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How to Start Investing Today With Only 500 Bucks

Donny Gamble
January 6, 2022
investing 500 dollars
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Investing in your future is a good idea, no matter which way you slice it. But it’s not the most accessible thing for a lot of people, primarily because up until the last ten years or so, there was a lot of gate kept information.

Now, it’s easier than ever to invest your money in 2022.  Investing for beginners is now widely accessible, and you can invest little money for a large payoff in the future.

Let’s not drag it out; you came here for a reason, and that’s to invest your money this year so that it can pay off next year, and the next year, and so on. Let’s get into it.

1. DRIP Account

A dividend reinvestment plan (DRIP account) is the best way to invest small amounts of money and essentially leave your investments on autopilot. You invest $500 per month, and as dividends are paid out from the stocks in that DRIP account, those profits are auto-reinvested. 

So that $500 you invested is now compounding the earnings you receive instead of you taking it off the top, and when compiled with compound interest, you basically have a money-making machine.

You just have to feed it a little each month.

Setup a DRIP account with M1 Finance

2. Start a Blog

Buy a domain name, host the site for the year, and pay for some mid-tier designs. Invest in SEO and content writing each month if you don’t want to maintain it yourself, and over time, reinvest any earnings you make from affiliate marketing back into the website.

Over time, this can yield a high return even if the startup costs are lower. There’s a lot more to it than you first think, so it’s best to study this one (as you would with any investment), but it’s a viable strategy and a way to keep costs down as your own business.

Learn how to start a blog with the Launch Your Blog Course

3. Peer-to-Peer Lending

You can invest your money with peer-to-peer lending programs or services that give you a return on your investment when money that is lent out is returned. 

Peer-to-peer lending is all about having a high payback rate, so $500 could easily turn into $600 in a month, provided that everything goes well.

However, much like penny stock trading, peer to peer lending has its risks of defaulting. With peer to peer lending, there are often no securities involved, so if it flops you’re left with nothing.

There’s certainly risk involved.

Check out a site like Prosper to get started

4. Invest in Mutual Funds

If you seek out high interest yield mutual funds, you could be sitting on a pretty penny after a relatively short amount of time. You have to be tactical with how you approach mutual funds when it comes to taxation, but overall it’s a great long-term strategy that only requires bits and scraps of cash here and there.

An alternative to mutual funds are high yield ETFs, which has a different investment strategy. Consider both if you want to take a non-traditional route to investing.

5. Rollover to a Gold IRA's

Investing means that you’ll have money for the future. Well, when are you going to need that money the most? When you’re unable to work or hit a certain health condition at an older age.

A gold IRA or precious metal IRA can help you accrue wealth while being tax deferred, so the money you put into your IRA won't be hit with heavy tax percentages when you eventually need to use that money.

Check out a company like American Hartford Gold

6. 401(k) Matching

Check with your employer and see if they have a 401(k) match program. Typically, employers will match X amount of money that you put in your 401(k), dollar for dollar. 

You can’t use this money right now, but much like the method of using an IRA, it’s all about having money later when it counts.  Because your 401(k) is also tax deferred, you don’t pay tax when you contribute money to it.

For this reason, employers can actually write-off a fair sum of 401(k) matching, meaning they’ll be exempt as well. It’s a win-win situation designed to help the investor at every turn.

7. Invest in Your Credit

Your credit can do wonders for you, if you know how to leverage it properly. Whether you want to use your credit to break into real estate investing, help fund a new business proposition, or simply help you with better mortgage rates, investing in your credit now will save you money in countless ways in the not-too-distant future.

This is often overlooked because it’s not immediate and you can’t see a balance in an account, but it’s a very real (and very helpful) way to invest in your financial future.

8. Reduce Your Cost of Living

If you have purchases you can make now that will reduce your cost of living, or save you time (a better dishwasher with lower load times, a machine that can automate a t ask for you), you can save time, stress, and therefore contribute that time to meaningful activities.

Even if that activity is earning more income.  You can also invest money each month and save it to move locations to an area with a lower cost of living, saving you money each and every month for the foreseeable future.

It’s not the most exciting way to invest, but it has both financial and emotional gain.

How Should You Invest $500?

Investing isn’t necessarily exciting. While it can be fantastic to invest in a new business before it launches, or be on the ground floor of an innovation, the truth is investing small bits of cash piece by piece is relatively boring.

However, with patience, a vision for the future, and consistency, you’ll be able to nearly double $500 in the span of the next decade; just imagine what you could do with more.

Over the next ten years, at $500 per month, you’ll have invested.

Investing $500 FAQ's

How can I make money with $500?

Investing is the simple answer, but the sad truth is that many people are impatient. They want their money to accrue interest overnight, and that’s not how it happens.

You need patience with investing, so if you don’t have the patience to watch your money gain value over time, there are a few things you can do.

Use that $500 to start a small side hustle, even if it requires continued investments each month to reach its potential. Find some way to invest it so that it can grow, whether or not it’s something that’s completely controlled by you.

Should I invest in an index fund?

Do you consider yourself a savvy investor? Index funds are great tools, but they’re not a basket to put all of your eggs. Investing in an index fund can yield a long-term return with relatively high percentages, but it does have restrictions. 

Understand those restrictions, what alternative investments you can do to avoid those pitfalls, and diversify your portfolio to include more than solely index funds.

Can you make money with monthly $500 investments?

Absolutely. While the best way to do this would be with a DRIP account so you don’t have to actively invest, you could invest $500 in stocks on the open market, REITs, cryptocurrency, and many other forms.

At the very least, you could protect yourself from inflation by placing that $500 into high yield interest savings accounts so that your money doesn’t depreciate over time.

A $500 investment with a 6% return would be worth $895.42 in ten years. A $6,000 investment (one year of monthly $500 investments) could be worth over $10,700 in ten years.

The more your invest, the more you stand to gain, so even if $500 seems small on a monthly basis, it can do big numbers given patience and time.

About the author 

Donny Gamble

I’m Donny. I’m a world traveler, investor, entrepreneur, and online marketing aficionado who has a big appetite to compete and disrupt big markets. I thrive on being able to create things that impact change, difficult challenges, and being able to add value in negative situations.

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