The day has finally come, you have a crisp $100 bill in your hand and you have two choices...
You could be like most people and spend that money on something that depreciates like a fresh new pair of sneakers, or you can be like the rich and invest it!
Most people don't realize that there are a number of investments available that do not require thousands of dollars. In this article, we will cover a number of different ways you can start investing with as little as $100.
In the past, investing was reserved for people who had thousands, if not tens of thousands of dollars on hand. This concept still exists in traditional investing circles. If you try to convince a financial advisor to help you invest your $100, you likely won't get far. This isn't evil, it's simply math.
These advisors make a commission off of what you have invested with them, typically around 1%. If you invest $100 with them, they stand to make about $1! It is simply not worth it to them to help you.
So, where can you go to get the most out of that fresh $100?
Here's one of the best ways to make the most out of that $100.
Webull is a commission-free stock brokerage that has a great offer for Investing Simple readers.
If you open an account with them and fund it with $100 or more on your first deposit, they will grant you 2 free stocks!
So, basically you get a minimum of $10.50 in free stocks completely free! Simply math says that by investing $100 and getting back $10.50 means you have already made a 10.5% return on your money. A great way to start out investing!
Instead of a financial advisor, what about an online brokerage account? The good news there are a lot of good options out there.
When I opened my first trading account, I had to deposit a minimum of $500 and pay a commission of $6.95 per trade. Today, there are countless opportunities that require a minimum balance of $100, or less, with little to no commission costs! Here are our top picks for the best free investing apps.
Thanks to modern day technology, automation and paperless communication, the cost of investing has been drastically reduced. This means better options for you and that $100 in your hand!
But is it actually worth it to invest $100? You could have a night out with some friends, go out to a movie or buy a new golf club. What is the point of investing such a small amount of money?
As soon as you begin investing, you have made a decision. You have transitioned from someone who is living day to day to someone who is planning and preparing for tomorrow.
Everyone is planning for their own dreams, but it is critical that you act and not simply dream. What are you wanting to accomplish with your money? It could be a home purchase, an education, a new car or simply helping those in need.
Whatever your dream is, investing that $100 can help you get started. By staying consistent and investing early and often, these dreams can quickly become a reality.
Let me share with you a story about Warren Buffett, the most successful investor of our time. A man who is worth more than $95 billion.
Once, Warren Buffett was riding an elevator when he noticed a penny on the floor. Though he was on the elevator with a few other people, he was the only one who seemed to notice.
When the elevator doors opened, everyone walked off except for Buffett. He kneeled down and picked up the penny on the floor while the others watched. As he walked past the others, he muttered "the beginning of the next billion."
Warren Buffett is the last person in the world who needs to pick up change off the ground, but that does not stop him. He understands that it is the action and the principle behind it that counts, not the amount of money.
Just like this story with Warren Buffett, the action of starting to invest is far more significant than the amount you invest. Recently, we wrote a piece on how Warren Buffett invests and how you can do it too.
So, let's get the ball rolling and figure out how you can invest your first $100!
Remember that financial advisor we mentioned above? If you went into his office with $100, he would send you away.
Today, there is an entirely new form of advisor known as the robo advisor.
Robo advisors are algorithm-based investing platforms where your money is invested based on your goals and current situation. Instead of having a human do this, it is handled by technology!
The result? A seriously inexpensive financial advisor that doesn't need thousands of your hard earned dollars to get started. Take Betterment for example.
This is one of the most popular robo advisor out there. While most financial advisors charge an asset management fee of around 1%, Betterment charges just 0.25%.
Since Betterment is algorithm based, you can invest with any amount you have! That's right, no minimum balance. If you invest with a financial advisor, it would take them a few hours to have a discussion with you and set up the proper investment account. With Betterment, this is done in seconds.
Betterment doesn't have any physical brick and mortar locations, and everything is 100% automated. Their marginal costs of bringing on one new client is next to nothing, which means they can afford to charge you, their client, next to nothing.
When you invest with a robo advisor, you are investing in a way that is 100% passive.
You simply open an account, answer a few questions about your goals and your current situation and fund the account. After that, you are done! You will not think about this investment until tax season, or if you choose to contribute more money.
If you are brand new to investing and you don't want to pick individual stocks or funds, a robo advisor like Betterment could be a great option. You will have professional oversight of your money without paying a boatload of fees.
If you want to pick your own investments, keep reading!
Are you looking to be more active with your investments?
If so, another option for investing is to pick individual stocks or funds. This can be one of the most exciting ways to invest, but we recommend doing some research first! Here is our free guide on investing in the stock market as a beginner.
In the past, purchasing individual stocks resulted in high commissions that would strangle your returns. Now, with the advancement of technology, you can make trades or buy individual stocks for almost nothing!
Thanks to paperless communication, technology and high frequency trading platforms, there are now an array of free investing platforms out there. Two of the most popular platforms are Robinhood and Webull.
Both of these platforms allow you to invest in stocks and ETFs traded on the major stock exchanges for free.
That's right, zero commissions or fees whatsoever! This is, of course, not including government-associated fees from the SEC or clearing houses, but those are almost negligible.
Robinhood is best for complete beginners, and they give you a free stock when you sign up!
Webull has more advanced tools and data, and they give you two free stocks!
One of the most exciting investments that has recently emerged is crowdfunded real estate investing. Platforms like Fundrise allow you to pool your money with other investors to invest in real estate projects.
I am sure we all have that rich friend or family member that made a fortune by investing in real estate. Typically, this is through buying multifamily properties and renting them out or purchasing land for development.
While this can be a great investment, there is one problem with this: it is really difficult and expensive to get started!
If you want to buy a piece of real estate, get ready to put down as much as 25% of the total price of the property, not including closing costs!
Thanks to crowdfunded real estate platforms, you can now invest in real estate projects with other people without shelling out thousands of dollars! With Fundrise, it is a lot easier to get started.
Real estate is one of the most popular investments out there, and you are able to make money while providing much needed housing to other people.
This type of real estate investment is 100% passive, meaning you will not have to do anything after you invest!
If you buy a piece of real estate to rent out to someone else, that is going to be a very active income source. You will be getting calls at all hours of the day, and night! On top of that, if your tenant does not pay rent you will have to evict them! This is a very time consuming process and you will not be making any money from that unit during that time.
With crowdfunded real estate investments, you own a small piece of hundreds or thousands of different properties! You won't have to worry about vacancies or evictions.
Another way to invest your money is to set it aside in an emergency or rainy day fund. Most people do not have much in savings, so this is a really important concept.
Experts recommend having 3 - 6 months of expenses saved up and tucked away in an emergency fund. Do you have this in place?
If not, consider tucking that money into a separate savings account. You don't want to leave that money in checking. Trust me, you will be tempted to spend it.
Online savings accounts are a great option for your nest egg. They pay a significantly higher interest rate than most banks. As an added bonus, it is tucked away in a separate account so you won't be tempted to spend it!
Check out the Betterment Cash Reserve Savings which has a minimum of just $10.
Watch out! If your friends approach you about a business opportunity, do your research on it.
If this business requires you to buy a starter package, pay for your own website or buy inventory, it might be a multi-level marketing business. While most of these are perfectly legal, they often require you to leverage your personal network of friends and family.
There are probably better opportunities out there!
So, aside from selling tupperware and candles to your friends on Facebook, what businesses could you start with $100? The answer is quite a few! And if you need some more, here is our mega list of side hustle ideas.
Business Ideas To Start:
If you are totally afraid of risk, you could invest in a certificate of deposit through your bank. Most of these bank investments have a minimum deposit amount and time threshold, but you could find one that has a minimum of $100 or less.
The first certificate of deposit that I opened was a $500 deposit. This was a 12 month CD that renewed annually and the purpose of this CD was to secure a line of credit I had with the bank.
At the time, I was 18 and I needed to establish credit. I was offered a $500 line of credit from the bank if I backed it with a certificate of deposit. I earned an interest rate of 0.50% on that short term CD, meaning I was earning $2.50 per year.
For most people, the returns from a CD are not what they are looking for. The purpose of a CD is to earn interest that is a little better than what you would earn from a checking or savings account.
Bank CD's are FDIC Insured for up to $250,000 meaning there is no way that you could lose money by investing in one.
If you are a young person and you do not need the money you are investing in the short term, you should probably look beyond the bank CD. The interest you are receiving will not outpace inflation and you will most likely be losing the buying power of your money.
There are a number of small investments you can make in yourself that can generate huge returns in the long run.
Here is a list:
Often times, when it comes to a job interview the first impression is what matters.
Something as simple as a fresh haircut and a new shirt and tie could put you ahead of the other candidates. If a $100 investment in your looks means you get the job, that is well worth it!
What you do with your money is up to you! You might decide to follow one of the strategies listed above or continue searching.
The last thing I want to do is cover a few things that you probably should not do with your $100 investment. Most people who do these things end up losing most if not all of the money.
We want you to have the best chance at success!
While you may be tempted to do something flashy with this $100, remember the story of Warren Buffett. It is often the non-flashy but meaningful moves that make all the difference. Whatever you decide to do with this $100, make sure you put it somewhere where it can grow.
The stock market and real estate are just two of the best options out there to help you reach your goals. Remember that what you choose to do with this $100 might not change your life, but those habits you are creating by investing will absolutely change your life.