3 Affordable Investment Options for Your Savings

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So you want to invest a bit of savings. There's one problem: The free market isn't so free after all. Many investment types charge management fees or investment minimums. Mutual funds impose both; many CDs and bonds require investors to deposit $500 or more.

Fees eat into returns -- doubly so when you only have a bit of savings to invest. Likewise, minimums block investors from taking part in profitable money-making opportunities. That includes the stock market, which has averaged a 6.5% return since 1928 (once you figure in inflation).

Thing is, many of these fees are avoidable. You can earn income on $50 or less with a bit of digging. Here are three affordable investment options for your savings.

1. Fractional shares (stocks and ETFs)

Stocks are great. I own dozens of them. But some pack jaw-dropping price tags. A single Costco stock is $723.26 at the time of writing. It's a great company, but not everyone can or wants to bet that much money on a single company.

Regardless, you want to avoid picking stocks based on price tag, which doesn't tell you much about the health of the company. A well-diversified portfolio typically spreads savings more or less equally amongst dozens of investments.

One solution: fractional shares. Some fractional share brokers let you take a stake in big companies like Costco and Apple for as little as $1. Invest in ETFs to automatically diversify your investments even further.

2. Low fee robo-advisors

Not every investor has the time to research the stock market. Enter advisors. Wealth advisors and robo-advisors pick your investments for you. However, they typically charge fees to cover the costs of researching markets and managing portfolios.

Out of the two, robo-advisors charge lower fees. A typical robo-advisory fee is 0.2% to 0.5% of your holdings, charged annually; human managers charge around twice that.

Low-fee robo advisors charge even less. SoFi offers a robo-advisory service free of management fees; other investment expenses are low. It's an excellent, affordable option for folks who want to avoid paying big fees on small investments.

3. No-minimum CDs

Fixed-income investments are safe, relatively speaking. Bonds and certificates of deposit (CDs) fall into this category. They pay you flat, predictable interest rates, and they're stable. CDs are now trendy since rates are high across the board, with banks pushing 5% or more annual returns.

Plus, CDs let you lock in rates for the duration of the CD term. Even if the Federal Reserve lowers interest rates (as it is expected to do this year), your locked-in rate will remain high.

One downside is that fixed-income investments typically require minimum deposits. You often must invest $500 or more to open CDs with the best rates.

However, CDs without a minimum deposit exist. Some of the best CD rates let you invest for as little as $1. It's an affordable way to earn extra on your savings. CDs often offer better rates than savings accounts do, so they're worth looking into.

Which is the best investment option?

Fractional shares are excellent for high-risk, high-reward investors. You could lose money on your investments, but your returns could outperform deposits in high-yield savings accounts, money market funds, and CDs.

A low-fee robo-advisor lets investors take a hands-off approach. You don't need to put much effort into picking stocks; your advisor will do it for you. Opening a no-minimum CD is a relatively safe way to grow your savings. The catch is that you'll need to leave the money alone for six months to five years, depending on the term you choose. Otherwise, you'll have to pay CD early withdrawal fees.

You can put your savings to work with as little as $50 with these low-fee options. If none appeal to you, consider leaving your savings in a high-yield account to earn interest on deposits. It's one of the safest ways to earn money on savings.

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We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Cole Tretheway has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Costco Wholesale. The Motley Fool has a disclosure policy.