Hey there! If you’re reading this, you’ve probably got $500 burning a hole in your pocket and you’re wondering if it’s enough to jump into the stock market The short answer? Heck yes, it is!
I remember when I first started investing, I thought I needed thousands to get started. Boy, was I wrong! Today’s investing landscape has completely transformed, making it easier than ever for regular folks like us to start building wealth with small amounts.
The Good News About Investing $500
Let’s cut to the chase – $500 is definitely enough to start investing in stocks! In fact, with modern investing options, you could even start with much less.
Here’s the exciting part: With fractional share investing now available through many brokers and with zero commissions on stock trades, you can start investing in blue-chip stocks with as little as $1 to $5, making your $500 enough to build a small portfolio of several major companies.
You read that right. Your $500 can buy pieces of more than one company, not just a few cheap stocks.
Your Options for Investing $500
When you’ve got $500 ready to invest, you have several solid paths forward:
1. Choose the Right Investment Account
First things first you need to decide where to put your money
-
Individual Retirement Account (IRA) – If you’re thinking long-term (like retirement), an IRA might be your best bet. In 2025, you can contribute up to $7,000 to an IRA (or $8,000 if you’re over 50).
- Traditional IRA gives you tax breaks now
- Roth IRA offers tax-free withdrawals in retirement
-
Taxable Brokerage Account—This is the best choice if you want to be able to use your money whenever you want without any limits.
I started with a Roth IRA because I liked the idea of growth that would not be taxed. However, your situation may be different!
2. DIY or Get Help?
You’ve basically got two approaches:
Choice A: Do It Yourself: If you like to learn by doing and make your own decisions, opening a regular brokerage account lets you choose your own investments. These days, most online brokers don’t even need you to make a minimum deposit to start.
Option B: Let a Robo-Advisor Handle It
Not comfortable picking stocks yet? No problem! Robo-advisors like Betterment and Wealthfront will build and manage a portfolio for you based on your goals and risk tolerance. Many have super low minimums, sometimes as little as $1-10 to start!
The fees for robo-advisors typically range from 0.25% to 0.50% annually, which is pretty reasonable compared to traditional financial advisors.
What Should You Buy With $500?
Blue-Chip Stocks Through Fractional Shares
One of the coolest developments in investing is fractional shares. Before this, if you wanted to buy Amazon stock trading at $3,000+ per share, you’d need at least that much. Now? You can buy a slice of Amazon for as little as $1!
This means your $500 could buy you small pieces of several major companies like:
- Apple
- Microsoft
- Disney
- Johnson & Johnson
- Procter & Gamble
Rather than putting all your eggs in one basket or buying risky penny stocks.
Exchange-Traded Funds (ETFs)
ETFs are my personal favorite for beginners with $500. Here’s why:
- They instantly diversify your investment across many companies
- Many brokers offer commission-free ETF trading
- You can buy fractional shares of ETFs too
- They’re simple to understand – many just track well-known indexes like the S&P 500
With $500, you could invest in an S&P 500 ETF and essentially own tiny pieces of 500 of America’s largest companies in one transaction!
Dividend Stocks
If you like the idea of getting regular income from your investments, dividend stocks might be worth considering. Many quality dividend-paying stocks trade between $20-100 per share, so your $500 could buy several shares of a reliable dividend-payer or be split between 2-3 different stocks.
Companies with track records of paying consistent dividends tend to be more stable, which can be great for beginners.
What NOT to Do With Your $500
Avoid Penny Stocks!
I see this mistake all the time. New investors with small amounts often think, “I can buy thousands of shares of this $0.10 stock instead of just a few shares of a $100 stock!”
Let me save you some heartache: penny stocks (generally stocks trading under $5, often on OTC markets) are super risky. They’re:
- Highly volatile
- Often lack financial transparency
- More susceptible to manipulation
- Have limited liquidity (hard to sell when you want to)
- Frequently have wide bid-ask spreads
Despite their low share prices, penny stocks carry significant risks. The total value of your investment is what matters, not the number of shares you own.
Watch Out for Fees
If you’re investing just $500, fees can eat up your returns quickly. For example, if you pay $10 per trade and split your $500 across 5 stocks, that’s $50 in commissions—you’ve already lost 10% before even starting!
Thankfully, most major online brokers now offer zero-commission trading for stocks and ETFs, which has been a game-changer for small investors.
The Long Game: Time is Your Best Friend
When investing $500, you should ideally be thinking long-term. Money you might need within the next 5 years probably shouldn’t be invested in stocks at all.
But here’s where it gets exciting… $500 invested at a 10% average annual return (roughly the historical average of the stock market) for 30 years could grow to around $10,000! That’s 20 times your initial investment!
Even better, if you can add just $100 per month to your initial $500 and earn that same 10% return, after 30 years you could be looking at around $238,000. This is the magic of compound interest!
Real Talk: Is $500 Enough?
Look, $500 might not make you rich overnight, but it’s absolutely enough to start investing and learning the ropes. The most important thing is to:
- Get started (even small amounts count)
- Stay consistent (add more when you can)
- Think long-term (ride out market fluctuations)
- Keep learning (your knowledge compounds too)
I started with less than $500 myself, and while those first investments didn’t make me rich, they taught me valuable lessons and got me comfortable with investing. That foundation was priceless!
How to Get Started Right Now
- Choose a broker (look for zero commissions and fractional shares)
- Open an account (takes about 15 minutes online)
- Deposit your $500
- Select your investments (consider ETFs for easy diversification)
- Set up automatic contributions if possible (even $10-25 per month helps)
Some popular brokers for beginners include:
- Charles Schwab
- Fidelity
- Robinhood
- Public
Bottom Line: Just Start!
The most important investing lesson I’ve learned is that starting is often the hardest part. Don’t let that $500 sit in a savings account earning minimal interest while you overthink your options.
Even if you make a less-than-perfect investment choice, the experience and confidence you’ll gain will be worth it. And with fractional shares making it possible to buy into quality companies with small amounts, there’s no reason to wait until you have “more money” to start investing.
So, can you buy stock with $500? Not only can you buy stock, but you can build a surprisingly diversified portfolio that puts you on the path to building wealth!
Have you started investing with a small amount? What was your experience like? Drop a comment below and let’s chat about it!
How To Buy Stocks As A Begginer
FAQ
Is 500 dollars enough to invest in stocks?
Yes $500 is enough to trade stocks. Remember that if you want that amount to grow pretty quickly, you’ll need to focus on trades with a high chance of success that can give you a big return on your money when you take into account the commission per trade. ie $500 at 30% return – $10 commission at $640.
What stocks to buy with $500?
With $500$ 500$500, it is recommended to buy an exchange-traded fund (ETF) like the Vanguard High Dividend Yield ETF (VYM), Invesco High Yield Equity Dividend Achievers ETF (PEY), or Schwab US Dividend Equity ETF (SCHD) to get diversified exposure to the stock market.
Can I buy shares with $500?
How much do you need? Most brokers will ask for at least $500 for the first trade, which is called the “minimum marketable parcel of shares.”
How to turn $500 into more money?
Investing $500 in the stock market through ETFs, fractional shares, or robo-advisors can make you more money. You can also use the money to pay off high-interest debt, start a side business, or invest in the stock market.
