I'm looking to drop $20 in the stocks now, but I don't have this money currently available. Is there any kind of micro/nano-loaning service where one can borrow a very small amount of funds and pay back given the same terms, only with less difficulty or strictness in the lending review/validation process?

For example, imagine a "nanoloaning" company that could lend people up to $0-$50 instantly somehow, with the expectation that you pay it back & without the rigorous income documenting process in larger loans since the risk is higher. I don't know how one can assure re-payment likelihood (I mean even verified loans of large magnitudes sometimes don't get paid either, so yeah....).

Even if it is riskier, one could lend the small funds in only specified ways, i.e., giving them only when it's known or controlled in the manner they can be used, which could be appealing to, say, young investors -- or just people in general that need some quick, small cash for some specific/direct purpose.

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    can you actually open a trading account with $20? and if you have to borrow that said 20, should you be investing? I really hope this is not a serious question. – sofa general Apr 29 '19 at 19:54
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    If you can't afford $20, you shouldn't be buying any stocks right now. – ceejayoz Apr 29 '19 at 20:02
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    There might be something to this question if you ignore the plan to invest the $20. "Why don't banks offer nanoloans" – stannius Apr 29 '19 at 20:46
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    I'm voting to close this question as off-topic because it is a troll; the OP is here to argue and not to seek any answers to an obviously fictitious question – Dilip Sarwate Apr 30 '19 at 13:58
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    Isn't this what a credit card is? – Brady Gilg Apr 30 '19 at 16:40

For such a small amount, most institutions won't offer you a loan because there's not enough principal to generate a meaningful amount of interest. In other words, they don't make enough money off you to make it worth the hassle.

You could use something like the "earnin" app. From the FAQ they essentially give you an interest-free loan of less than $100, that you pay back when your next paycheck is deposited into your bank account. You can "tip what you think is fair", which is how the app is supported.

Note: I am not affiliated with earnin and I have no experience using their (or any similar) app. Do more research before you give or receive any money. As others have mentioned, if you don't have $20 available to you then you shouldn't be borrowing to invest it anyway.

Edit to address your "why not" question concerning the last point:

There are many reasons why it's not a good idea to borrow $20 to invest, but here's two that immediately come to my mind:

  1. Fees will take up a very large portion of your investment. A lot of brokers charge $5 or more per trade. Each trade of $20 is then essentially reduced by 25% before you even have the money invested. Of course, if you used Robinhood or other brokers with no-load mutual funds or commission free ETFs, you can avoid this.
  2. Borrowing to invest puts you in a situation with unnecessary risk. What happens if you invest $100 in the "next big thing" and then you lose 10%, 50%, or 90% of that investment? Now you have lost all your money, but you also have a debt that is due soon. No one can predict the market. Sure, you might turn your $20 into $200 but what makes you think you will?

There is nothing wrong with investing small amounts. In fact, if you have an extra $20 then it is a great idea to sock that away each month into a well diversified portfolio (assuming a long event horizon of at least 5+ years). Some may say that borrowing to invest is a good idea, but only for young people and only if you really understand the risks. However, you are right that the majority of people on money.SE and elsewhere would advise against it, myself included.

If $20 is such a small amount to borrow, then why put yourself in debt rather than just save what you have?

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  • Why not? Who's to say if it's bad or good to invest a small amount? If you have any value and feel like investing it, what's not good about it? Better than doing nothing with it, right? I smell bias here. – Arm Champ Apr 29 '19 at 22:06
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    It's best to think of stocks as an investment that you won't touch for at least a decade. If you don't have even $20 available right now, you'd probably be better off starting an emergency fund in a regular savings account. You can use the time you'd spend researching stocks to find ways to earn more in your job. – wide.writing.immediately Apr 29 '19 at 23:21
  • Investing is just a subset of one's desire to use their income. I can't guarantee any changes in my income, but I can make a good use out of it whatever money I have set aside for a particular investment purpose. I don't understand your mentality really. Not everyone has anything to gain from "saving" $20 as if that's going to do anything for my overall situation. I'd rather move money around and spread my chances out than to hold on to petty cash "in case" and miss out on opportunities and/or rare chances I could make excellent returns. I guess I don't have the mentality of most posters here. – Arm Champ Apr 30 '19 at 0:55
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    Did you come here to ask a question, or to argue? It sounds like you already know all the answers. – ceejayoz Apr 30 '19 at 1:23
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    @ArmChamp It's not about the amount you are investing. If you can find a broker where the fees don't eat up any potential gains, go ahead and invest. But it's a bad idea to borrow money to invest, or to use money you may need (emergency fund) in high-risk investments. You say that you want to make use of "whatever money I have set aside", but it seems that you don't have the money set aside. "rare chances" for "excellent returns" always come with a high risk. If it doesn't come through and you invested borrowed money, you can't pay that back – tim Apr 30 '19 at 8:26

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