3 Simple Ways to Invest $500 Online

September 22, 2010

This is a guest post by Ramsay at moneyedup.com.  You can enter to win $500 by subscribing to their blog.  Visit moneyedup.com to enter the giveaway.

In the past, investing money was limited to a few vehicles, most of which were accessible by working with a local company. Today, however, the Internet opens numerous investment options that you can take advantage of. If you have $500 to invest, here are a few of the ways to make that money grow using online financial tools and programs.

Individual Retirement Account
Investing in an IRA has been one of the most widely-used way to put away a chunk of change for retirement. An IRA account provides a way to invest money without losing as much of your earnings to taxes.

Depending on the type of IRA you have, the tax benefits will be slightly different. For example, a traditional IRA allows you to deposit money into the account pre-tax; in other words, that portion of your income is exempt from taxes. In addition, the account grows tax-deferred.  You can also choose from a Roth IRA or SEP IRA.

There are many ways to invest $500 in an online IRA. Many investment institutions offer online IRA accounts, with minimum opening deposits that range from $100 to $1,000.  Here are a few

  • ShareBuilder IRA
  • Etrade IRA
  • TradeKing IRA

Peer to Peer Lending
Most people wouldn’t think that lending their $500 to cousin Joe would be a good way to grow their cash. However, with a slight variation on this theme, many investors are finding that peer to peer lending is a reasonable investment vehicle.

Much like lending your assets to a friend or family member, peer to peer lending platforms allows you to lend your money to an individual with their promise to pay it back, with interest. Unlike cousin Joe, however, you have legal agreements and protections in place, as well as the help of the broker that matched you with the borrower.

Depending on the service you use, you can expect to earn anywhere from 5-35% on your $500 investment. The actual return will depend on what service you use, how long the loan term is, the credit of the person you’re lending to, and the bidding process.  Here are a few peer to peer lending companies

  • Prosper
  • Lending Club

Certificates of Deposit
If you want a more traditional and secure way to put away your $500, an online CD may be right for you. With so many banks moving their customers to an electronic money-managing platform, purchasing an online CD is easier than ever.

You can probably buy a CD online from the bank you already deal with. However, shopping around at various institutions will give you the full spectrum of options available and could increase your return. Remember that CDs have a specific term, so your $500 will not grow to its fullest potential unless you are patient.

Returns on CDs will likely be lower than you’ll find with peer to peer lending or stocks or mutual funds in an IRA but this investment vehicle is still considered to be one of the most secure and safe ways to grow your money. Here are some places you can find CD’s online:

  • Ally Bank
  • Discover Bank

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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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5 Responses to 3 Simple Ways to Invest $500 Online

  • Sunita

    There are several way to invest our money and some of the ways are as follow:
    We can invest our money by boring old bank account. Here we can get about 2.5% a year for the money we have in our account. Not the best way to invest but an easy way to start. We can also invest by certificate of deposit (CD). CD’s are a type of lending investment. With a CD we lend our money to a bank for a specific time, say 6 months, and they give us our money back with an interest rate of 6 to 7 percent compounded onto that amount. CD’s are a guaranteed safe investment. Bonds are another type of lending investment similar to CD’s. Bonds can be issued by a bank or company.


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