Can I Buy Stock With $500? Absolutely! Here’s How to Get Started

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.

That’s right! Your $500 can actually buy you pieces of multiple companies rather than limiting you to 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 – If you want more flexibility to use the money whenever you want without restrictions, this is your go-to option.

I personally started with a Roth IRA cuz I liked the idea of tax-free growth, but your situation might be different!

2. DIY or Get Help?

You’ve basically got two approaches:

Option A: Do It Yourself
If you’re the hands-on type who loves learning and making your own decisions, opening a regular brokerage account lets you pick your own investments. Most online brokers these days don’t even require minimum deposits to get started.

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:

1. Get started (even small amounts count)
2. Stay consistent (add more when you can)
3. Think long-term (ride out market fluctuations)
4. 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

1. Choose a broker (look for zero commissions and fractional shares)
2. Open an account (takes about 15 minutes online)
3. Deposit your $500
4. Select your investments (consider ETFs for easy diversification)
5. 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!

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With

$\$500$

, 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.

You can turn $500 into more money by investing in the stock market through ETFs, fractional shares, or robo-advisors, paying down high-interest debt to save money, or using the funds for side hustles and small business ventures.