3 ways to get started as an investor for as little as $500

We've all heard it: The best way to make money is to have money. And whether you've seen an early-stage startup hit massive success before your eyes, or hated getting left behind in the crazy (now crashed) bull run of the last five years, you've probably wondered how to maximize your money like Warren Buffett.

After all, 1 to 2% interest in your savings account can feel paltry when compared to double-digit gains.

The problem is, many feel they just don't have enough money to be an investor. Which, to be fair, was true for a long time.

Now, thanks to the burgeoning fintech sector , investment opportunities are becoming more available to individuals at every savings level even for as little as $500.

So how do you do it? There are theoretically infinite ways to "invest" your money, as all it takes is capital and a way to get return on that capital.

However, for most individuals with a full-time job, investments are thought of as a passive, low-effort mechanism for seeing moderate gains. And when it comes to return on investment relative to risk and effort, there are some clear winners.

We outlined three of the best ways to invest with just $500 and little more than a laptop.

1. Invest with the help of a robo-adviser

One of the most popular inventions in fintech is the robo-adviser .

The invention of algorithm-based trading and advice platforms has made it possible for almost anyone to take advantage of the stock and bond markets which you want to take advantage of given their power for wealth creation.

For perspective, the average return for the S&P 500 has been 7% over the last 60 years. That's five times the return of a high-yield savings account , and three times that of a CD (certificate of deposit) .

Now, they key to that 7% is broad-based exposure. While you're not seeing the triple-digits gains of crypto and pot stocks, you're also not seeing triple-digit losses, either. It's almost always recommended that passive investors get broad exposure via exchange-traded funds (ETFs) or other vehicles.

Because funds or stocks can be difficult to select and manage, robo-advisers like Betterment and Wealthfront use data and their algorithms to do the decision making typically reserved for wealth managers. And they're pretty good at it returning 2.6% better than the average investor.

Both robo-advisers automatically invest your savings in the market based on your risk preference and goals, and as fiduciaries, it is their responsibility to keep your best interest in mind.

While you may see ups and downs in the short term, as all investors do, over the long run you are getting exposure to one of the largest wealth-generating tools, with almost no more effort than creating a savings account.

Open a brokerage account with Betterment or Wealthfront today and watch your money grow

2. Invest in a startup

Normally, to invest in a private company, you need to be an accredited investor, which the SEC defines as an individual income of over $200,000 or a net worth of $1 million. However, with MicroVentures , you can start investing through crowdfunding for as little as $100.

MicroVentures is a FINRA-registered marketplace that aggregates individual investments through the accredited First Democracy VC, which then allows for investment in early-stage companies in what's known as equity crowdfunding . Think Kickstarter, except you get to make profits (MicroVentures does have an active partnership with Indiegogo).

MicroVentures tries to eliminate some of the risk by vetting early-stage startups to find primary and secondary investment opportunities that have funding needs ranging from $150,000 to over a $2 million, and their portfolio of companies includes 23andMe, Bonobos, and HotelTonight.

However, you should take note: This is not an option for those who need liquidity. Under Title III of the SEC, you're basically locked into your shares for at least a year, and selling after that can typically only be done back to the company, or to another accredited investor.

While a great opportunity to invest in a company you believe in, you should always keep in mind that 50% of small business fail in the first four years . In other words: invest carefully.

3. Invest in microloans

Since 2006, using data from the Nobel Prize-winning project of economist Muhammad Yunus, microlending has become a huge source of business development in the world. Typically referring to loans of less than $50,000, microloans are a way for businesses to get capital outside of traditional banks.

Kiva is probably the leading name in this field, however, it's a non-profit that primarily targets social impact in developing countries.

If you want to loan out your money as a means of wealth generation, your best option with $500 or less to invest is Prosper . It's a peer-to-peer lending network that allow you to receive monthly payments with interest in exchange for a principal loan. ( Lending Club is another option but requires a minimum of $1,000 to get started.)

As far as performance goes, Prosper has seen an average of 3 to 8% in historical returns, with performance increasing the more diversified a portfolio becomes.

However, one big thing to note is state availability. State regulations around microloans differ, and before you do anything, you need to check if investing in microloans is even a possibility for you.

The bottom line

Whether you want to invest in securities, startups, or microloans, you should always do so with liquid money. If you have money you're saving for a mortgage or student loans, this is not the place to invest it.

The fundamental principle underlying investments is you're taking on higher risk for the chance of more gains, and that higher risk means you may lose your money (or, at the very least, see a short-term decrease in value).

That being said, almost every wealthy individual has an array of investments increasing their wealth, and there's no reason you can't join in on the party.

As long as you are disciplined and don't over-leverage yourself, it's not unrealistic to see gains of two to three times that of traditional savings instruments. Do your research, make a plan, and get started.

3 ways to get started as an investor for as little as $500