You hear about investing your money all the time, but yet almost nobody does it. Why is that? Well, many people think that this is just something that rich people do, but what if you could get started with just $100? Yes, that’s right, in this article you will learn 10 methods on how to start investing with $100.
There are many benefits for investing your money, but the number one reason for most investors is profits. Others prefer the security of knowing that when things happen they have extra money to take care of their problems, and then there’s retirement, and pretty much everyone wants to have enough money to retire and live comfortably.
It doesn’t really matter what category of investor you fall into, the point is that you can start investing with $100, so read on to see all the 10 methods.
1. Contribute to a 401(k) or IRA
Consider investing your first $100 into your retirement. Sure, most young people these days don’t really think about it, but they should.
If you already have a 401(k), contributing $100 to your 401(k) plan will bring you many benefits, and it’s probably the easiest way to start investing.
Contributing to your 401(k) is easy because it’s mostly an automated process. You just have to do some paperwork at the beginning, and then everything gets done automatically.
For example, you could put forward a percentage of your salary or $100 to go towards your 401(k) automatically each month, saving you the hassle of having to deal with anything else or closely monitor it.
But it gets even better, because if you invest $100 into your retirement plan and your employers also offer a company match, then that means you basically get free money. For example, if you contribute 5% of your pay to your 401(k), some employers will also contribute an additional 5% to your retirement plan.
Of course, this depends entirely on the employer, and the percentage of the match might vary, so you should check with them first.
You’re self-employed or your employer doesn’t offer a 401(k)? Open up a Roth IRA account. Invest the same $100 every month into your Roth IRA account, and also get to have many benefits such as special tax advantages.
Sure you might not get a company to match your contributions, but it’s still worth having one. You can even invest into your IRA with less than $100 (depends on the broker though).
2. Invest in index funds
Another good option to get started investing $100 is with index funds. These are a type of mutual funds and are used to track a market index, the most popular of them being the S&P 500.
Index funds are a great way to invest because you can get started with little money, and it’s a lower-risk trading investment than with the other options.
There are many brokerage and investment companies like Charles Schwab where you can open an account and get into the S&P 500 Index fund with no minimum investment.
Index funds are good especially if you are a beginner investor, and once you get the hang of it, you could move on to other options, but if done correctly, you might not even need to search for anything else. So look into them.
3. Investing in Frictional Shares
There are a lot of options these days to trade stock. One popular way to invest in individual stock is through fractional shares.
For example, if you want to buy a stock that has a $1,000 share price, you could only spend $100 and buy 0.1 of that stock.
Or you could split your $100, into multiple fractional shares and own stocks from multiple companies.
Many popular apps and investment companies give you the option to buy fractional shares, for example, Stockpile, and M1 Finance.
Do you know how there are financial advisors that can help you with your finances? Well, if you try going into their offices looking for some help with your financial situation, and only have a $100 bill in your pocket, they will probably laugh and send you on your way.
Don’t worry though, these days there are automated solutions for that, they are called robo advisors.
These are investing platforms that are based on algorithms and artificial intelligence and sometimes they can even generate you more money than regular financial advisors.
Not to mention, they won’t turn you away if you want to start investing with $100.
They function based on your financial goals, so for the robo-advisors to do their job properly, they will give you a short quiz with a series of questions before you start. This is so that they can determine the ideal custom portfolio that is based on your answers and your goals.
There are many brokerage firms where you can get started investing $100 using robo-advisors. A few popular robo-advisors are Vanguard, Betterment, Acorns, and M1 Finance.
5. Start an emergency fund
Most people don’t have any money saved up for an emergency or a rainy day. A staggering 74% of Americans live paycheck to paycheck.
Many can’t even afford an unexpected expense of just $400.
So the sensible option is to build an emergency fund and save money that you would only spend in case you get an unexpected bill or problem.
So, another great option to start investing with $100, is to put it towards your emergency fund.
Sure it’s not actually “investing”, but every respectable financial advisor out there (and even robo-advisors), will recommend you to set up an emergency fund before you start investing your money into something else.
Ideally, your emergency fund should be able to cover at least 3 to 6 months of your living expenses.
You want to keep your emergency money in a savings account and as liquid, as possible because if something unexpected happens you need to be able to access your money right away.
There are many unexpected situations where an emergency fund could be helpful to have:
- Losing your job
- Car repairs
- Unexpected health problems
- Market crash
- Family issues
- Veterinary Bills
6. Use micro-investing apps
If you want to start investing with $100, micro-investing apps are another great option. The main benefit of using micro-investing apps is that you can put a small amount of money that can work for you over time.
So basically, every time you purchase with your credit card or another app, the micro-investing app will round up the total amount that you will have to pay to the nearest dollar, and simply invest the remaining difference.
Sure, they are not going to be a replacement to traditional investing methods, but they are easy to get started, they don’t require too much management and you can start investing with $5, and if you have let’s say $100, you can invest that amount from the start
So here’s an example of how micro-investing apps work: You go online, you want to buy a T-shirt that’s $29,50 and if you use a micro-investing app, you will pay $30, with the $29.50 going to the T-shirt seller and $0.50 going to your investments via the app.
Some popular apps: Stash, Acorns, Betterment.
7. Invest in yourself
Why not start investing $100 into yourself? It could probably be the most important thing you could do to change your life for the better.
Here are a few examples of how to invest $100 into yourself:
Yes, books. Sure they might not be as popular these days as they used to be, but books can still provide an immense value and return on investment that most other methods can’t even compare.
Just stay away from the non-fiction section, and buy the books that will help you develop more in your field or in life. Read autobiographies of famous and successful people, or learn how to create and approach life so that you can succeed at whatever you put your mind to.
A good place to start is to take a look at some of the most popular business, entrepreneurship, and personal finance books, and buy a few.
Imagine, what if just one single thing that you read in a book can suddenly light up a bulb in your head that could change your life forever?
That’s why pretty much nothing else can beat books in terms of ROI (return on investments).
Invest into your resume.
A well designed and written resume can bring you a new job, possibly one with an even higher salary.
Sure, what you have written in your resume is the most important and deciding factor for a hiring manager, but it also needs to stand out a bit, in order for that hiring manager to notice it straight away from the pile of other bland resumes.
Learn a new skill with courses
Learning new skills or new ways of thinking is also important. If you know how to do more things than the average Joe, chances are you will stand out more, whether that’s in your resume, in a business meeting, or even if you want to have a few side hustles that you can earn extra income from.
Whatever the case, courses are also another great way to invest $100. From business and entrepreneurship courses to leadership mentality or simply learning how to code, design, create, play the guitar.
Courses have an immense value for money, similar to books.
Invest in a gym membership
Ever heard of the saying health is wealth? The thing is, that’s actually true, on so many levels. But let’s look at it from a financial point.
Not taking care of our own bodies can play a huge economical burden on us. A study from the Lancet shows that physical inactivity is associated with many health problems including chronic diseases and even early deaths.
Want to know the estimated total cost of all these health issues in the United States every year?
Get ready for it: $28 billion. Yes, $28 billion in health-related costs simply because we don’t take care of our bodies and don’t move enough.
So invest $100 into a gym membership (for that money you could probably pay for at least 2-3 months in advance), and start taking care of your body.
Sure there are health issues that we can’t prevent, but at least we should try to prevent those that we can, through exercising and moving regularly.
8. Start a business with $100
The coronavirus pandemic happened and in 2020 we have seen millions of people around the world that have remained without a job.
Nobody really knows as of yet when the economy will recover, and how long will it take for things to go back to normal.
But in these trying times, a few of those unfortunate persons who have suddenly become unemployed, have started to turn their life around and started their own business.
You can start investing $100 into your very own business, and over the years if you grow it properly it can give you an immense return on investment.
Here are a few examples of businesses that you can start with just $100:
- A blog or a website and earn money through ads, affiliate marketing, and other methods.
- YouTube Channel
- Create an online shop
- Start tutoring and teaching others
- Freelance work such as copywriting, designing, etc.
- Window Cleaning
- Repairing things (you could invest in some tools to get you started for example)
- Lawn care
As you could see, there are many ways on how you can start a business with $100, and in a future article we will share even more with you, so subscribe to our newsletter to be notified when that happens.
9. Put it into a high-yield savings account
If you want to start investing with just $100 and want to take a safer approach, you could try to put it into a high-yield savings account.
Sure, you won’t get to see huge returns, but it’s still a much safer option than trading, plus high-yield savings accounts are insured by the FDIC.
One of the advantages of using a high-yield savings account is that the interest rates are higher than what you could get from a regular bank account.
If you just put your money into a regular savings account, you may receive a very minimal amount of interest on your deposit.
Another benefit of putting your money into this type of account is that your assets remain liquid. You can take money out of your account at any point, based on your financial needs.
By comparison, if you took money out of a CD, you would probably have to pay a penalty for taking your money out before it matured. Learn how online savings accounts work if you want to get a higher interest rate than banking with traditional banks.
10. Certificates Of Deposit
Probably one of the safest options out there to get started investing $100 is to put it all into a CD (certificates of deposit).
CDs are known not to bring too much ROI (return on investment), so don’t expect to earn a lot of money by investing your $100 in certificates of deposit.
The upside is that they are very safe to invest in because they are insured by the FDIC up to $250,000 and also they have a higher return rate than a regular savings account.
They do work similarly to a savings account however, you basically have to not touch the money that you have invested for the amount of time that you have decided when you started. Usually, that’s one year, but you could also set it to be 1 month or as long as 5 years if you want.
If you decide to take out money from your CD before that time period, you will get a big penalty, so it’s never a good idea to withdraw from your CD unless absolutely necessary, and knowing that you will get to pay big penalties because of that.
CDs also have fixed interest rates, so they will never change during the entire length of the CD time period. The interest rate for CDs varies depending on many factors but they are anywhere between 0.15% to 2%.
Investment Options To Avoid
All of the methods that we’ve talked about above will work in one way or another, sure you might lose some money if you invest in the wrong stock but, they are at least legit methods used by billionaires and regular folks like us from all over the world.
What you don’t want to invest your $100 is these:
Gambling and betting
Straight up don’t do it. It’s not worth it, and you’re basically throwing money away. The chances are rarely in your favor, the betting and gambling clubs and casinos are only working for their benefit.
Plus if they were so good ideas to invest in, everyone would be a millionaire by now, and the casinos and betting houses would have gone bankrupt by now, instead… they are building more and more shiny new buildings, and are here to stay.
So don’t gamble or bet, instead, you should buy books, invest in yourself… pretty much anything else is better than gambling, honestly.
Investing in penny stocks
The returns are so low that most of the time these are not really worth it. Plus there are many shady practices involved with pump and dump schemes performed by fraudulent companies.
Don’t fall for scams
You know those ads that you see all over the internet but more importantly on YouTube, where you see guys in Ferraris and Lamborghini’s flexing their wealth?
Guess what, they are almost always a scam. The cars and villas are usually rented, and the product that they are selling is usually not working or involved in other schemes like MLM and so on.
Many of those “gurus” were caught as being absolute fakes, their villas were rented through AirBnB, and some even forgot to remove the rental sticker from the Ferrari key fob.
Stay away from MLM
Ah, MLMs… let’s sell products that have almost no value, with an insane price markup to friends and family, and then try to recruit those same friends to sell the products themselves to other people and so on and so on.
You probably know by now what MLMs are, so our advice is to stay as far away as possible from them. Only the MLM owners make serious money, the rest are just getting peanuts in working for the big boss.
How to start investing $100 – Conclusion
Sure, you might think to yourself that $100 does not look like a lot of money to invest to make a profit. But you’re not really seeing the big picture here.
You see, the goal is not to take $100 and turn it into $100,000. The goal is to learn the ropes first and get started now towards building a better future for you and your family.
It’s not something that you just do one time and then you’re done. You have to learn how to invest properly and smartly and also what works for you the best, and then do it over and over again.
And if you learn how to invest $100 one time and make a little bit of profit, and then do it every single time you have a spare $100 bill, well then that’s how you build towards your financial freedom.