It’s common to believe that there’s no point in investing unless you have a lot of money available to work with, but that’s not true at all.

It IS possible to successfully invest small amounts of money, especially if you can commit to doing so on a regular basis. In fact, that’s one way that small amounts can eventually become large amounts.

How quickly can you invest?

How quickly can you invest just a small amount of money? Well, it depends on what you want to invest in. If you’re interested in real estate and you have $25 per month to invest, it’s going to be a very long time before you can buy some property. But if you want to invest in stocks, bonds, and mutual funds, you can do so fairly easily.

What to keep in mind

There are a few things to pay special attention to when investing small amounts in stocks, bonds, or mutual funds. (They’re also good things to pay attention to regardless of the amount you have to invest.)

Fees are probably the most critical thing to be mindful of, especially trading commissions and annual fees. Those can quickly eat away at your investment amount if you aren’t careful. Investigate exactly what you’ll be charged for each trade and what other associated fees might be involved. Many brokerage firms offer more than one pricing structure, and they usually charge different rates depending on whether you do the trades online, over the phone, or using a broker.

Remember, “investing” doesn’t necessarily mean “outside of a retirement account”. You can do so within your Roth, 401k, or other type of retirement account. Those can give you tax advantages too. I maximize investing within tax-advantaged accounts first.

Reducing fees

There are strategies to reduce the fees you’ll pay when you have a small amount of money to invest regularly. You can trade less frequently (by saving up until you have a larger amount), sign up for automatic investment plans (either via brokerage firms or using DRIPs), or choose no-load mutual funds or funds with very low fees.

You can use fund screeners like Morningstar’s to search for no load funds or low-fee funds. Vanguard funds are also known for having low fees, but they often have relatively high minimum initial investment amounts, so you may need to save up for a while if you want to invest in one of their funds. You can also buy Treasury bonds, notes, and bills with minimum purchase amounts ranging from $25 to $100.

Don’t bet on a single horse

Diversification is another issue that’s harder to deal with when you only have a small amount to invest each month, but it can be handled. You just have to be hyper aware of it.

Be sure that you don’t strictly buy shares of one single company, or invest only in a single industry or category. Spread things out so that you don’t put all of your eggs in one basket. It’ll take you longer to do so if you’re buying single stocks, but it can be done. Diversification in this case is probably easier to accomplish with mutual funds.

The bottom line though is not to be discouraged if you only have a small amount of money to invest each month. It can be done. And given time, consistency, and smart choices, small amounts can become large amounts.