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15 No-Brainer Ways to Invest $500 Right Now

By Rachel Warren - Oct 11, 2022 at 7:00AM
Child counts cash in front of glass jar while adult smiles.

15 No-Brainer Ways to Invest $500 Right Now

You don't need to wait until you have a huge stash of cash to start investing

If you're ready to get your financial health on track, it's never too late to get started. No matter what financial decisions you've made in the past, forming new healthy habits and breaking old, harmful ones requires consistency and commitment, and it's possible for everyone.

If you have $500 on hand that you want to put to work right now, here are 15 no-brainer ways to do so that could upgrade your financial health in 2022 and beyond.

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A jar labeled Savings filled with coins.

1. Put it into your nest egg

While you can certainly invest your money into assets like stocks and build up your nest egg at the same time, if you have a minimal savings stash right now, this could be the ideal place to put an extra $500.

In particular, with fears of a recession and/or stock market crash looming, now is an excellent time to ensure that your nest egg is where you want it to be.

If you're trying to decide between putting your money into stocks or into your nest egg, consider whether this is cash that you think you'll need soon. If you suspect you'll need that $500 in the next one to two years, it's better to save it, as you never want to invest cash that you plan on using in the near future.

ALSO READ: 5 Ways Americans Waste Money Without Noticing

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The word Debt being erased.

2. Put it toward getting rid of outstanding debt

This is another great way to make use of an extra $500. If you have outstanding debt, whether that be credit card debt, student loans, or otherwise, making an extra payment to whittle that down can help to shorten your repayment period.

Few things are as detrimental to the health of your finances as debt, so any steps you can take to reduce the amount that you owe will not only give you more peace of mind but free up your ability to invest more cash in the future.

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A desk with a calculator and a glass jar that says Emergency Fund and is full of cash.

3. Add it to your emergency fund if your current one is lacking

This is a third way to make use of an extra $500 other than a traditional investment in the stock market. And you could certainly split that $500 evenly between putting it toward your rainy day fund and the investment(s) of your choosing.

However, if your emergency fund is running low -- or you don't have one at all -- now is the perfect time to start building that up.

The lack of an emergency fund could not only cause you grave financial worries in the future but force you to pull from your investments if you don't have any other means of liquidity on hand and an emergency does occur.

ALSO READ: Why I Changed the Due Dates on My Credit Cards

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Newly developed commercial real estate office building.

4. Invest it into REITs

Another great way to invest $500 is to put it into real estate. There are so many ways to invest in real estate without ever buying physical property yourself, and real estate investment trusts (REITs) are one such fantastic option.

In addition to producing portfolio returns through share price appreciation, REITs are also a great source of dividend income. Most REITs pay dividends on a quarterly schedule, although some pay out dividends monthly.

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Stock market numbers and arrows and lines.

5. Invest in index funds

Whether you're a more risk-averse investor or simply want to diversify your investment portfolio more quickly, index funds can be an excellent way to do so. Not only do index funds pay dividends, but these funds contain a basket of securities so you can invest in a variety of stocks and sectors that interest you without putting money in just one company.

Index funds are exactly what their name suggests, as they follow the returns of a particular market index. Therefore, index funds are not the type of investment that will generally beat the market, but they can provide consistent and stable returns over a period of years to a long-term investor's portfolio.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

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Three clear glass piggy banks that say ETF, and each has some coins.

6. Invest in ETFs

Another way to invest $500 into a pool of assets without buying an individual stock is to invest in an exchange-traded fund, or ETF. They can also be a viable source of steady dividend income.

There are many different types of ETFs that you can invest in, ranging from ones that follow the performance of particular market indexes to sector-focused ETFs (such as tech, consumer staples, healthcare, and real estate) to bond ETFs.

ALSO READ: Thinking of Putting Your Emergency Savings in Stocks? Why Suze Orman Says That's a Big 'No'

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Notebook with mutual fund data.

7. Invest in mutual funds

Mutual funds, another popular investment vehicle, provide easy portfolio diversification and allow you to invest in a wide range of companies.

These can be a worthwhile addition to any investor's portfolio, regardless of experience level. In addition to stocks, mutual funds allow you to invest in a variety of bonds and other assets in just about every sector imaginable.

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A person sits on a chair while working on a laptop.

8. Invest in growth stocks

If you're a more risk-tolerant investor and would like to invest your $500 in individual companies, growth stocks can be an excellent place to park your cash. While growth stocks have certainly been beaten down over the past year, there's still an abundance of compelling businesses with strong leadership to be found in this family of stocks.

When investing in these types of stocks, don't just look for companies that have a consistent track record of growth. Focus on businesses with minimal debt, a strong cash stockpile, a robust competitive position in their market or markets, and a variety of tailwinds to support future growth and profits.

ALSO READ: 1 More Trend Growth Investors Need to Worry About

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The words Value and Price at opposite ends of a balance, drawn on a blackboard.

9. Invest in value stocks

The best value stocks are always a great way to make use of an extra $500 worth of investment capital. In the volatile market investors have been witnessing recently, many popular value stocks have outperformed the major indexes as shares of growth stocks have remained depressed. In bull markets, the inverse is often true.

Nonetheless, value stocks can provide a steady source of portfolio growth over a period of years and help to balance out the riskier investments you own. You can find value stocks in a variety of sectors, including healthcare, consumer staples, and even tech.

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A person writing the word Dividends.

10. Invest in dividend stocks

There are dividend stocks for just about every type of investor, found in sectors ranging from industrials to utilities to healthcare. An added benefit to putting your cash in these types of companies is that you can more quickly grow your returns while also generating additional money that you can reinvest in your portfolio if you so choose.

If you want to invest in dividend stocks, look for companies that have an established reputation for implementing successive dividend increases and have continued to pay out their dividends in a variety of economic and market environments.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

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11. Invest in fractional shares of one or more stocks you want to buy

If you want to spread your $500 investment further but don't particularly want to put it into a fund, there are still options for you. Fractional investing is a fantastic tool that allows you to buy partial shares of a company you like at the price you're willing to pay. Investing in fractional shares can make even a relatively modest investment amount like $500 go far and enable you to build a solid foundation for your portfolio more quickly.

While most investors won't experience the same level of returns going the fractional investing route as those buying whole shares of a company, there are many benefits to taking advantage of fractional shares and incorporating this approach into your overall stock buying strategy.

Besides enabling you to invest in multiple companies with even a small amount of cash on hand, you can use fractional shares to invest in stocks with extremely high valuations that would otherwise be unattainable or even to take a small position in a riskier investment that you find compelling but don’t want to gain overexposure to in your portfolio.

ALSO READ: The Best Kinds of Investments During Times of Uncertainty

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Four people in white jackets working together in a laboratory.

12. Invest in blue chip stocks

Blue chip stocks are the companies that everyone knows by name and that have a proven track record of growth over a period of many years, compelling leadership, and the financials to back them up.

While these companies won't necessarily outperform the market, they can lend consistent portfolio growth through gradual share price returns (and often, dividends). These are the types of companies that you can invest in, add to again and again over the years, and hold on to for a lifetime.

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Pills lying on dollar bills.

13. Invest in healthcare stocks

Healthcare may not be the most eye-catching industry to invest in. However, there are a wealth of compelling companies in this space that investors would be remiss to overlook.

These range from established companies developing and selling life-saving medicines, therapeutics, and vaccines to those in the earlier stages of growth forging a new path in the fight against rare diseases to companies that develop and manufacture surgical instruments and devices.

ALSO READ: Motley Fool Co-Founder David Gardner on Investing During Tough Markets

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Neural AI.

14. Invest in tech stocks

Despite the volatility that tech investors have faced over the past year, this industry still remains a favorite for many. There are many ways to invest in technology according to your personal preferences and risk tolerance.

In addition to the more traditional types of tech companies like software stocks, there are plenty of other sectors within this space such as gig economy stocks, artificial intelligence stocks, augmented reality stocks, and robotics stocks.

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Shoppers pick up items at a grocery store.

15. Invest in consumer staples stocks

Another excellent way to invest $500 is in consumer staples stocks. This is an industry that has garnered increased attention lately as inflation remains near record levels and fears of recession are top of mind for both retail investors and consumers alike.

Companies in this space tend to be more value-oriented stocks, and they're often household names that make or sell the products you use on a daily basis.

While these companies can certainly be impacted in a recessionary environment, they tend to have the market and pricing power required to not only ride out these periods of difficulty but come out on the other side and generate stable growth over many years for investors.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

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Person in orange sweater smiles while leaning back and putting feet on desk.

Maximize the power of your money

You don't need to have a lot of money to start investing or to build a well-run portfolio. Even $500 invested wisely now can reap manifold returns over a period of years and help you construct a strong portfolio that stands the test of time.

Even more important is your ability to research and understand the companies you like before you buy them, to consistently add to your portfolio regardless of the market or economic environment, to have the patience and dedication to let your winners keep winning, and to stay invested in great companies even when others are running for the hills in panic.

The Motley Fool has a disclosure policy.

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