How can you start investing if you don’t have much money to spare? Planning for your financial future doesn’t require oodles of extra cash—just a thoughtful approach to building and managing your investment portfolio. A tight budget may feel like a major constraint, but you can stretch your dollars by minimizing your investing risk and cutting unnecessary investing expenses.

　　Before you get started with investing, you’ll want to establish an emergency fund to cover three to six months’ worth of living expenses. A high-yield savings account is a good place to store this cash. Once your emergency fund is in place, there are several low-cost ways to begin your investing journey and start building wealth. These six strategies are geared toward budget-conscious investors.

　　1. Invest in index fundsFor affordable exposure to a diversified range of companies, you can invest in a fund that replicates the performance of a broad market index such as the S&P 500. Index funds hold portfolios of assets that closely match the components of the index being tracked.

　　Every index fund is unique, but many have no minimum investment amount and some charge no management fee. (An investment management fee is also known as the fund’s expense ratio.) Starting your portfolio by buying into an index fund provides low-cost exposure to the overall market—which historically has gained value over long intervals.

　　2. Diversify with low-cost ETFsAnother affordable approach to building a diversified portfolio is to purchase shares in an exchange-traded fund (ETF) with a low expense ratio. Index funds may qualify as low-cost ETFs, but you can also use ETFs to focus more narrowly on a specific asset type, industry, or company size. For example, an ETF may focus solely on real estate, technology, or companies with large market capitalizations.

　　Especially with a tight budget, choosing an ETF with a low expense ratio matters. Research ETFs that align with your investing goals and charge the lowest fees to find those right for you.

　　3. Buy zero-commission stocksIf you have a hankering to own stock in individual companies, consider using a trading platform that charges no commissions to purchase shares in small quantities. A zero-commission brokerage, such as Charles Schwab, Fidelity, or Vanguard, charges no fees to execute stock transactions online.

　　Investing in individual stocks offers you the flexibility to build a customized investment portfolio. With small, ongoing purchases, you can gradually create a diversified portfolio that reflects your investing priorities. Without the burden of transaction fees, you can allocate your entire investing budget to the stocks you most want to own.

　　4. Invest in fractional sharesIf you have your sights set on pricey stocks—for example, shares of auto parts retailer AutoZone (AZO) traded for about $3,150 each in August 2024—you can use your limited budget to purchase fractional shares. Just as it sounds, a fractional share represents partial ownership of a full stock share.

　　Investing in fractional shares is another strategy that allows you to build a customized portfolio, even on a small budget. Many—but not all—stocks may be fractionally owned. (Trading sites may require a minimum investment amount in dollars or a minimum fraction size.)

　　5. Use a micro-investing appAnother way to start investing with a tiny budget is to use a micro-investing app, which can help you create a diversified investment portfolio using spare change from your electronic purchases.

　　How do micro-investing apps work? Although each one is unique, many of them automatically round up purchases. Every time you buy an item with your credit or debit card, the total price is rounded up to the nearest dollar and that change is invested. You control the investment parameters to ensure that the micro-investing app adds to your portfolio in a way that aligns with your goals. And because it’s automated, you’ll be adding to your investments simply by buying things.

　　6. Invest in stocks with dividend reinvestment plans What if you could DRIP your way to achieving all your financial goals? Dividend reinvestment plans—DRIPs—are another way to automate your investing activity and accommodate a small budget. With a DRIP, the dividends you earn from stock investments are automatically used to purchase more of the same stock.

　　Common stocks of companies that pay regular dividends are typically eligible for DRIPs, which may be administered by the company directly or through a brokerage. Not all stocks pay dividends, so not all stocks are suitable for DRIPs. To benefit from a DRIP, identify the stocks you want to buy and authorize your broker or another third party to automatically reinvest your dividends. Then you can rest easy while your position grows—without requiring you to inject any fresh capital.

　　The bottom lineIf your emergency fund is fully funded, you’re already making strides toward a more secure financial future—and ideally positioned to start investing. Money invested today has the most time to grow in your portfolio, so there’s no time like now to get started. Collect that spare change, do plenty of research, and pursue the low-cost investing strategy that feels right for you.

　　And be sure to enroll in your employer’s 401(k) plan (or similar plan), if you’re offered one. It will empower you to invest regularly (with each paycheck) and take advantage of the benefits of dollar-cost averaging. If your employer doesn’t offer a retirement plan or you’re self-employed, consider other options, such as an individual retirement account (IRA), that will help you save while enjoying the thrill of investing.