You don’t need thousands of dollars to begin investing — in fact, you can start with as little as $100. Whether you’re looking to build wealth for the long term or just starting out on your financial journey, investing with a small amount of money is completely possible. The key is knowing where to put that $100 and how to make it work for you.
In this article, we’ll guide you through how to start investing with $100, focusing on smart strategies and beginner-friendly options that can set you up for financial success.
1. Set Clear Financial Goals
Before jumping into any investment, it’s essential to set clear goals. Are you saving for retirement? Want to build an emergency fund? Or are you looking to grow your money over the next few years for a specific goal, like buying a house or going on vacation?
Your investment choices will depend on your goals. For example, if you’re investing for retirement, long-term growth in stocks or retirement accounts like an IRA may be appropriate. If you’re saving for something shorter-term, you might want to consider safer, more liquid investments like bonds or high-yield savings accounts.
2. Choose the Right Investment Account
To invest your $100, you’ll need to choose the right account. Fortunately, there are several options that allow you to start with little capital:
Brokerage Accounts
A standard brokerage account is one of the most flexible ways to start investing. Many online brokers now allow you to open an account with just $100 or even less. Some popular options include Fidelity, Charles Schwab, and TD Ameritrade. These platforms offer access to stocks, ETFs, and mutual funds with minimal account balance requirements.
Robo-Advisors
Robo-advisors are automated investment platforms that create and manage a diversified portfolio for you based on your risk tolerance and financial goals. They’re a great choice if you’re new to investing or don’t have the time or expertise to manage your portfolio. Some popular robo-advisors include Betterment, Wealthfront, and SoFi Invest.
Many robo-advisors allow you to start with a very low amount, such as $100 or less, and they will automatically invest your money across a mix of assets like stocks and bonds. Robo-advisors typically charge lower fees than traditional financial advisors, making them a cost-effective choice for beginner investors.
Retirement Accounts (IRAs)
If you’re focused on long-term growth, starting a retirement account like an Individual Retirement Account (IRA) could be a smart move. With an IRA, you can invest in stocks, bonds, or mutual funds, and the money grows tax-deferred until you withdraw it. If you’re under 50, you can contribute up to $6,000 per year, but you can still start small with $100.
Some companies, like Vanguard and Fidelity, allow you to start an IRA with very little money and automatically set you up with diversified, low-cost index funds.
3. Invest in Low-Cost ETFs or Index Funds
If you’re working with only $100, you might want to avoid high fees and focus on low-cost options. ETFs (Exchange-Traded Funds) and index funds are great choices for beginner investors because they offer broad market exposure with low fees.
- Index Funds: These funds track the performance of a specific index, like the S&P 500, and usually have very low expense ratios (the annual fees charged by the fund). They allow you to invest in a broad array of companies, giving you instant diversification for just a small amount of money.
- ETFs: Similar to index funds, ETFs are baskets of stocks or other assets, but they trade on exchanges like individual stocks. ETFs can be a more flexible option because they allow you to buy and sell throughout the day, just like individual stocks.
With $100, you can buy shares of an ETF or index fund, and the price of these funds can vary, but many are priced low enough for beginner investors to get started.
4. Try Fractional Shares
Investing in high-priced stocks like Amazon, Tesla, or Apple with just $100 may seem impossible. But with fractional shares, you don’t need to buy a whole share of a stock. Fractional shares allow you to invest in stocks by purchasing a fraction of a share, so you can invest any dollar amount, no matter the stock’s price.
For example, if a single share of Tesla is $900, you can buy just $100 worth, or about 0.11 shares, which is perfect if you’re just starting out and want exposure to big companies without committing to the full price.
Platforms like Robinhood, Fidelity, and Charles Schwab offer fractional shares, allowing you to diversify your investments even with a limited budget.
5. Explore Peer-to-Peer Lending or Crowdfunding
If you’re looking for something a little different, you might want to consider peer-to-peer (P2P) lending or crowdfunding investments. These platforms let you lend money directly to individuals or small businesses in exchange for interest or equity. While they carry more risk than traditional investments, they can offer potentially higher returns.
LendingClub and Prosper are popular P2P lending platforms where you can start investing with as little as $25 or $100. These platforms let you lend money to borrowers in exchange for interest, making them a great option for investors seeking fixed income with smaller amounts of capital.
Another option is crowdfunding platforms like Fundrise, which allow you to invest in real estate projects with low starting amounts, sometimes as little as $100.
6. Start Building an Emergency Fund
While investing is essential for long-term wealth-building, don’t forget the importance of a solid financial foundation. If you’re just starting out, you may want to consider putting your $100 toward building an emergency fund.
Having a safety net of three to six months‘ worth of expenses will help you weather financial storms and allow you to invest with more confidence in the future. Look for high-yield savings accounts or money market funds that provide better returns than traditional savings accounts.
7. Learn, Educate Yourself, and Stay Patient
Investing is a long-term game, and the key to success lies in consistency and patience. With just $100 to start, it might take time to see substantial gains, but the goal is to build good habits early on. Educate yourself about investing principles, risk management, and different asset classes.
Follow blogs, listen to podcasts, and read books on personal finance to learn more. The more you know, the better equipped you’ll be to make informed decisions and grow your investments.
Starting to invest with as little as $100 is entirely possible, and it’s a great way to begin building wealth over time. Whether you choose to invest in low-cost index funds, fractional shares, or robo-advisors, the most important thing is to get started and stay consistent. Even small investments can lead to big results when you invest wisely and with a long-term mindset.
As you continue to grow your knowledge and confidence, you can increase your investments and refine your strategies. Remember, the key is to start small, stay patient, and let your investments work for you over time. Happy investing!
