How to Invest Your First $100 phroogal

How to Invest Your First $100

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Want to invest your first $100?

There is a misconception that you need a lot of money to start investing. Nothing can be further from the truth. Waiting to have lots of money before you start investing means you lose out on years of gains. While it can be a daunting task to begin investing, you can start small and grow into a big portfolio. As a newbie investor, there are options to invest your first $100 to start.

Some of the investment options available for newbie investors with $100 include fractional investing, buying index funds and ETFs, and using Robo-advisors.

Investing Your First $100

To start investing, you’ll need a brokerage account and fortunately, there are many options available with zero- or very little cost involved. It’s important to find an online brokerage service or app that doesn’t charge big fees for your small balance.

So, how can you start investing your first $100?

1. Buying Stocks

The first option you have is to buy shares of companies you know well. There are many companies with share prices under $100. For example, the stock of ABC company is $10 which means you can buy 10 shares. Buying stocks requires researching companies and understanding how to make trades. However, it’s quite simple to do and many online brokerages offer zero-commission trades with no minimums.

To buy your first stock worth $100, you’ll need to open an online brokerage account. There are many different types of brokerage apps too. There is M1 Finance and Webull (promo: get 2 free stocks with $100 deposit). Some of these apps offer free stocks for simply signing up.

Learn the difference between micro-investing and stock trading

2. Fractional Shares Investing

Fractional investing allows you to own pieces of stock shares without buying the entire share. You do not have to worry about getting all the money needed to acquire the entire share. For example, Apple stock is $400 per share which meant you’ll need the exact amount to own it. With fractional investing, your $100 can buy a quarter share of Apple. Or you can choose to buy $25 of Apple, $25 of Tesla, $25 of Amazon, and $25 of Google.

Once you put money into fractional shares, you can continue to invest small amounts and build to owning the entire share. Over time, as your portfolio grows, your returns will also keep growing. Apps such as Robinhood and Public Investing app allow you to buy fractional shares for as little as $1. Some of the websites that offer fractional investing offer zero-commission trades, no or small account minimums, and/or charge very low management fees.

Promotion: Get a free stock with Robinhood, click here.

Promotion: Get a $10 share of a stock (GOOG, FB, APPL, etc), click here.

3. Buying Index Funds and ETFs

Although you may want to pick stocks on your own, index funds give you an option to put your money into a range of shares at the same time. An index fund match or track a particular market index. It’s hands-off, and you could build a diversified portfolio earning solid returns. Index funds don’t try to beat the market or earn higher returns compared with market averages. Instead, these funds try to be the market—buying stocks of every firm listed on an index to mirror the performance of the index as a whole. The benefit of index funds is how they can help balance the risk in your portfolio. As market swings tend to be less volatile across an index compared with individual stocks.

Rather than pick a specific stock, your investment goes into several stocks chosen by the index fund managers or brokerage firm. There are several companies that offer index funds and charge a minimal account management fee.

Similar to individual stocks, you can buy fractional shares of index funds too. Apps such as M1 Finance and Stash are great options.

4. Automatic Savings and Invest Options

Sometimes what you need is a bit more help to invest your first $100. A benefit of automation using apps like Acorns and Stash is how it ties spending to savings and then investing small amounts into funds or individual stocks. It’s a simple and effortless way to invest small amounts. Many have used these micro-savings apps to get started after seeing how much money they’ve saved and how it’s being invested for growth.

Consider using Acorns to help you round-up your purchases and automatically save and invest the amount into one of their ETFs. If you want a bit more options, Stash is a more robust micro-savings app that lets you choose individual stocks with fractional shares too. Both of these apps allows you to set up recurring automatic deposits or one-time investments.

Promotion: Get $5 with a new Stash account to use in your first investment, click here.

5. Using a Robo Advisor

Robo advisors is an automated investment advisor. Instead of a human advisor, it uses algorithms to determine where to invest your money. The algorithm uses your goals as well as your financial situation to decide on an investment vehicle that would suit your risk and time horizon. The benefit is not having to do the work of researching what stocks or index funds to invest your money.

It’s an inexpensive and effective way to invest your first $100. Many Robo-advisors have zero or $100 minimum balance requirement and charge a small management fee starting at $1 per month. To get started, you open an account, answer a few questions, and wait for a tailored investment recommendation. Then, you’ll need to make your first deposit and can also choose to set up recurring deposits to meet your investment goals.

Robo-advisor apps include Wealthsimple and Betterment.

As you can see, there are options to invest your first $100. It’s good to start now and begin to grow your investments. Don’t let anyone tell you that $100 isn’t enough to start investing. Start small. Stay consistent. Automate. And let your investments grow with time.

Remember, $100 is a good amount to start but you’ll need to continue to invest money to grow your portfolio.

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