How to invest $500

Flickr / Jacob Bøtter

If investing feels like a rich person's game, it's not your imagination: Many online brokers impose initial deposit requirements of $1,000 or more. Mutual funds, a common investment choice with close to $16 trillion in U.S. assets, often have similar minimums.

But that doesn't mean you should sit on your hands — or settle for the near-0% interest rates that savings accounts are paying — and assume you can't meet the cost of entry.

After all, regularly investing small amounts over a long time horizon just might be the single best way to build wealth. And with robo-advisors like Betterment and Wealthfront actively targeting new investors with low minimums, it's possible for anyone to get in on the action.

Here's how to do that with just $500.

Start with a 401(k) if you have one.

If you have some extra money to invest and a 401(k) that offers matching dollars, this is an easy answer: Start funding that baby. Those matching dollars are free money and a 100% return on your investment. Don't pass that up.

There's another benefit, too: 401(k)s typically offer a curated selection of investments with no minimum requirements. The selection tends to be skimpy, yes, but there are likely to be at least a few good mutual or index fund choices that would otherwise be out of your reach. For instance, Vanguard's target date funds — which are some of the best, and lowest-cost, in the business — typically require a $1,000 minimum investment. But if they're offered within your 401(k), that won't apply.

The payoff: $500 invested at a 7% return for 30 years will grow to close to $4,000. Add a 50% match on that contribution and you'll have nearly $6,000. No, it's not a ton of cash. But it is 10 times your initial investment — and regularly putting extra money to work will add up over time, in addition to making you a more confident investor.

Invest through a robo-advisor.

When you have a small amount to invest, one of the best choices is a robo-advisor.

Robo-advisors use computer algorithms to manage your money in exchange for a small management fee. The process diversifies even small account balances among a range of carefully selected exchange-traded funds, and the management fee is typically a percentage of assets under management, which means the amount you pay is tied to your account balance.

Betterment has a $0 funding requirement, but on balances of $10,000 or less it requires auto-deposits of $100 a month to avoid a $3 monthly charge. Wealthfront has a $500 minimum but manages the first $10,000 for free. (Even better: The company has agreed to increase this to $15,000 for NerdWallet's readers.)

With either of these robo-advisors you can open an IRA, which is the best home for your money — after, of course, a 401(k) with matching dollars.

The payoff: Betterment says its clients can expect returns that are 4.3% higher than what the average DIY investor sees. Less the company's fees, on $500 invested over 30 years that could add up to additional earnings of close to $8,600.

Pick an online broker that waives its minimum.

If a robo-advisor isn't your style — maybe you want to be a little more hands-on with your investment choices — you might prefer the autonomy of an online brokerage account.

The trouble: As noted, many online brokers require $1,000 or more to open an account. Even if a broker doesn't require that kind of initial balance, many mutual funds and index funds do.

But there's another option that builds momentum and gets you in the door: Some brokers will waive the required minimum to open an account if you commit to continued monthly deposits. (This is often called an automatic investing program.) At Fidelity, you can do this in an IRA if you elect for auto-investments of at least $200 a month. Charles Schwab often waives its $1,000 account minimum with automatic investments of $100 a month.

The catch if you go this route is that your investment choices may be limited to select mutual funds, typically the broker's own. But there's also an added perk: Once you get into the habit of putting that money away, you may not want to stop. The act of saving admittedly isn't very fun, but watching that money build up certainly can be.

The payoff: An earlier start on growing your money. Let's say it would have taken you a year to build up a $1,000 minimum. Delaying your investment by that long would shave $300 off your 30-year return.