Many people put off investing because they think they need thousands of dollars to get started. But what if I told you, you can actually invest $100 right here, right now?
I’m going to show you how to invest $100 and make money doing it! Don’t underestimate the importance of beginning to invest even with a small amount of money.
Investing 100 dollars may not sound like a lot of money in a traditional investment, but it will get you started. And it’ll be what you do from there that will determine your financial future.
10 Ways to Start Investing with $100
Here’s how you can invest 100 dollars today:
- Use a Micro-Investing App
- Buy Fractional Shares of Stock
- Open a High-Yield Savings Account
- Start an Emergency Fund with an MMA
- Start a Robo-Advisor Account
- Buy a Portfolio with an ETF
- Open an IRA
- Employer-Sponsored 401k
- Peer-to-Peer Lending
- Consolidate and Pay Off Debt
1. Micro-Investing with Acorns
We’re talking about how to invest $100. But what if you have less than $100, like nothing? Then you can get started with micro-investing apps.
These are apps that not only enable you to invest, but also to accumulate the money you’ll need to do it.
One of the most popular micro-investment apps is Acorns. You can link your bank account, and each time you make a purchase, Acorns uses a process it calls “Round-Ups” to help you save money to invest.
EXAMPLE: Let’s say you purchase items at a grocery store for $8.25. The Acorns app will round the purchase up to an even $9. $8.25 will go to pay the merchant, and $0.75 will be held toward investing. Once you accumulate $5 in round-ups, the money is transferred to the Acorns investment account.
There, it’s managed by the Acorns robo-advisor. Acorns designs a portfolio of stocks and bonds for you and then manages it by reinvesting dividends to take advantage of compound interest. They will also rebalance your portfolio automatically now and then to maintain a target asset allocation.
It’s one of the very best ways for someone with no money to begin investing and little to no risk tolerance. And even if you have $100 already, you can invest that money in one of the other options on this list, and use a taxable brokerage account with Acorns to accumulate more money.
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2. Buy Fractional Shares of Stock
Many folks would like to invest in brands they are familiar with; however, some (like Apple, Google, Amazon, etc) can be hundreds, if not $1,000s of dollars for a single share.
If you want a piece of Amazon, but only have $100, you can invest with apps like Robinhood, Public, or Stash with what are called “fractional shares”.
These apps also make it very easy for even a novice investor to get started investing. Public even offers a social component that lets you see what others are investing in and ask users for advice.
Both of these will even give you FREE stock just for signing up.
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3. Open a High-Yield Online Savings Account
Several online banks are offering much a higher interest rate on savings products than local banks. Although they might pay high returns on a money market account or certificates of deposit, the minimum initial investment on either of those products is usually well above $100.
But you can take advantage of online high-yield savings accounts that pay high interest and have no minimum initial investment required. Compound interest happens slowly over time, but it is important to consider monthly contributions when you begin investing.
You really benefit from these high-yield savings accounts by leaving your investment in the account long-term, so make sure you do not need to access these funds in the short-term so you can maximize your investment.
4. Start an Emergency Fund with an MMA
If you have $100 to invest, and no emergency fund, you should consider starting one with one of the best money market accounts available.
A good emergency fund should be able to cover your expense for three to six months if something were to happen to your monthly income.
5. Start a Robo-Advisor Account
There are dozens of robo-advisors and even some that require no upfront investment at all. With just $100, you can get a well-diversified portfolio of stocks and bond funds fully managed for you. There is no ongoing work for the investor.
Just like a human financial advisor, a robo-advisor will design the portfolio for you, and then manage it going forward for a minimal fee.
One of the best examples of robo-advisors that require no minimum initial investment is Betterment. It enables you to begin investing immediately with only $100.
Robo-advisors are an excellent way to begin building a fully designed investment portfolio with only 100 dollars.
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6. Buy a Portfolio with an Exchange Traded Fund (ETF)
If you want to invest directly in the stock market, $100 won’t buy you much if you’re going to purchase individual stocks. Even penny stocks can have high fees and little returns.
But you can buy into an entire market by investing with an index-based ETF. In short, we just call them Index Funds. This is the most common investment advice that investor legends like Warren Buffett highly recommend for beginners.
An ETF is like a mutual fund, except they have lower fees and don’t charge sales or redemption loads. And as an index fund, it will be a completely passive investment. You won’t outperform the market, but you won’t underperform it either.
One of the best examples is the Vanguard S&P 500 Index Fund (VOO). As the name implies, the fund is invested in the S&P 500 index. That means it represents proportionate shares of each of the 500+ different stocks in the index. The S&P 500 index includes the 500 largest publicly traded corporations in America, across all different industries — including real estate.
An ETF allows you to buy into an entire market for just $100. And since they trade like stocks, you can simply purchase them through any major investment broker. If you don’t have a broker currently, we recommend M1 Finance to start with.
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7. Open a Traditional or Roth IRA
If your employer doesn’t offer a sponsored retirement plan, you can begin making contributions to an IRA. Once again, you can do this by contributing $100 per month to the plan, and even have it payroll deducted directly into the IRA.
You can open an IRA account with any of the investment brokers or Robo-advisors mentioned in this article. Since each has no minimum investment requirement, you can get started with $100.
Monthly contributions of a similar amount will enable your plan to grow steadily. And since IRAs are self-directed retirement plans, you can invest the money any way you want.
You can choose to invest in either a traditional IRA or a Roth IRA. With both plans, your investment earnings within the plan are tax-deferred.
- Traditional IRA: Contributions to a traditional IRA are fully tax-deductible if another retirement plan does not cover you. (Here is a full article that explains the difference between Roth vs. Traditional IRAs) You can begin taking withdrawals from your traditional IRA beginning at age 59 ½, with the distribution subject to ordinary income tax.
- Roth IRA: A Roth IRA works similarly to a traditional IRA, but it’s different in two important respects. First, your contributions to the plan are not tax-deductible. Second, you can take distributions from the plan completely tax-free if you are at least 59 ½ years old, and have participated in the Roth plan for at least five years.
(One other benefit of a Roth IRA is that since your contributions to the plan are not tax-deductible, they can be withdrawn at any time, free from ordinary income tax or the 10% early withdrawal penalty.)
Whether you participate in a traditional IRA or a Roth IRA, you can contribute up to $6,000 per year, or $7,000 if you’re 50 or older.
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8. Participate in Your Employer-Sponsored Retirement Plan (401k)
If your employer offers a sponsored retirement account, this will be the easiest way to begin investing with next to no money.
You can begin by investing just $100 per month. And since your contributions are payroll deducted, you’ll hardly notice the money missing from your paycheck.
Also, contributions to a qualified retirement plan are tax-deductible. That being the case, at least some of the $100 you’re contributing to the plan will be returned to you in the form of a lower income tax bill.
Different employers offer a variety of plans. 401(k) plans are popular among corporations and other for-profit employers. 403(b) plans are typically for charitable organizations and certain government employers. The Thrift Savings Plan (TSP) is available to federal government employees.
If you’re not participating in one of these plans, you’re missing out on one of the very best and easiest ways how to invest $100.
9. Peer-to-Peer (P2P) Lending
P2P lending platforms are where consumers come to borrow money for personal loans. These are unsecured loans that can be used for just about any purpose (such as buying real estate, car purchase, etc) and can be as high as $40,000. Interest rates on those types of loans vary based on the borrowers’ credit profiles.
But they’re also platforms where investors come to invest in those loans. You don’t actually invest in entire loans, but rather in small slices of loans referred to as “notes.” A note can be purchased for $25, which means you can spread an investment of $100 across four different loans.
LendingClub is the largest P2P investment platform, and it will allow you to invest with as low as $25. They also advertise returns ranging between 4% and 7%. There is some risk of loss of your investment principal due to borrower defaults.
But the rates indicated reflect those default rates, and are still much higher than what you can get on bank investments. It’s one of the best ways to invest $100.
10. Payoff Debt
This may not sound like much of an investment, but it might be the single best investment you can make with $100.
There are two ways you can get a return on your money. The first is to invest it and earn interest, dividends, or capital gains. But the second is to eliminate interest expenses by paying off debt.
One of the best ways to do this is to pay off credit card debt. If you have a credit card that’s charging you say, 20% interest, paying it down by $100 will get you an annual “return” of $20.
That’s the equivalent of a 20% return on a traditional investment, which is virtually impossible to get on a regular basis.
What’s more, paying off debt is an entirely risk-free investment. There’s virtually no way to lose money on the transaction.
BONUS: Invest in Yourself!
Most people don’t think of investing in yourself as being an investment, but it’s one of the best investments you can make.
With a small amount of money – no more than $100 – you can quite literally purchase a course or program (or even a book) that can help you learn a new skill that will enable you to increase your income by several thousand dollars per year.
You can surf the web, and especially YouTube, to find courses and programs that will help you generate extra income. Many are available for well under $100.
For example, you can get my book, Financial Freedom ASAP for just $8.99 (on Kindle), to help show you how you can achieve financial freedom no matter where you’re at in life right now.
Don’t overlook investing in yourself as a highly profitable investment. It’s THE best way how to invest $100. Your income-generating ability – as well as your personal financial management skills – will produce more money in your life than any investment you may own at this point.
Should You Invest $100?
The main point I’m trying to convey in this article is that you don’t need to wait until you have thousands of dollars before you begin investing. If you have $100, you can get started right now with numerous different investment options available.
That will be more than enough to begin investing in traditional investments, like savings accounts, stocks, bonds, ETFs, Robo-advisors, or retirement plans.
But if you’re feeling more adventurous, and you want more than an ordinary return on your money, try your hand at buying and selling, or investing in yourself. With a seemingly small investment of just $100, either venture can produce a future cash flow of thousands of dollars per year.
When that money starts rolling in, you’ll be able to invest in as many traditional investments as you want. Now that you know how to invest $100, nothing is stopping you. Your financial future will only get better if you start taking action now.
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