There's this idea floating around that you need like $10,000 or something significant before investing makes sense but also people say start early because of compound interest, so which is actually true? Got about $1000 sitting in savings doing basically nothing and wondering if that's enough to even bother opening an investment account or if the fees and minimums make it pointless at this level.
Some people mention apps where you can start with literally any amount but then there's advice saying you need proper diversification which requires more money to spread around, so maybe waiting until there's $3000 or $5000 makes more sense? The conflicting information is confusing honestly because one side says time in the market beats timing and the other says don't bother with tiny amounts.
Also I’m not sure if this should go into a roth ira or just a regular brokerage account or what the actual difference even is besides something about taxes, the whole thing feels like you need a finance degree just to make the first move without screwing it up somehow.
Does anyone actually know how to start investing with $1000 or is that amount too small to bother?
byu/Upbeat_Owl_3383 inpersonalfinance
Posted by Upbeat_Owl_3383
28 Comments
Start here: https://www.reddit.com/r/personalfinance/wiki/commontopics.
Everyone starts somewhere
$10,000 is better than $1,000
But $1,000 is better then $100 or $0
$1000 is plenty to start, seriously don’t overthink this part, you can buy fractional shares now so diversification isn’t a problem anymore, just pick a total market etf and you’re good to go, the real mistake is waiting years while trying to save up some arbitrary amount because you lose all that compound growth time.
Roth ira is probably the move if you’re working and under the income limits, the tax advantages over decades are huge, you can invest that $1000 in something simple like vti or a target date fund and just keep adding to it, checking apps like blossom or whatever to track it, but the important thing is actually starting not optimizing every detail.
Honestly just open an account at fidelity or vanguard tomorrow and buy a total market index fund, you can always adjust later but sitting on $1000 in savings earning 0.01% interest while researching for six months is costing you money, you can also use tracking apps like blossom to make it less intimidating but really the first step is just clicking buy, it’s way less scary once you actually do it.
If that 1000 is all you have in savings then no, you shouldn’t invest it, it is your emergency fund. You should have 6 months of expenses saved up in case you lose your job, and that savings should ideally be in a high yield savings account so you’re at least earning 3% interest on it.
Thinking that you don’t have enough to start or that it won’t be worth it is what keeps a lot of people from just starting. There’s no amount too small. $5000 is a great start. Just keep adding to it after your initial investment.
Don’t expect a massive windfall overnight. What you’ve heard is right: start early & keep adding to it. Real wealth building is slow, gradual, and boring.
Every little bit helps. Let it sit for 30 years in a retirement account and that $1k could be $7500 in today’s dollars. Any broker that allows fractional ETF shares lets you buy into a fully diversified fund like VT with whatever you have on hand.
If all you have in savings is $1000 you should be saving not investing.
You need an emergency fund to cover things like a car repair bill, losing your job, medical expenses, etc. That money should not be invested in the market because it could take a big drop tomorrow and then it is gone. Most people say 6 months of expenses.
Investments should be thought of as long term. Think about 5-10 year horizons for that money. If the market dips you should be able to leave it invested for a rebound which could take 4 years. Putting money in the markets with shorter horizons is gambling.
I’m currently paying for one kid’s college and I take the money out for the next year or two in advance so that I don’t need to do it at a time when the investments are down. I have money staggered in layers of Cash ready to use, short term CDs, 2-3 year CDs, investments that will be sold to fund anything inside the next 3 years and finally longer term and retirement investments that are for 8-10+ years out.
The ones I listed first are the most liquid that I can access right away and the further you go down the list the harder it is to use that money. If you don’t have that Emergency fund save for that first.
>There’s this idea floating around that you need like $10,000 or something significant before investing makes sense but also people say start early because of compound interest, so which is actually true?
Many people are stupid.
$100 can earn the same percentage gain as $10,000. For example if invested in an S&P 500 mutual fund, each amount earns, for example, 10%.
OF COURSE if you have more money invested then it will generate more dollars. However most people are starting out with small money and that’s fine.
same as you start with $10 or $10,000
Sign up for Fidelity or Vanguard, link your bank account, transfer money, then by “VTI”.
Warren Buffett’s first investment was $111. It’s never too early or too small.
1000 is a start. You got to have 1000 to have 10,000. Got to have 10,000 to have 100,000. Start somewhere and build habit putting money aside towards investing. Have a emergency fund first then invest
Just start. Invest every paycheck and set it on autopilot. The main change you need to make is to regularly up the amount as your income grows.
While you have that going, you can fine-tune what you want to invest in and how you could best utilize tax advantaged accounts.
One of my accounts is just $100 every two weeks on Fidelity. Super easy to get going with just the mobile app.
Keep it in a HYS as an emergency fund plus add to it any near term goals for within 5 years from now (college, car, down payment, wedding, etc). Once you have those bases covered then start with a roth ira invested in low cost index funds.
If you can consistently turn 8-10% with a $1000 year over year, it would take you your whole life to get wealthy. If you could do the same with $10k it would probably take you half of that time and if you did the same with $100k it would take a quarter of that time. The point is, don’t be discouraged with starting small, because the key is in consistency. If you can maintain 8% a year then you’ll be able to do that regardless if you’re playing with 100 dollars or 100,000 dollars.
The chances are your gains and losses are gonna be all over the place so starting with 10k or 100k would put you in a dog house quickly.
Start small and make sure you can make consistent gains. Some ETFs like SPY that track S&P 500 will give you average gains of 8-10% while you sleep.
Starting small will also make you realize what kind of investor are you. Are you the patient type who keeps adding to a carefully picked stock or a fund and give it a long timeline? Or, are you impatient and you’re dumping everything into a meme stock that just made 120% gains in two weeks? Your investing style and risk tolerance largely determines whether you’re getting rich slowly or experiencing volatility every day.
You need a 3-6 month emergency fund before you start investing.
When it comes to investing there are two cardinal rules.
1.You are never late. Just start investing.
2.There is no such thing as small amount. Every cent invested in compounds over time. Obviously the bigger the amount the bigger the returns but your returns will always be zero as long as you don’t invest.
Do get out there and put that cash to work.
Investing at any time makes sense. However, expectations need to be in check. A 10% return on $1000 is $100. Don’t expect to look at your bank account or investment account at the end of the year after a 10% return and be overly excited. I’ve had many clients come back to me upset about their returns because they’re looking at dollar amounts not percentages. You should be excited over a 10% return regardless of what dollar amount that produces. And just know that the compounding interest here continues to accrue and build this account overtime. This is a marathon, not a sprint.
One way to have 10k invested is to invest 1k a year for 10 years. And you’ll have growth for that time. Where if you waited 10 years to put in 10k at once you’ll miss it in the growth for the early parts
No amount is small to start investing,. Invest in USA broad market indexes or the SP500
Anything is better than nothing. I use an app called Acorns, it’s for small investors. You can set up auto deposits or roundups (rounds up each purchase to next dollar-when you buy something for 2.75, it automatically puts .25 into your account). They also have 401k which is nice for self employed (like me).
With $1000 i would put it in HYSA and continue to save.
Personally I might tell someone they should have $10k before investing. But I dont mean that they need that much to invest before its worthwile…I mean they should have at least $10k in savings to fall back on in an emergency before they consider investing. You can invest with 10 bucks…but you shouldnt until you have a foundation of financial security.
Are you sure you didnt just misunderstand the advice you got? You can absolutely invest with $1000…assuming that behind that you have adequate savings. If $1000 represents the entirity of your liquidity then no I wouldnt invest it.
NEVER too small to start. Ten years ago was a better time to have started. Right now is the second best time. Of course, depending on your age… Start NOW!
What exactly are you trying to accomplish? Are you trying to gamble with it and get rich or just want to do SOMETHING with it that is better than leaving it in checking account or low interest savings account?
What does your checking account look like? I would keep at least $1,000 just as a buffer in checking. But if you already have that then start a high yield savings account or buy a CD. Or put it in an index fund.
Doesn’t matter start , just add monthly to account even if only 25$ and you can buy fractal shares of anything , and be sure to reinvest any dividends and bonus . And some day you will be amazed of account Size
I think some of that logic is a hold over from brokerage fee trading. Thankfully Schwab started the no-fee trading thing in ’19.
I know that’s what put me off from investing earlier in my life. If I only had $100 I didn’t really feel like paying $4.95-6.95 per trade, or when places like vanguard had minimum investment amounts ( I remember 1,000-10,000 being minimums for certain EFTS) through their platforms (they still might, I don’t use vanguard.)
I think the logic was, if you’re going to pay additional for a trade, might as well make it a large investment so the fees are less of a % of your investment.
At least, that’s how my poor dumb brain worked.
If you have earned income you should put as much money as you can afford to into your Roth. You can put in $7,500 for 2026 and you still have time to contribute for 2025 ($7,000).
As for diversification: Just buy VT and you have diversification.
The math works out the same for $1,000 as it does for a million. If you make 4% that’s $40 you got from investing. You just get more zeros for that million.
$1000 isn’t too small to start with. $50 isn’t too small to start. Start where you can and keep contributing. The steady continuous contributions is where you will see real growth occurring.
Good luck.