How to Invest $20 – 9 Ways to Put Your Money to Work!

While $20 may not be a lot of money, you have many ways to make your money work for you! Do not underestimate the power of making small, incremental investments over time.

9 Places to Put Your Money

You’re probably thinking – investing $20? That sounds like a waste of time. Why not spend it on a few cups of coffee or a decent meal instead? In the ideal world, we’d all have millions of dollars to invest. But, the reality is that we all have to start somewhere.

I started investing with $50. Then, it became $100, then $200, and now tens of thousands. The key to investing is to take the first step and make the jump. Building wealth is all about having the right mindset and staying consistent.

With the power of compound interest, your $20 invested today in the stock market could be worth over $150 with a 7% return 30 years from now. And that’s just from you making this initial investment and doing nothing afterward. If you invest $20 consistently every week or month, you will slowly but surely build a powerful nest egg for yourself.

If you only have $20, don’t be discouraged! That is still a worthwhile amount to invest. The good news is that as you increase your income in the future, you’ll know what to do once you build a solid foundation. With that said, let’s go over some tips and best practices for investing $20.

list of places to put your money

Key Takeaways

  • Consider your goals, time horizon, financial circumstances, and risk tolerance before you begin investing.
  • We’ll go over 9 different ways to invest $20.

4 Factors to Consider

Before you begin investing, let’s assess 4 factors that will guide your next move.

1. Goals

The first step to investing is to understand your short-term, medium-term, and long-term goals. What do you want to accomplish by investing your money? Do you have specific goals in mind, such as paying for a vacation, saving for the down payment of your future house, or saving for retirement?

When setting financial goals, make sure to create SMART goals. If you set goals that are too vague, it will be harder to visualize them and measure your progress. As a visual person, I like using charts and graphs to monitor my progress and stay focused.

smart goals explained

For example, if you want to save up for a trip to Japan and Korea next January, start doing some calculations now on how much you plan to spend on the trip, including the cost of the flights, accommodations, food, transportation, tourist attractions, etc. Once you have the numbers down, plan out how much you will need to save each month to pay for the trip. By the time your vacation comes, you’ll have the money ready to pay for all your expenses.

For longer-term goals, a simple trick I like to use is to set smaller milestones along the way. With loftier goals, such as saving one million dollars, it is harder to envision ourselves reaching them because they seem so far away. To stay grounded, split up the goals into smaller parts, such as setting milestones at $50,000, $100,000, $250,000, and so forth if your goal is one million dollars. That way, we can stay motivated and focused while celebrating the wins along the way.

2. Time Horizon

Tying into your goals, think about the time horizon of your investment strategy. How long you plan on holding onto your investments will play a major role in the types of securities you invest your money in. If you need cash soon, it may not be wise to invest in volatile assets, such as growth stocks or penny stocks, because there is a higher risk of losing your principal investment. The last thing you want is to have to withdraw your assets when the markets are doing poorly.

Another thing to keep in mind is tax implications. You will get taxed at different rates depending on the length of time you hold your positions for certain assets such as stocks. Short-term capital gains are taxed at your regular income rate, while long-term capital gains are taxed at much more favorable rates. If you are a high-income earner, the short-term versus long-term capital gains taxes could make a huge difference in your take-home profit. 

3. Financial Circumstances

How much money you have now and how much you anticipate having in the future will affect your financial planning process. If you have a lot of high-interest debt, such as credit card debt, you may want to focus on tackling that first before you begin investing. If you expect a large inheritance in the future, you can probably afford to be more easygoing with your money.

While money will not buy us happiness, it can give us the freedom to pursue things that make us happier or feel more fulfilled. If your goal is financial independence, building wealth is a means of achieving that.

4. Risk Tolerance

Your risk appetite will largely determine the type of securities you end up investing in. Think of your risk tolerance as how much you are willing to risk for a certain amount of reward. If you are a high-stakes gambler, then cryptocurrencies, options, or growth stocks may be better plays for you. If you are risk-averse, then bonds, gold, or S&P 500 funds will work in your favor more.

In this context, if losing $20 will have no meaningful impact on you, you likely have a high-risk tolerance. But, if the $20 is a significant amount for you and will impact your ability to pay the bills this month, then your risk tolerance is relatively low. Depending on your risk appetite and immediate financial needs, some securities will better suit your preferences better than others.

risk profile chart

9 Places to Invest Your Money

While investing $20 will not make you rich overnight, it’s a start. If you think you have limited options, think again! You have many investment vehicles to choose from – we’ll cover some of our top recommendations below!

1. High-Yield Savings Account

If you’re looking for an investment vehicle with virtually no risk, open a high-yield savings account. While this option is one of the least sexy items on our list, it is a safe and reliable place to park your money.

If you are building an emergency fund, this is a great place to stash your money while you work towards larger investments. Some top banking choices we’ve found are HMBradley, Marcus by Goldman Sachs, and Ally Bank. These offer above-average annual percentage yields (APYs) and other competitive benefits. Currently, I have an account with Marcus by Goldman Sachs, which offers a 3% APY with no minimum deposit (as of November 2022).

While a savings account will not net you crazy returns, there are many benefits to having one. Most online banks offer decent interest rates and do not have minimum opening deposits, account balances, or service fees. Your money will also be easily accessible, so if an emergency arises, you can withdraw your money without difficulty.

2. The Stock Market

One of the most common and popular choices among investors is the stock market. We’ve all heard of investors who went all-in on companies like Tesla, GameStop, Apple, or Amazon early on, and now they’re printing money in the comforts of their multi-million dollar mansions. While most of us will probably not become overnight millionaires, the stock market is a solid choice for anyone looking to build wealth.

Within the stock market, you have many choices at your disposal. For example, you can handpick individual stocks that cost less than $20, buy fractional shares of stocks, gamble on some options, etc.

Some companies I currently invest in with shares under $20 include Matterport, Mind Medicine, and AST SpaceMobile. Note that most of these picks are highly risky because they lean towards the disruptive technologies side. With these stocks, I have a long-term time horizon (think 5+ years). However, there is also a lot of risk and uncertainty involved, so I try to limit my exposure to them as a percentage of my overall stock portfolio. 

Fractional Shares

In the past, brokerage firms limited their clients to buy at least a single share, which was a major barrier for investors with capital constraints. Nowadays, most major brokerages, such as Fidelity, Public, and M1 Finance, have changed their models and allow their customers to buy fractional shares of stocks.

With fractional shares, you can buy a specific dollar amount of a stock instead of investing in a full share. As of writing this, one share of Apple costs ~$151, which costs more than 7x the amount we have. However, if you open an account with a brokerage that supports fractional investing, you can take your $20 and invest it in a portion of an Apple share.

The shift towards fractional investing allows anyone with a bit of money to spare to buy shares of stock in any company, making it easier than ever before to invest. No matter what the price tag of a share is, you can still invest in it. With the emergence of “micro-investing,” more people can learn how to invest and take a stab at the stock market with only a few bucks.

3. Index Funds and ETFs

For passive investors who do not want to put in the time and effort to handpick individual assets, index funds and exchange-traded funds (ETFs) are a solid option. Index funds are often purchased through a mutual fund and represent a segment of the markets, such as companies separated by industries or market cap. ETFs represent baskets of assets that can get traded in the stock market.

While index funds and ETFs can be bought and sold like individual stocks, the key difference is that each fund often contains hundreds or thousands of investments. By investing in a fund, you can eliminate the guesswork and instantly diversify your portfolio.

Because you’re investing in many equities at the same time, you minimize your risk. Even if the price of one stock in your fund drops off a cliff, your overall portfolio will be less impacted than if you had bought individual shares of that stock. Moreover, when you invest in a fund, you invest in a sliver of different assets, so if companies like Google or Amazon are out of your price range, you can still invest in them indirectly.

With index funds and ETFs, there are many different price points. For example, in my Roth IRA, I currently invest in Fidelity’s Zero International Index (FZILX), which costs less than $15, whereas their Total Market Index Fund (FSKAX) costs over $120. What I like most about these funds are the sheer amount of holdings they have, as well as their low expense ratios. That way, I can invest in a lot of different stocks at a low cost.

One of the most popular forms of passive investing is investing in an S&P 500 fund, such as the iShares Core S&P 500 ETF (IVV), Vanguard S&P 500 ETF (VOO), and SPDR S&P 500 ETF Trust (SPY). When you invest $20 into one of these funds, you automatically invest in the 500 largest publicly traded companies in the U.S., which have historically had 7-10% in annual returns.

When we think of ETFs, we often think about stocks, but ETFs can contain bonds, commodities, and real estate investments too. For example, if you want to invest in gold, but do not want to buy physical gold bars, you can invest in a gold ETF like iShares Gold Trust (IAU) or SPDR Gold Trust (GLD).

Most brokerages that allow fractional investing will also allow you to buy fractional shares of different funds. To maintain a balanced portfolio, you’ll need to invest in several funds, such as a total market fund and an international fund, as one fund will not be diversified enough.

4. Robo-advisors

If you are overwhelmed by all this talk of buying stocks, index funds, and ETFs, a robo-advisor is a low-cost, stress-free alternative to consider. With a robo-advisor, your investments are fully automated, so you do not have to think about investing at all. Once you take your initial survey with the online investment platform of your choice, such as Betterment, Wealthfront, or Acorns, their robo-advisors will build a custom portfolio based on your investing goals, including your risk tolerance and preferences. Then, it’s all autopilot from there.

While some robo-advisors will have minimum dollar investments, such as Personal Capital (which has a hefty $100,000 minimum investment), most will allow you to create balanced portfolios with just $1. If you are a beginner in the stock market, using a robo-advisor is one of the easiest ways to get started as you do not need any prior knowledge or experience.

Some robo-advisors will also handle more complicated tasks, such as rebalancing your portfolio or leveraging tax-saving strategies. Note that these robo-advisors will likely charge a monthly fee, which may not be worth it if you have limited capital to invest or find their functionality less relevant based on your investing needs.

If you choose this option, make sure to check your portfolio every once in a while to see how your investments are doing. One of our friends left their robo-investments on autopilot for several months and didn’t realize that he was losing money the whole time!

5. Retirement Accounts

For most of us, retirement is probably too far away for us to even start thinking about it. However, it is never too early to start investing money into your retirement accounts. The biggest advantage of having a retirement account is the tax advantage, which we will cover individually for the Roth IRA and 401(k).

Roth IRA

The Roth IRA is hands down one of my favorite investment accounts. If I had to choose only one place to invest $20 in, it would be this one. It is a tax-advantaged retirement account that allows you to withdraw capital gains tax-free starting at age 59 1/2. The Roth IRA is the only financial vehicle available that lets you keep all your profits. I’ve been consistently maxing out my Roth IRA for the few years for this very reason.

Currently, you can contribute up to $6,000 a year if you make less than $140,000 annually. If you file taxes jointly with your partner, you both can contribute to this account if you make less than $208,000 combined.


Most companies these days offer 401(k) plans for their employees and allow them to opt-in and choose how much to invest into their accounts. The main difference between the 401(k) and Roth IRA is that the 401(k) is an employer-sponsored retirement account that you can contribute to using pre-tax income.

If you are in a high-income tax bracket, this is a great way to substantially reduce your current tax burden as a percentage of your paychecks will be invested into this account before taxes. Note that you will be taxed, however, when you begin withdrawing from your account beginning at age 59 1/2.

The rule of thumb is to contribute at least enough to max out your employer’s matching contribution. For example, if your employer has a 5% matching program, you should contribute at least 5% of your paychecks to your 401(k). That way, you do not leave any (free) money on the table.

At my previous company, I set my contributions to 10% of my income. While I didn’t have an employer’s matching program, I still wanted to contribute because it reduced my taxes slightly and was a good way to start saving for retirement.

6. Real Estate

$20 is not enough for the down payment of any property, but you have a couple of options to choose from. While this amount will not get you very far, you can still get exposure to real estate with limited downside risk.


Real estate investment trusts, or REITs, are companies that allow you to buy shares of their real estate investments. Think of this as buying fractional shares of stocks, but instead, you get a stake in different properties. With REITs, you do not have to buy the physical properties yourself, which minimizes your risk and the amount of money you would need to cover the down payment on a property. Additionally, you will not have to manage any of the properties yourself, which can save you headaches and stress if you have properties that require extensive maintenance or troublesome tenants.

REITs can include many different real estate properties, such as offices, apartment buildings, hospitals, warehouses, hotels, shopping centers, etc. You can invest in REITs through your brokerage firm, which will typically be through a mutual fund or ETF. They can sometimes be incorporated into your investment portfolio if you use a robo-advisor. Some REITs you can invest in include the Vanguard Real Estate ETF (VNQ), the Fidelity Real Estate Index Fund (FSRNX), and the Fidelity Real Estate Income Fund (FRIFX).

Real Estate Crowdfunding

An alternative is real estate crowdfunding, which allows you to pool money together with other investors to fund properties. There are two ways you can make money from this – either from rents collected or when the properties appreciate.

Fundrise and DivesyFund are two hot companies in this space, but they both have $500 minimum investment requirements to get started. However, Rich Uncles has a Student Housing REIT that will allow you to begin investing with only $5, while Groundfloor lets you invest in single-family homes with only $10. While I have not tried any of these options yet, they are attractive options to consider because they have relatively low entry prices.

7. Bonds

While bonds fell out of favor during the last few years due to inflation concerns, Series I Savings Bonds (I bonds) have been a popular place for investors to park their money recently due to the high interest rates being offered. Bonds have traditionally been a popular place to invest your money if you want to preserve wealth.

Think of bonds as a loan agreement where you will loan money to another party with the expectation of being paid back in full with interest. Generally, the borrower will make regular interest payments at a fixed rate over an agreed-upon period, such as five years or ten years.

There are five main types of bonds:

  • Treasury bonds are sold at auction by the Treasury to fund federal expenditures. They are commonly used to set the interest rates for all other long-term, fixed-rate bonds.
  • Savings bonds are affordable bonds issued by the Treasury geared towards individual investors.
  • Agency bonds get issued by quasi-governmental agencies, such as Fannie Mae and Freddie Mac, but are guaranteed by the federal government.
  • Municipal bonds are tax-free bonds issued by cities. They are considered riskier than bonds issued by the Fed and have lower interest rates than corporate bonds.
  • Corporate bonds are issued by different types of companies and sold by their representative banks. They offer higher rates of returns than government-backed bonds but are riskier than them.

Overall, compared to stocks or real estate, they are considered low-risk investments with limited volatility. For risk-averse investors, investing in bonds will counteract the risks of handpicking stocks or buying properties. You can purchase bonds directly from the government, through discount brokerage, or online investment platforms. Worthy’s investing platform allows you to invest in bonds with as little as $5 and pays a fixed return of 5%.

Initially, I was opposed to investing in bonds due to my age and short-term investment goals. However, with growth stocks and crypto taking a huge hit the past year, I started purchasing I bonds to reduce my risks and preserve capital.

8. Cryptocurrencies

top 10 crypto by market cap
Top 10 Crypto by Market Cap as of Nov 2022 | CoinMarketCap

Out of everything on our list, cryptocurrencies carry the highest risks and highest reward potential. If you can’t handle volatility, run far away from this security. This past year, I watched as my crypto investments drop 40-50% in value overnight while several major crypto lending brokerages and exchanges filed bankruptcies or went offline (FTX, Celsius, Voyager, Hodlnaut, to name a few).

Cryptocurrencies are an emerging asset class that is rapidly gaining traction among retail and institutional investors alike. Crypto tokens, such as Bitcoin and Ethereum, promise to disrupt the way financial institutions currently operate. Unlike fiat currencies, which are issued by central governments, cryptos have decentralized networks and govern by consensus.

Similar to buying fractional shares, you can buy fractions of different crypto tokens. For example, I purchased 0.001 of a Bitcoin earlier this year before because that was all I could afford at the time. For cheaper altcoins, which is any coin that is not Bitcoin, I’ve been able to buy hundreds or thousands at once, such as Dogecoin and Cardano. Note that you will typically have to pay a fee when you purchase crypto, which could be a significant amount if you only have $20.

There are several ways to purchase crypto. You can buy crypto on a brokerage firm, such as Webull; on an exchange, such as eToro or Coinbase Pro; or a hard wallet, such as Ledger Nano X or Trezor. Though, we recommend using an exchange or hard wallet over a brokerage as you have more control over your crypto holdings.

9. Invest in Yourself

Finally, if none of the options above sound attractive to you, you can invest in yourself. There’s always room for growth and improvement no matter where we are in our lives. If you want to learn a new skill or hone an existing one, you can significantly increase your income opportunities.

For example, there are many classes on Udemy that cost under $20, such as Python, Excel, web development, data science, etc. If you want to break into the tech sector, having some technical skills under your belt can elevate your skill set and reputation. If you run a blog, taking a content marketing class can improve your content and accelerate traffic to your site.

How to Invest $20 Safely

The goal of investing $20 is to develop a money mindset and start investing consistently. Once you get some firsthand experience, you will establish a healthy relationship with money. This guide is by no means a way to get rich quickly unless you happen to have invested in Bitcoin when it was under 10 cents.

No matter how much you start with, use your initial investment as a learning experience to guide your path towards financial independence. All it takes is the first step forward, and someday you’ll be on your way to your first $100,000 or $1,000,000.

We are not financial advisors. The content on this website and our YouTube videos are for educational purposes only and merely cite our own personal opinions. In order to make the best financial decision that suits your own needs, you must conduct your own research and seek the advice of a licensed financial advisor if necessary. Know that all investments involve some form of risk and there is no guarantee that you will be successful in making, saving, or investing money; nor is there any guarantee that you won't experience any loss when investing. Always remember to make smart decisions and do your own research!

Leave a Comment