsavings App

A solid first step to investing with little money is to open a microsavings account.

A microsavings account is the same as a regular savings account but with lower barriers for entry. Regular savings accounts often have requirements like:

  • A $500 or higher initial deposit
  • A daily minimum balance requirement
  • Limited monthly withdrawals

Worst of all, if you breach any of these account requirements, you could be subject to fees that could wipe out all of your hard-earned interest in a flash.

Thankfully, banks that offer microsavings accounts seem to better understand that fees and thresholds kinda defeat the whole point of having a savings account in the first place. Chime®, for example, has a daily minimum balance “requirement” of $0.01 and will never charge you a fee.

The other advantage of a microsavings account over other forms of investing is liquidity. You can typically withdraw from a microsavings account balance up to five, 10 or even unlimited times per month, so it’s a good place to keep an emergency fund.

By contrast, “withdrawing” from your stock portfolio requires you to sell off shares, incurring trade fees, capital gains taxes, and in the case of your 401(k), additional penalties.

Although microsavings accounts are essentially risk-free and liquid, the chief drawback is that they don’t earn much money. According to the FDIC, the national average interest rate for a savings account is a pithy 0.06% APY — and although it’s easy to find a microsavings account offering 0.50%, that’s still well below the rate of inflation.

I’d recommend using your microsavings account as a staging point for your other investments. You can have a portion of your paycheck automatically routed there each month where it can live separately from your checking account, generating a nice trickle of interest until you invest it using one of the other five methods on this list.

Find out more >>> Best Microsavings Apps


  • Risk-free: Savings accounts are FDIC-insured and will never lose equity.
  • Liquid: Unlike other investments, withdrawing from your microsavings account is instant, tax-free and penalty-free.
  • Separates your investable cash from your checking account: Microsavings accounts provide a convenient “staging point” for your investable capital away from your regular spending money.

What are the Best Investment Strategies for Beginners?

There are many different investment strategies out there. You could read material from Warren Buffett, Dave Ramsey, and other personal finance experts who will all have different beliefs on investing and managing your money.

Before you start investing, here are a few things to consider with all investing strategies.

1. Understand Your Goals Before Doing Anything

What are your investment goals? Here are some goals you may be pursuing:

  • Saving up for early retirement.
  • Investing in real estate so that you can become a landlord.
  • Investing in the stock market so you can buy that dream home in 10 years.

And so on. The good news is that investing your money is a personal decision, so no goal is the wrong goal.

Here are a few helpful tips to keep in mind if you’re investing as a beginner:

  • Money that you need within five years should not be invested in the stock market.
  • Money that you’ll need before retirement should not be in a 401(k) or IRA.
  • When saving for retirement, get the employer match, then max out your Roth, then go back to max out your 401(k). Anything after that should be in a brokerage account or real estate.

2. There’s No Such Thing as the Best Investment for Everyone

I have friends who refuse to even think about cryptocurrency. Then I have other friends who only invest in cryptocurrency. I know people who swear by real estate investing while my dividend stock investing friends are terrified of getting into the real estate investing space.

It’s important to remember that there are many different investment strategies and there’s no such thing as a one-size-fits-all solution. You may find that investing your money with robo-advisors works best or you could lean towards getting into real estate investing.

3. You Have to Build up to Different Investments

One thing you have to accept as a new investor is that there are different investment strategies for every stage of life.

For example, when you first get out of college, you may want to focus on opening a few investment accounts with just a bit of funding, as you tackle your student loans and build up an emergency fund.

You have to start investing your money with what you already have before you can get into bigger investments.

4. You Have to be Patient as an Investor

Warren Buffett is known for the following quote about patience in investing: “The stock market is designed to transfer money from the active to the patient.”

What this means is that many beginner investors will lose money because they’re too impatient or because they’re looking to make a quick buck from investing.

What makes a good short-term investment?

Good short-term investments may have many things in common, but they are typically characterized by the following three traits:

  • Stability: Good short-term investments don’t fluctuate too much in value, as many stocks and bonds do. The money will be there when you need it, and is often protected by FDIC insurance or a government guarantee.
  • Liquidity: A good short-term investment usually offers high liquidity, meaning that you can access the cash invested in it quickly. In the case of certain CDs, you’ll know when the money becomes available, and you can always redeem the CD, though it will often come with a penalty, unless you opt for a no-penalty CD.
  • Low transaction costs: A good short-term investment doesn’t cost a lot of money to get into or out of, unlike a house, for example. That’s especially important when yields on short-term investments are at historical lows.

These features mean that your money will not be at risk and will be accessible when you need to use it, which is one of the major reasons to have a short-term investment. In contrast, you can earn a higher return on long-term investments but must endure more short-term volatility. If you need that money, though, you might have to sell at a loss to access it fully.

Where do you start?

Well, if all you have is a savings account, the first step would be to open an investment account with a low fee provider.  There are a couple sources available, but Vanguard is my personal favorite.  Fidelity and Schwab also offer low-cost funds, but they do offer actively managed, higher fee funds as well so you have to be more careful if you choose to go with them.  For sake of simplicity, I am going to walk through the rest of this post as if you are using Vanguard.

Signing up

Sign up for a new Vanguard account.  Depending on your goals, there are a number of different account types.  Vanguard has a good tool within the “Need help deciding” button to help you choose an account, but, in general, this part isn’t too confusing.

  • Saving for Retirement? If your main goal is to save for retirement, and you meet the income limits (<$118K for a single tax filer, <$186K for a married filer), you should open a ROTH IRA. Otherwise, open a Traditional IRA.
  • Saving for other goals? Open an individual account, or joint account if you are married.

Once you have one account, you can add another to the same login.  I have a Rollover IRA, Joint Account, and 529 College Account for Fuss Fish all in my Vanguard.

Linking your bank account

You can fund your new Vanguard account via check or direct deposit from your bank.  I recommend linking your bank account so you can set up automatic deposits into your investment funds monthly to make investing more of a habit.  This also takes advantage of dollar cost averaging.