It seems financial advisors and investment companies target high-income and high-net-worth investors. What about everyone else? Where do they invest? Who helps them? Well, we at The Money Mix are going to give that a shot. Today’s post is about how to invest $500.00.
We reached out to the personal finance blogging community to ask for their help. What follows are their answers to the question – how to invest $500.00.
There are several investment companies and funds that offer low minimum investments and low fees to help small investors. A few weeks ago, one of them reached out to The Money Mix asking us to take a look at their fund. We did that and like what we saw. We wrote about it in our post, What You Need to Know about Fundrise and DiversyFund. In a way, it was our answer to the question of how to invest $500.00. Why? DiversyFund and FundRise both have minimum investments of $500.00.
But before you run out and put your money in one of these funds, read the review so you can better understand the risks and requirements of the investment. After we looked at both funds, our team decided we like DiversyFund as the first choice.
Here’s what we like about DiversyFund. It’s a private real estate investment fund open to smaller investors. Most private funds target accredited investors. Accredited investors are those with at least $200,000 in income ($300,000 joint) or a $1,000,00 net worth (exclusive of residence). That leaves out the vast majority of investors.
As we said earlier, we really like the low minimum investment of $500.00. They recently lowered that from $2,500.00. We also like the type of properties they buy. They scan the country for undervalued multi-family properties that need some TLC (some minor repairs and updates). They perform those updates themselves with the intent of charging higher rents and increasing the value when they decide to sell a property.
There are no platform fees with The DiversyFund Growth REIT. Low fees mean potentially higher returns. Traditionally, private equity fees are among the highest. What we like the best, though, is that the management team invests their own money in these properties. And guess what? They don’t take profits until their investors.
Remember, these are the highlights. Read the review to get a more detailed analysis of the two funds. There are risks involved in this investment like any others. It’s important to understand whether those are risks you’re willing to take.
All things considered, we think the DiversyFund Growth Reit is an investment worth considering. That’s our answer to how to invest $500.
Now let’s see what other personal finance bloggers have to say about it.
How to Invest $500
Time in the Market
Here’s what Jarek, from Time in the Market has to say:
“If I get $500, I’m going to keep it simple. I want one ETF or Fund that’s going to give me a good return but also solid diversification. That means I’m probably going all in on VTSAX. That’ll give me exposure to every company in the US stock market and a pretty good return with a very low expense ratio. That’s key for money I plan to hold for at least 30 years. At that time, I’d expect that $500 to be around $5,000 even if I don’t add anything and that’s a nice little sum of money.”
Mrs. Daaku Studio
Chhavi from Mrs. Daaku Studio suggests:
“I am more of a ‘invest safely’ and take ‘minimum risks’ kind of a person. If I had to invest $500, I would break it into 3 parts. I would put $100 in a high-interest savings account (also an emergency account), $300 towards a fixed deposit or bonds, and invest $100 in starting a small but profitable side hustle like flipping things on eBay or another blog.”
This Online World
Tom Blade from This Online World:
I would suggest investing $500 into the start of a new side hustle or small business idea! $500 can go a long way in getting a new idea off the ground, and even a small investment can have massive returns with enough time. Start a blog, buy a piece of equipment that lets you provide a service (i.e. a lawn mower, snow blower, etc.), or get creative with that money and use it to purchase infrastructure that allows you to make even more money down the line.
Todd from Invested Wallet says:
“I think it depends on more than just simply looking to invest $500. How much of an emergency fund do you have saved? Are you planning on contributing more than $500 as time goes on? Have you already started contributing to a 401k or IRA? The answers to those questions can help determine what choice you’d want to make.
For me right now, I would be investing that money in myself, like my online business. $500 can get me quite a lot and I already aggressively save and invest outside of that.
If I was asked this question when I was just starting out with my personal finances, I’d be opening a Roth IRA and dropping the $500 in target-date retirement fund in Vanguard to get started. That way I’m starting to set the foundation for retirement, chose a simple fund that does the work for me, and I wouldn’t be tempted to spend it.”
My Money Chronicles
Here’s what Jason Butler from My Money Chronicles offers:
“I’d currently invest $500 in merchandise for my eBay store. I go thrifting nearly every weekend. $500 can go a very long way at thrift stores. I could easily triple or quadruple that amount depending on what items I find.”
From Financial Pilgrimage:
“If you are looking for a more active investment you could consider starting your own online business flipping items from garage sales. An initial $500 would be a perfect amount of money to build up some inventory, purchase packaging, and potentially spend a little money on an eBay template. Here are 6 tips to get started flipping items at garage sales and selling online for profit!
Andrew at Wealthy Nickel says:
“There are many ways to invest $500, but I am a real estate guy, so I would invest it in real estate! You can exponentially increase $500 by investing it into a “fixer upper” rental property and increasing your equity. Or if you are more hands-off, Fundrise is one of my favorite passive real estate investment opportunities that allow you to diversify your money across multiple commercial real estate deals.
I wrote a post with 5 different ways to invest a small amount of money and double it ($500-$1000) as long as you are willing to put in the time and/or work needed to grow your investment.”
Money Done Right
Logan Allec at Money Done Right:
“Assuming you already have a well-allocated stock portfolio and want to try your hand at alternative investments, I’d recommend considering investing in some well-vetted private real estate deals with $500. There are many platforms that make this a possibility without you having to be an accredited investor.
Here are somes options to get you started.
Paul Moyer at the Saving Freak:
“If I were going to invest $500 in one place I would go with Fundrise. Being able to diversify into real estate without having to manage the property is very appealing.” 10 Ways to Invest $500 and Make it Grow.
Money Smart Guides
Jon Dulin over at Money Smart Guides suggests:
“I would invest $500 into a large-cap ETF. This will allow you to be diversified from the start, and allow for growth of your investment as well as begin earning dividends. Then as I had more money to invest, I would continue to invest more into this ETF.”
The Ways to Wealth
R.J. Weiss at The Ways to Wealth:
“While $500 is a lot of money, investing $500 in the stock market isn’t going to change your financial future. What can change your future though is investing in yourself. Whether that investment is in books, courses, or even relationships—there are certainly ways to see a very high return on $500 (or much less).”
The Frugal Fellow
Bob Haegele at The Frugal Fellow offers:
“With an investment of this size, there are a few things I would consider. -One would be to invest it in FZROX – Fidelity’s no-fee, no-minimum total stock market fund. -Another option would be to invest it using M1 Finance. I would probably use it to buy VTI. -A third option is to simply keep it all in high-interest savings. Due to the size of this investment, I don’t feel it makes sense to diversify, so I would simply pick one option and run with it.”
Investing to Thrive
Julie Rains at Investing to Thrive:
“I like to invest in ways that are simple, cost-effective, and minimize tax hassles and upkeep. My investments are mainly in individual stocks and ETFs.
If I wanted to get started with $500, I would a) open a brokerage account with Schwab or Fidelity, b) choose a commission-free ETF or shares of a growing company that are fairly valued or undervalued and c) place a purchase for as many shares possible considering the trading fee of $4.95 (applicable to stocks only).
Both of these firms offer low-cost, commission-free ETFs (such as SCHB or ITOT) and low trading fees. In addition, their pricing structure has remained consistent over time, even becoming lower in terms of expense ratios and trading fees. With this approach, I generally wouldn’t need to be concerned about ongoing fees or taxes from re-balancing or capital gains until I sold the shares.”
Peerless Money Mentor
Jerry over at Peerless Money Mentor suggests:
“If I were given $500 to invest, I’d deposit that money in a Roth IRA account. Last year, I was contributing $50 a month to a Roth I opened using Betterment. After deciding to pivot away from Uber, 30% of my income disappeared. This year I am focusing on picking up more freelance clients, so I can redirect extra money to that account again!”
The Five Journeys
Brenda at The Five Journeys offers:
“Gamble a bit and buy some marijuana stock!”
Do You Even Blog
Pete McPherson at Do You Even Blog:
“5 letters. VTSMX! The simplest (and laziest) method for folks who don’t obsess over the details.”
A Journey We Love
Ruby over at A Journey We Love says:
“Besides the obvious mutual funds and tax-advantaged investment contributions (HSA, 401k, and IRA), we would invest $500 on buying furniture from thrift stores and the like to furnish rooms that will be on Airbnb (for our new place) We will then turn around and put any earnings of our investment into paying off our mortgage – mostly to lower PMI and the principal payment.”
ESI Money offers this:
“If I was still working, I’d spend it on a class that would increase my value as an employee. If you pick the right subject (public speaking, negotiating, analytical thinking, etc.) that $500 will net you tens of thousands of dollars over the life of your career.”
The Young and The Invested
Riley Adams at Young and The Invested:
“If I found an extra $500, I’d choose to invest in low-risk, short-term Treasuries bills. My wife and I are saving for a house down payment and want certainty on our principal and also want a little added return above what you find in most bank savings accounts. The ~2% return we receive satisfies our needs and puts us on track toward buying our first home together.”
Mike Pearson at Credit Takeoff:
“I’m kind of a “boring” investor so I will give you a somewhat boring answer, but I believe it’s effective — I would invest $500 in a low-cost index fund that tracks the broader stock market.
For example, Vanguard has a fund (VTSAX) which gives you exposure to the ENTIRE U.S. stock market, has very low costs (0.04% expense ratio) and has broad diversification (3,599 stocks). The stock market has proven to be one of the best — if not THE best — investments for individual investors over the past 50+ years.
This fund gives you access to the entire U.S. stock market, and a $10,000 investment made 10 years ago would now be worth $37,000 today, with ZERO effort required on your end. It’s the definition of a “set it and forget it” type of investment.”
Sa El of Simply Insurance says:
“I would invest in education with $500.00, the reason I say this is that, in all honesty, $500 isn’t much to use when trying to invest. There isn’t anything that can give you a higher return on your investment than education.
Just think about it, with $500 you can become a real estate agent or an insurance agent or purchase a course on how to blog. All of these avenues would make you better off than trying to invest in an index fund or the stock market.
Education Investment for the Win!”
I want to thank all those who volunteered to help answer our question of how to invest $500. As you can see, there are a lot of thoughts on the subject.
Some offered more traditional answers like index funds or other types of stock market investments (individual stocks or ETFs). Others suggested starting a side hustle. Real estate is a popular choice among bloggers too. That’s reflected in the answers.
Another popular choice was adding to retirement accounts like traditional and Roth IRAs. A couple suggested investing in yourself, through education like a course or accreditation that might improve your career and income earning potential.
Here is the bottom line as we see it. There are lots of option available when considering a $500 investment. You should always think about the best use of that money for your personal and financial situation. The ideas offered here are not meant to be investment advice. We offer them to introduce you to some ideas to consider.
One final piece of unsolicited advice we would offer. Never invest in anything you don’t fully understand. If it sounds too good to be true, it usually is. If it’s complicated to explain and hard to understand, it may bring more stress than its worth.
With that in mind, we hope you find this list a helpful starting point the next time you find yourself with $500 and don’t know what to do with it.
Let us know what you think? Were there ideas you hadn’t thought about here? Which ones resonated with you?
Fred is the Founder and President of Leamnson Capital. He helps people preparing for and in retirement with financial, retirement, Social Security, and estate planning.
At Money with a Purpose, he focuses on three primary areas: Personal Finance, Overcoming Adversity, and Lifestyle. He has been quoted in Forbes, USA Today and appeared in Money Magazine, MarketWatch, The Good Men Project, Thrive Global and many other publications.