How to Invest With Little or No Money

In this post I look at how to invest with little or no money.  One of the biggest hurdles that people face is simply finding an easy and cost effective way to invest their money.  Over the past decade financial institutions have come a long way in making investing easier and cheaper for the average person.

I have an investment portfolio that’s worth several hundreds of thousands of dollars, but I didn’t get there by investing thousands of dollars all at once.  In fact, I managed to grow that portfolio $25, $50 and $100 at a time. I started by saving and investing small amounts.  I continue to follow this approach today.  As I mentioned before, whenever I get a raise I increase my savings by $25 or $50 a pay.

In my experience I’ve found that saving and investing small amounts of money has been a recipe for success.  I’ve automated my savings and investments to the greatest extent possible so I don’t even notice the money gone.  I purchase low-cost TD e-Series funds on a weekly basis in my RRSP.  If you’ve looked at my monthly dividend income reports you’ll see that I buy anywhere from $25 to $100 worth of blue chip dividend stocks through my dividend re-investment plans (DRiPs).

I very rarely make big lump sum stock, mutual fund or ETF purchases.  The reason is simple: like most other people I just don’t have that kind of money sitting around.  With the exception of my annual tax refund and the odd work bonus I never get any “windfall” money.  That’s why I’m a big proponent of automatically saving and investing small amounts of money.  If you start out by saving a small amount – say $25/week – and continue to incrementally increase that amount over time, with the power of compounding you’ll be able to achieve an investment portfolio worth hundreds of thousands of dollars.

So if you want to start investing your money here are 3 low-cost ways to do it that don’t require you to invest thousands of dollars all at once.

1. Get started with low-cost mutual funds like the TD e-Series Funds. I’ve written a post about these funds that you can check out here. This is how I started out nearly a decade ago. They have a pre-authorized purchase plan that lets you get started for as little as $25/month per fund.
2. Set up a Questrade account and buy low-cost ETFs for free!  The online discount brokers have a lot to offer the small time investor.  One of the things I like about Questrade is that you can set up a monthly purchase plan to buy exchange-traded funds (ETFs) and you won’t be charged any buying commissions or fees.
3. Start investing through dividend re-investment plans (DRiPs).  Again, I’ve written extensively on this subject here so I won’t go into much detail.  Basically if you prefer to invest in a specific company but don’t have $1000s to throw at it, you might consider this option.  Many well established blue-chip companies offer DRiPs that allow you to make stock purchases for as little as $25 depending on the company.  Companies like the Bank of Montreal (BMO) and the Bank of Nova Scotia (BNS), BCE (BCE) and Telus (T), Suncor (SU) and Imperial Oil (IMO) etc etc.  These investment plans are also offered by giant multinationals like Coca Cola (KO) and Procter and Gamble (PG).

My approach to investing involves a combination of index investing and dividend growth investing.  I buy TD e-Series Funds and ETFs in my retirement accounts, but I also buy dividend stocks through DRiPs and in my TFSA.  There really is no right or wrong way to invest.  Each of us will develop our own investing style and comfort level.  My point is that you don’t need large sums of money to start investing and growing your wealth.  Take it one small step at a time and start investing $25 and grow it from there.

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