With the Right Mindset, Investing Little Money Can Still Go a Long Way

NEW YORK, Sept. 16, 2026 — Starting early gives investors more time to benefit from compounding and recover from market downturns. Yet many young adults do not consider themselves investors because they believe they lack the money or knowledge to invest. U.S. News reports that young adults can start investing with relatively small amounts after establishing emergency savings and taking advantage of workplace retirement benefits.

Build an Emergency Fund First

Investors with limited savings may benefit from building an emergency fund before putting money into the stock market. Brandon Cox, a certified financial planner at Coastline Complete Wealth in Bluffton, South Carolina, frequently works with clients whose children or grandchildren need help getting started. “Our advice is usually to establish an emergency fund first, and we talk with them about how much that should be based on their situation,” Cox says.

Steven Crane, founder of Financial Legacy Builders in Fairborn, Ohio, also recommends having cash savings before investing. “Investing every dollar you have and then putting an emergency on a credit card is kind of defeating the whole point,” he says. Once investors have emergency savings, Crane recommends taking advantage of an employer match before considering a Roth IRA or making additional contributions to a workplace retirement plan, even with monthly contributions of $50 or $100.

Start with Workplace Retirement Plans

Opening an investment account can be difficult for people who have never invested. A Vanguard study released in February through its In My Finance Era podcast found that nearly two-thirds of adults ages 18 to 34 do not consider themselves investors because they believe they do not have enough money. Fifty-nine percent of respondents said they did not know where to begin, while 69% said they lacked the knowledge to get started.

Automatic enrollment can remove one barrier to participation. For many 401(k) plans established after Dec. 29, 2022, automatic enrollment is mandatory. Jon Lapp, CFP, and founder of Haven Financial in Lancaster, Pennsylvania, says opening an account and establishing a regular contribution can help new investors begin building an investing habit. In its 2025 employee benefits survey, the Society for Human Resource Management found that 93% of respondents offered a 401(k), while 85% of those employers offered a matching contribution. Cox encourages younger investors to take advantage of the match when one is available.

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Consider a Roth IRA

A Roth individual retirement account can be another option for younger investors. Contributions are made with after-tax dollars, while qualified withdrawals in retirement are tax-free. Younger workers may also be able to pay taxes on contributions while their income tax rates are relatively low. Cox recommends discussing Roth accounts with younger investors as part of retirement planning.

Lapp also points to the account’s flexibility. Roth IRA contributions, unlike investment earnings, can generally be withdrawn without taxes or penalties. That withdrawal flexibility can provide access to funds if a serious financial need arises, although Lapp says the account should still primarily be treated as a retirement account. For tax year 2026, the IRA contribution limit is $7,500, up from $7,000 in 2025. An additional $1,100 catch-up contribution is available to taxpayers ages 50 and older.

Choose Low-Cost Investments

Once an investor has selected an account, the next question is what to hold inside it. A 2025 survey by the BlackRock Foundation and nonprofit financial researcher Commonwealth found that more than 54% of Americans in households earning between $30,000 and $79,999 were investing in the market. More than half of those investors had started within the previous five years. Individual stocks were the most frequently held asset among these newer investors, with 69% holding them. Exchange-traded funds and mutual funds were each held by 34% of respondents.

The BlackRock Foundation and Commonwealth said the findings point to a need for more investor education about diversification. Cox generally recommends low-cost index funds for new investors. Examples include the Vanguard Total World Stock ETF, State Street SPDR Portfolio S&P 500 ETF and iShares Core S&P Mid-Cap ETF. These funds provide exposure to different parts of the stock market.