How To Invest In Stocks If You're Flat Broke

A table full of comic books.
Cheap comics aren't a good investment so buy stocks instead.

Even if you're nearly broke you can start saving and investing today. The key is to start today, even if you can only put aside $10 a week. If you can start this week with $10 then you can turn it into more than $11,384 in 10 years and $52,407 in 20 years.

If you're young enough that same $10 today can be worth $181,910 in 30 years and $564,231 in 40 years. If that doesn't get you excited enough to start investing today than don't bother reading the rest of this page, because I'm going to show you how easy it is to do.

Open A Low Cost Brokerage Account

All my investements, not including my 401k, are at Fidelity. There's no minimum to open a brokerage account with Fidelity and they don't charge a yearly maintance fee.

Transfer $10 To Your Account On The Same Day Every Week

When you get paid send $10 to your brokerage account before anyone else gets any money. If you have direct deposit you can probably have this done automatically by having $10 sent to your brokerage account and the balance sent to your checking account.

Invest In An S&P 500 Index Fund

Don't mess around with stock picking or even trying to pick a mutual fund. Most mutual fund managers measure their success by comparing their results to the performance of the S&P 500, but more than 60% of them fail to out perform it every year.

To make matters worse fund managers will often charge you a high annual fee (they call it an expense ratio) for managing your money. Just skip these clowns all together and invest your money in a fund that copies their benchmark, the S&P 500.

Not only will you get a better return on your money than with most mutual funds but the expense ratio is much lower. A typical mutual fund that is actively buying a selling different investments will charge you .50% a year or more. Right now the Fidelity 500 Index Fund (FXAIX) is charging .015%, and that's about as cheap as you'll ever get for a mutual fund.

Once A Year Increase The Amount Your Transfer To Your Brokerage Account By 10%

If $10 a week for a year seemed easy then going to $11 for the second year won't make a difference to you. In the third year it's just $12.10 a week, and as your deposits increase over the years so does your income making this even easier to do.

The chart below shows you how your balance will grow over time using a 7% average yearly growth rate. The S&P 500 has earned closer to an average of 8% per year since its' inception in 1957 but I like to be slightly pessimistic when trying to predict the future.

That's all there is to it! Save today, save consistently, invest in the S&P 500, and slowly increase the amount you save. The sooner you start investing the richer you're going to be, so don't wait, even if you feel that it's not worth starting with $10 a week. As the chart above shows, your balance really starts to rocket up after the 10th year, so the sooner you start the sooner you'll get to experience rocket ship growth.

Updated Jun 06, 2019 by Scott