3 Reasons to Open a Brokerage Account ASAP -- Even if You Hardly Have Any Money to Invest

I can admit that I didn't first open a brokerage account and start investing until I had a few thousand dollars to work with. At the time, I just assumed that investing a few hundred dollars wasn't worth it.

I now realize how silly that line of thinking was. The reality is that many brokerage accounts today don't impose a minimum. So even if you only have $100 or so, you can start investing right away. Here's why it pays to open a brokerage account ASAP, even if you're fairly low on funds.

1. You can start growing your money immediately

If you're hoping to grow wealth by investing, the most effective tool you have at your disposal is time. The more years you're invested for, the more you can benefit from compounded returns in your brokerage account.

So let's say you only have $200 to invest with today. Over the past 50 years, the stock market has generated an average annual return of 10%. Your $200 could be worth almost $23,500 in 50 years if your portfolio performs similarly.

2. You can still create a diversified portfolio with fractional investing

It's generally not a good idea to invest money in a single stock and call it a day. But if you're short on funds, you might assume that's your only choice.

That's not necessarily so. Most brokerage accounts allow you to buy shares on a fractional basis. What this means is that you don't have to buy whole shares of stock. You can buy one-eighth of a share of a given company, or one-tenth of a share of another. By taking advantage of fractional investing, you can own a good number of stocks with a small amount of money.

3. You may be less tempted to spend money you should be saving

The money you invest in a brokerage account is yours to withdraw at any time. There are no penalties to worry about, whereas with an IRA or 401(k), you could be penalized for removing your money before reaching age 59 1/2. 

Still, once that money lands in your brokerage account, your brain might consider it off-limits. And that's a good thing if you're trying to use that money to save for a long-term goal, like retirement, your kids' college expenses, or something else.

If you leave your money sitting in your bank account, you may be more likely to spend it. But keeping it in a separate brokerage account might change the way you view that money. 

Also, for better or worse, the value of your portfolio is likely to fluctuate over time. If you see that your stocks are down, you may be motivated to leave that money alone to avoid taking a loss. If you see that your stocks are up, you may be motivated to leave that money alone so it can continue to grow. Either way, you stand to benefit.

There's no need to let a lack of funds stop you from opening a brokerage account. As long as you have some money to invest, it pays to get started as soon as you can -- with the goal of adding to your account over time.