During the financial crisis of 2008, millions of Americans saw their retirement accounts and savings cut in half almost overnight. Headlines screamed panic, and many small investors sold everything at the worst possible time. Yet, those who held on, or even invested more when fear was at its peak saw their money grow many times over in the following decade. 

Similarly, in March of 2020, the COVID-19 pandemic sent shockwaves through the global economy and the stock market plunged. Headlines screamed panic. Many people rushed to sell their investments, worried they might lose everything. Those who stayed invested and kept putting in small amounts of money month after month saw something remarkable: within a year, the market not only recovered but reached record highs.  

One of many Warren Buffett beloved quotes states, “The stock market is a device for transferring money from the impatient to the patient.” In both of these scenarios, we learned that investing is not about timing the market, it’s about time in the market. More importantly, investing is about mindset, patience, and preparation. 

“but I barely have enough money to cover my bills. How could I ever start investing?”  

This is the challenge many people face, but you don’t need thousands of dollars sitting in your bank account to start investing. No matter where you are today, you can take your first step toward financial independence. Start with what you have, learn along the way, and let time and consistency do the heavy lifting for you. 

Let’s break down how stocks work, the options available for beginners, and practical ways you can invest even with limited funds. 

What is a Stock, and How Do Stocks Make Money? 

At its most basic, a stock is a small piece of ownership in a company. When you buy a share, you’re buying into that company’s future. If the company grows and earns profits, so can you. 

There are two main ways stocks make money for investors: 

1. Capital gains (price growth): If you buy a stock at $50 and it rises to $75, you can sell it for a $25 profit.  

1. Dividends (income): Some companies share part of their profits with shareholders. Large, established companies like Coca-Cola or Johnson & Johnson are known for paying dividends regularly (Investopedia ).  

Of course, investing in stocks also comes with risk. If the company struggles, your investment could lose value. And in cases of bankruptcy, shareholders are last in line to be paid, often leaving shares worthless. 

That’s why smart investing is less about “striking it rich” overnight and more about building steady wealth over time. 

Bonus Tips 

Not sure where to start? Here’s a simple starter plan based on what you have today: 

• If you have $50:
  Open a high-yield savings account and set up automatic weekly deposits. This builds consistency while keeping your money liquid.

• If you have $500:
  Split it between a savings cushion and your first low-cost index fund (like an S&P 500 ETF). You’ll start compounding while protecting yourself from emergencies.  

• If you have $5,000:
  Diversify: max out retirement account contributions if you can, put part in index funds, and keep a portion as emergency savings. At this stage, balance growth with safety. 

What Are the Best Stocks for Beginners to Buy? 

For beginners, investing in stocks can feel intimidating. Here are some ways to approach it: 

1. Individual Stocks

Some investors want to pick companies themselves. While this can be rewarding, it’s also risky. 

• Beginners often make the mistake of buying what’s in the news, usually after the price has already surged.

• Selling in panic when prices drop is another common trap.  

If you want to pick your own stocks, remember one rule: never put more than 5% of your portfolio in a single company. That way, one mistake won’t ruin your entire investment. 

2. Mutual Funds

A mutual fund is like a basket of many companies bundled into one investment. Instead of owning just one company, you own small pieces of many. 

• Actively managed mutual funds: Managed by professionals who try to “beat the market.” These come with higher fees.  

• Index funds: These simply mirror a market index like the S&P 500. They are lower cost and often perform better long-term.  

The downside? Many mutual funds require at least $1,000 to get started. 

3. Exchange-Traded Funds (ETFs)

ETFs are similar to mutual funds but trade like stocks on an exchange. They give you instant diversification, low fees, and flexibility to buy with as little as the price of a single share.
Because of their low cost and accessibility, ETFs are often a great choice for beginners. 

How to Invest in Stocks With Little Money 

One of the biggest myths about investing is that you need a large sum to begin. Today, technology and competition have lowered the barriers. Here’s how you can get started even with just a few dollars: 

1. Contribute to Your 401(k)

If your employer offers a 401(k) with a matching contribution, it’s one of the smartest ways to start investing. A company match is essentially free money—and not taking it is like leaving part of your paycheck on the table. 

2. Open a Roth IRA

A Roth IRA allows your money to grow tax-free. You don’t get a tax deduction for contributions, but withdrawals in retirement are tax-free—a huge benefit later on. 

• In 2025, you can contribute up to $7,000 annually (or $8,000 if you’re over 50).

• You can invest in ETFs, index funds, or mutual funds inside your Roth IRA. 

3. Open a Brokerage Account

Online brokerages like Fidelity, Charles Schwab, or Robinhood now offer commission-free trades, making it easy to start with small amounts. 

• You can place a market order (buy at the current price) or a limit order (buy only at your chosen price).  

• Avoid frequent trading, wealth is built by holding investments over time, not chasing short-term moves. 

4. Use a Micro-Investing App

Apps like Acorns, Stash, or Robinhood’s fractional shares let you invest with as little as $1. 

• Some round up your everyday purchases and invest the spare change into ETFs.  

• It’s a simple, hands-off way to begin if you feel overwhelmed by the stock market. 

How to Keep Learning About Stocks 

Even the best investors never stop learning. To become confident with investing: 

• Follow financial news on days when the market makes big moves, and read why.

• Track individual companies on sites like Yahoo Finance.  

• Practice with stock simulators like Wall Street Survivor and HowTheMarketWorks before putting in real money.  

• Read trusted beginner-friendly books. Classics like The Little Book of Common Sense Investing by John Bogle, explain the basics in plain English. Remember, learning about investing is not something you finish, it’s a habit. Spending even 15 minutes a week can pay off in decades of financial security.