Four Smart Ways to Invest Tiny Sums - TheStreet

Think that you need a king's ransom to begin investing and make it grow even more? You're not alone.

If you're in your 20s and 30s, you're likely paying off school loans and probably can't fathom setting aside any extra cash on top of your expenses, but tucking away just a little bit can have a big payoff down the line.

"Many people think that it takes a lot of money to get started in investing and think small amounts aren't worth it," says Ginita Wall, a certified financial planner and author of

"It's More Than Your Money, It's Your Life."

"Remember that, over time, small amounts become big amounts."

Below, Wall offers ways to invest $500, $1,000, $2,500 and $5,000. Keep in mind that the advice is interchangeable, and you can use the suggested ways to invest for any of the dollar amounts.


Buy a bond.

Go to your bank, and buy an I savings bond, which is currently paying an annual interest rate of 4.84%. The interest adjusts on a semi-annual basis, and you can hold on to the bond as long as you want, but to get the real benefit, you should think of this as a long-term investment.

At the current interest rate, your $500 will have quadrupled to $2,000 in 30 years. You need a minimum of $50 to buy this bond, but can't invest more than $5,000 in a year. To learn more about I savings bonds, go to

this Web site



Buy into your company's stock purchase plan.

Many public companies offer employees the opportunity to buy its stock at a reduced price.

Generally, your employer takes money out of your paycheck every month on an after tax basis and, every six months, uses what's accumulated to buy you stock at a discount (usually around 15%). In six months, your $1,000 will buy you $1,200 worth of stock so you've already made money.

Over time, your investment will increase as your company's stock grows. A stock purchase plan is still a savvy investment if you can only set aside $600. Setting aside this $100 a month will get you $700 worth of stock in six months.


Buy a CD.



to see which banks in the country are offering the best rates for CDs. Right now, a return of 3.5% to 4% is the highest rate you can expect to get for CDs ranging from three to five years.

"It seems like a small gain, but if you put your money into the stock market, it might drop, and if you leave it in your bank account, it won't grow at all," Wall says.

She suggests opening a CD if you have an anticipated expense coming up in a few months or years, such as buying a car or going back to school.


Put it into a quality stock mutual fund.

Mutual funds invest in a diversified portfolio of stocks, and by putting $5,000 into a high-performing fund, you can expect a significant return on your investment.


Vanguard Total Stock Market Fund

(VTSMX) - Get Report

, for example, invests in stocks that mimic the entirety of the U.S. stock market and has an annualized total growth of 10.74%.

T. Rowe Price Equity Income Fund

(RRFDX) - Get Report

is another strong performer.

Learn about other quality stock mutual funds by visiting Morningstar, an independent rating service for mutual funds, or Ratings


Once you find a fund you want to invest in, you can usually fill out the paperwork online and mail the company a check.

On a day-to-day basis, mutual funds, like the stock market, can fluctuate, so plan on sticking it out for the long haul to see your money grow. In 10 years, your $5,000 has a good chance of more than doubling to $12,000 with a mutual fund that grows annually at 9%.

Shivani Vora is a New York City-based writer who writes for over a dozen publications on lifestyle trends, travel, food, health, culture and business.