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The good news is that even small investments grow, especially if you invest regularly. In fact in some cases regular investment is the best way to get good growth (see below).

Let's start with the bad news: there are some hazards small investors face that are specific to them.

First, the very fact that you have only a little money to invest probably indicates that you do not have much money and cannot afford to lose your investment. The guy investing thousands can probably afford to lose a few hundred, sometimes more. However if you have less than a couple of hundred dollars to invest, a loss of 25% of that investment may really put you in a bind. That means you must invest carefully and be confident that your investment will not lose money.

Second, it costs to invest in certain things such as stocks. That cost is less now with web-based investing but it is still there. It may cost $10 to buy stock. That is peanuts to the large investor. However, to the guy with only a couple of hundred, it may represent his return for an entire year.

Third, many investment companies are not interested in small accounts. In fact mutual funds often have a minimum investment which may be more than the small investor can pony up. You may have to save up before investing in things like the stock market.

That said, there is no reason you cannot invest a small amount of money profitably. You will have to do it differently than the big investor, but you can do it. Furthermore, that small investment can grow and become a large investment. However you have to be careful how you do it.

The first step is to make sure your immediate needs are met. Food, housing, clothing, medical expenses etc. get first call. Then set aside something for emergencies. Emergency funds should be in passbook savings or something similar where you can get them quickly when you need them. Once that is done, look at where you can invest for the long term.

Where do you put the long term investments? That depends on how much you are investing but don't overlook the same institution where your savings are. In fact your investment might initially go into a passbook account but it is usually better to put it into a certificate of deposit (CD) which pays higher interest. And do look at joining a credit union instead of dealing with a commercial bank. Credit unions don't have to make a profit so they tend to treat their members better than a commercial bank treats the owner of small accounts.

Once you have an emergency fund

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