Want to Invest but Short on Cash? Here Are 5 Ways to Make It Happen

If you find the thought of investing intimidating, you're selling yourself short. You don't have to be wealthy or a financial wizard to become an investor. You just need to be willing to learn and committed to investing for the long term. Over time, it will become easier, and before long, you'll feel like an old pro.

1. Build an emergency savings account

Not to put too fine a point on it, but building an emergency savings account is an investment in you. Without money in an emergency savings account, you could be stuck pulling out a high-interest credit card or applying for a personal loan to cover the cost of an emergency. One of the few interest-free ways to pay for an emergency is to borrow the money from yourself. 

Ideally, you'll want to aim for enough money in the account to cover three to six months of expenses. If you're not sure how much it will take to keep your household humming along, check out this emergency fund calculator.  

2. Open a high-yield savings account

A high-yield savings account is a great way to save for a down payment, wedding, or memorable trip. And right now, it's also an excellent place to sock away your emergency savings. Financial institutions are offering surprisingly attractive APYs. While banks can change their interest rates anytime, now is an excellent time to put your money to work for you. 

3. Open a brokerage account

Typically, there's no fee associated with opening a brokerage account, and you're free to invest any amount you have available. Brokerages give investors like you access to things like stocks, ETFs, and index funds in order to build a long-term relationship. Chances are, you'll have more money to invest one day, and a brokerage would be happy to partner with you.

The easiest way to get started is to visit the sites of top-notch brokerages for beginners. Look around each page to determine which one:

• Has a site that's easy to navigate and doesn't leave you feeling overwhelmed.
• Provides educational materials in plain English.
• Offers commission-free trades.

4. Build a retirement account

If you think you have too little money to begin saving for retirement, think again. Right off the bat, here are three places that will welcome whatever size investment you can manage:

• 401(k): A 401(k) is a great investment vehicle for a beginner because it's professionally managed. In addition, since the money is withdrawn from your paycheck before taxes are paid, you invest the money tax-free and won't pay any taxes until you've withdrawn the funds. If you're interested in a 401(k), talk to your company's HR department to learn more about the details. And if the most you can afford to contribute right now is 1%, that's okay. You can build up your contributions over time.
• Traditional IRA: There's no minimum to open an IRA, which makes it an excellent option if you're working with a tight budget. Like a 401(k), a traditional IRA is funded pre-tax, meaning you won't pay taxes on the money until you withdraw it. With big names like Merrill, Fidelity, Charles Schwab, and Vanguard offering IRAs, it's easy to get started through their online sites. 
• Roth IRA: A Roth IRA is funded with after-tax dollars. Since you're paying taxes on that income now, you won't have any taxes due when you withdraw it in retirement. If you want to invest in a Roth IRA, there are limits on how much you can earn annually and how much you can contribute. 

5. Buy fractional shares

At the time of this writing, AutoZone Inc. (AZO) stock closed at $2,565 -- for a single share. One share of Chipotle (CMG) is $1,940. That's pretty rich for anyone's blood. But if you've researched one of these companies and believe they're on the right track, you can invest by buying a fractional share. 

A fractional share of stock is like a tiny slice. Let's say you have $100 to invest and use it to buy a fractional share of Chipotle stock. That means you own 0.05% of a share. While it doesn't sound like much, your fraction of a share allows you to profit as Chipotle profits. 

Our best online brokers and trading platforms make it easy to open an account and get started.

No matter how much or how little money you may have to invest right now, anything that goes into your account has the potential to grow from a small acorn to a mighty oak over time.