How much money do I need to start investing?

There’s an old saying, “it takes money to make money.” But no matter how much you have in your bank account, there’s a way to start investing today.

Investing is one of the best ways to grow your money over time. However, a common belief that prevents people from getting started is that you need a large amount of money to get in the game. The truth is, the actual amount you need might be less than you think.

Yes, it’s a good idea to make sure you’re also managing any debt you may have and building your savings. But no matter what amount you currently have in your bank account, there’s a path for you to begin.

Here’s how much it takes to start investing, and the steps you can take to make it happen.

How much do you need to begin investing?

Investing isn’t one-size-fits-all; how much you’ll need to start depends on your financial goals and the platform or strategy you choose. Thanks to modern technology, investing is more accessible than ever, regardless of your financial starting point.

If you have $3 to invest.

You can begin investing for the price of a donut thanks to micro-investing apps like Stash or Acorns, which allow you to start with as little as $3 a month. These apps provide convenience but not a lot of handholding if you’re new to investing.

If you have $500 to invest.

For those with a bit more to work with, consider using platforms that combine advanced algorithms with human expertise to build and manage your portfolio. Robo-advisors generally have minimum deposit requirements ranging from $500 to $5,000 and provide a balanced mix of automation and personal guidance.

If you have a sizable amount to invest.

Another option available to you is working with a financial professional who can provide personalized guidance to help optimize your investments. In this case, the minimum deposit will vary depending on which financial institution you work with. 

If you prefer to manage your own portfolio.

For hands-on investors, an online brokerage account allows you to build and manage your portfolio independently. These platforms typically don’t have minimum deposit requirements, giving you flexibility. However, self-directed investing requires a willingness to research and make decisions on your own.

If your employer offers an investment account.

Take advantage of employer-sponsored retirement accounts like a 401(k), 403(b), SIMPLE IRA, or SEP IRA. Contributions are deducted from your paycheck pre-tax, and many employers offer contribution matching, which is essentially free money to grow your retirement savings.

In many of these instances, the minimum deposit amount is not the only cost you need to consider. Make sure to consider costs like management fees and/or sales commission fees, and other costs associated with the provider you work with. Do your research so you know all the associated costs.

How much should you invest?

While you can invest any amount, how much you should invest depends on your financial situation. If you don’t yet have the money required to cover a minimum deposit or fees associated with investing, you need a plan to get there. Or, if you have a large amount of debt or haven’t built up an emergency savings fund yet, those tasks should take precedence over investing.

These three steps can help prepare you to start investing wisely:

Set a budget and pay down debt.

First things first: Track your spending and put a budget in place. If you have high-interest debt like credit cards, pay those off first, putting as much toward that as you can afford each month.

Build up your savings.

You need a little cushion in case of a major life shift, health issue, or other unexpected change. The general rule of thumb is to have at least six months' worth of your household income set aside for emergencies, such as unexpected medical bills or losing your job. If money is tight, start by setting aside a small amount automatically every month. Remember: Starting small is better than doing nothing at all.

Factor goals, age and risk tolerance into your investing strategy.

When you feel able to start investing, your strategy should be based on your financial goals, tolerance for risk and timeline to retirement.

• What are your short- and long-term financial goals? You may have different priorities at different points in your life—and unexpected changes may mean you need to alter your strategy at different times. Staying flexible will be important, but always keep your goals top of mind.
• How much risk are you comfortably willing to take with investing? Compare how much money you have to invest against your goals to help weigh how much risk is right for you.
• Consider how close you are to retiring. If retirement is decades down the road, you may want to take a more aggressive approach. Conversely, someone who is closer to retirement may want to take a more conservative approach.

Your investing strategy doesn’t need to stay stagnant; it can and should vary depending on your age and/or what stage of life you’re in.

From investing online to working with a financial professional, learn more about your investing options.