Investing even small amounts of money can pay off in the long run if you use smart strategies. With only $40 available, your options are limited, but you can still put that money to work. Focus on investing in your own skills, education and development first. Then look to passive index funds, high growth industries like tech, and rounding up your spare change. Compounding returns and reinvesting dividends will make your money grow exponentially over time.
Develop valuable skills to increase earning potential
The best investment you can make with limited funds is in improving your own human capital. Spend the $40 on books, online courses, professional certification exams or other ways to gain career-boosting skills. This will allow you to command higher pay and invest more later.
Open a no-fee online brokerage account
You’ll need a place to invest, so open a no-minimum, no-trade fee brokerage account like Robinhood or Webull. You can then use spare dollars to buy fractional shares of stocks and ETFs commission-free.
Invest in a low-cost index ETF
Exchange traded funds that track market indexes offer instant diversification. With fractional ETF investing, you can invest as little as $1 at a time in a basket of hundreds of stocks. Top choices are VTI, VOO and QQQ.
Use round-up programs to grow investments
Apps like Acorns will round up your spare change from everyday purchases and auto-invest it for you. This automated strategy turns small digital pennies into a diversified portfolio.
With some smart thinking and strategic moves focused on maximizing your $40 investment, it’s possible to steadily grow your limited funds into a larger portfolio over time through continual contributions and compound growth.