Having $600 to invest is an excellent start, but it can be challenging to know where to put it for the best returns. With some planning and research, that $600 can grow into a much larger amount over time. Here are 5 smart ways to get started investing $600 to grow your money.
Choose index funds for steady growth over time
Index funds are an excellent choice for beginner investors with $600 to put to work. Index funds track a market index like the S&P 500, capturing the broad market’s gains over time. With low fees, diversification, and long-term growth potential, index funds are a smart way to invest $600. Focus on broad stock index funds to grow the $600 over 5-10 years or more.
Invest in a robo-advisor for customized hands-off investing
Robo-advisors like Betterment and Wealthfront make investing simple for beginners. After answering some questions about your goals and risk tolerance, robo-advisors will recommend and manage a diversified portfolio of low-cost ETFs tailored to you. Robos charge between 0.25% to 0.50% in annual fees but simplify investing. With $600, a robo-advisor can create a personalized, diversified portfolio to meet your needs.
Target dividend stocks for steady income potential
With $600, investing in a few choice dividend stocks can generate steady passive income. Look for stable, established companies with consistent dividend payouts over time and relatively high dividend yields. Reinvesting the dividends can allow that income to compound significantly. Focus on blue chip stocks like Johnson & Johnson, Coca-Cola, and Procter & Gamble for reliable dividends.
Invest in a high-yield savings account as an emergency fund
One of the smartest ways to invest $600 is to open a high-yield savings account and treat it as an emergency fund. Having an emergency fund prevents you from having to go into debt or withdraw retirement investments in an unexpected financial crisis. High-yield savings accounts currently pay over 2% annually in interest, allowing your $600 to grow over time with almost no risk.
Put it toward paying down high-interest debt
Using $600 to pay down credit card debt or other high-interest debt can be one of the best returns you can get. Every dollar put toward debt saves you the interest rate you would pay, often 15% or more. Paying off debt reduces risk and frees up cash flow for longer-term investing goals. If you have high-interest debt, paying it down can be a smart priority.
$600 is a great starting point to begin investing. Using index funds, robo-advisors, dividend stocks, high-yield savings accounts, or debt paydown are all smart ways to put $600 to work. With time and consistency, that $600 invested wisely can grow into a much larger portfolio.