How To Invest $100
Probably the most significant single obstacle keeping people from investing is a lack of money. But what if I told you can begin investing right here, right now, with just $100.
In this article, I’ll show you how to invest $100 and make money doing it! That’s not an exaggeration either.
Once you learn how to invest $100, a whole new world will open up for you. You can do that either by choosing traditional investments, many of which require much less money than you think, or some out-of-the-box investments that have potential for much higher returns.
How To Invest 100 Dollars
Don’t underestimate the importance of beginning to invest with just $100 bucks. Millions of people never invest primarily because they never get started.
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.
But if you want to learn how to invest $100 and make money – as in real money – consider some of the less conventional methods I’ll be suggesting.
With those, you’ll have the ability to earn ten times, or even 100 times your $100 investment. That’s the best way for a minimal investment to become a large one.
With those thoughts in mind, let’s look at 10 ways how to invest $100 and make money!
1. Micro-Savings/Micro-Investment Apps
We’re talking about how to invest $100. But what if you have less than $100, like nothing? If that describes you, count your blessings you’re living in the 21st century, because there’s an app to help you do just about anything you want these days.
An example is micro-savings and micro-investment apps. These are apps that not only enable you to invest, but also to accumulate the money you’ll need to do it.
Probably the most popular example of a micro-savings/micro-investment app is Acorns. You can link your checking account, and each time you make a purchase, Acorns uses a process it calls “Round-Ups” to help you save money to invest.
For 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 design a portfolio of stocks and bonds for you, 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 even if you have $100 already, you can invest that money in one of the other options on this list, and use Acorns to accumulate still more money.
2. Stocks – Fractional Shares
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 for a single share.
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.
3. High-Yield Online Savings Accounts
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.
Example banks that offer a no minimum savings account:
- CIT Bank – The Savings Builder account has no minimum account balance and no monthly fees.
- Discover Bank – Their Online Savings Account has no minimum account balance requirement and no monthly fees.
- UFB Direct – Their savings and mma accounts have no minimum account balance and no monthly fees.
4. Build an Investment Portfolio with Robo-Advisors
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, then manage it going forward for a minimal fee.
M1 Finance will also enable you to begin investing with $100. But they give you greater control over your investments. They use an investment method referred to as “pies,” in which each pie is its own investment portfolio.
They have pre-built pies to choose from, or you can create your own. Each pie can hold up to 100 exchange-traded funds (ETFs) or individual stocks.
The significant advantage of M1 Finance is that you can choose your investments, then the platform manages your pies as a robo-advisor. And they do it for no fee whatsoever.
Robo-advisors are an excellent way to begin building a fully designed investment portfolio with only 100 dollars.
5. 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.
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. For 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.
7. Participate in Your Employer-Sponsored Retirement Plan
If your employer offers a sponsored retirement plan, 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 one of 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 of how to invest $100.
8. 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. But 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.
A Roth IRA works similar 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.
9. Buying and Selling
Thousands of people are selling items on eBay and Amazon.com, and earning a nice side income – and sometimes a full-time income. There’s a lot more competition than there was a decade or more ago, but you can still make money selling underpriced and unusual items.
You can buy items on the cheap at garage sales, thrift stores, and flea markets, then sell them on the websites for a profit. And you can undoubtedly begin buying inventory at less than $100.
There was even a story of a Millennial who built a company that’s made millions of dollars reselling items from Walmart! That’s an extreme example, but it gives you an idea of what can be done.
It’s one of the best ways to parlay a small amount of money into a larger amount, though it does require some effort on your part.
Buying and selling gently used items isn’t your only option, either. You can also buy and sell website domain names. You may not be able to get too many domain names at $100, but the profit potential here can be enormous. You may be able to buy a web domain for $100, and eventually sell it for several times more.
Those aren’t traditional ways to invest your money, but the return on investment is far higher than it is on typical investments. And when you start investing with very little money, the ability to make them grow many times over is a serious advantage.
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 expense by paying off debt.
One of the best ways to do this is to pay off a 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.
11. 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 $13.99 (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.
So, What Should I Do With $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.
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.