Starting your investment journey may seem daunting, especially if you believe you need thousands of dollars to make any meaningful progress. However, the truth is that you can begin with as little as $100. Investing is less about the amount you start with and more about building good habits, leveraging compounding, and taking advantage of accessible tools. Here are eight practical and impactful ways to start investing your first $100.
1. Invest in Fractional Shares
Fractional shares allow you to purchase a portion of a stock rather than an entire share. This means you can own a piece of high-value companies like Amazon, Google, or Tesla without breaking the bank. Platforms like Robinhood, Fidelity, and Public make fractional share investing straightforward, enabling you to spread your $100 across multiple stocks and industries. Diversification from the outset helps manage risk while giving you exposure to various sectors of the economy.
For example, instead of spending $100 on one company’s stock, you could allocate $25 each to four different companies. This approach ensures that you’re not overly reliant on the performance of a single entity.
2. Buy Exchange-Traded Funds (ETFs)
ETFs are a great way to diversify your investments without needing a lot of capital. These funds pool money from multiple investors to invest in a broad range of stocks, bonds, or other assets. By purchasing a single ETF, you can gain exposure to an entire market index, such as the S&P 500, or focus on specific sectors like technology, healthcare, or renewable energy.
Many ETFs, like those offered by Vanguard or iShares, have low expense ratios, making them affordable for new investors. With platforms like Charles Schwab or E*TRADE, you can start investing in ETFs with just $100. This strategy provides stability and growth potential while keeping your portfolio diversified.
3. Open a Robo-Advisor Account
Robo-advisors are automated investment platforms that create and manage a portfolio for you based on your financial goals, risk tolerance, and timeline. Services like Betterment, Wealthfront, and Acorns are perfect for beginners who want to invest without the hassle of selecting individual stocks or managing a portfolio.
Many robo-advisors require little to no minimum deposit, and your $100 can be put to work immediately. They also rebalance your portfolio regularly and provide features like tax-loss harvesting to optimise your returns. This hands-off approach makes it easy for beginners to start investing while learning the basics of portfolio management.
4. Invest in Index Funds
Similar to ETFs, index funds track a specific market index, such as the S&P 500 or NASDAQ-100. While ETFs are traded like stocks, index funds are bought and sold directly through a mutual fund company, typically at the end of the trading day. Many brokerage firms, like Fidelity and Vanguard, offer index funds with low expense ratios and no account minimums.
Index funds are ideal for long-term investors because they provide broad market exposure and are known for their steady growth over time. Your $100 can grow significantly over the years due to the power of compounding.
5. Use a Micro-Investing App
Micro-investing apps like Acorns, Stash, and SoFi Invest are designed for small-scale investors. These platforms allow you to invest small amounts, often rounding up your spare change from everyday purchases and putting it into diversified portfolios. With your initial $100, you can start building a portfolio and continue adding to it effortlessly.
Micro-investing is particularly helpful for those who struggle with saving or have limited disposable income. These apps also provide educational resources to help you better understand investing concepts and strategies.
6. Invest in Bonds or Bond ETFs
Bonds are a lower-risk investment option compared to stocks. By purchasing bonds, you’re essentially lending money to a government or corporation in exchange for regular interest payments and the return of your principal amount at maturity. With $100, you can buy Treasury bonds, municipal bonds, or corporate bonds through platforms like TreasuryDirect or bond ETFs via brokerages like Schwab.
Bond ETFs are an excellent choice if you want to spread your investment across multiple bonds for diversification. They offer a steady stream of income and provide a cushion during volatile market periods.
7. Start a High-Yield Savings or Investment Account
If you’re not ready to jump into the stock market, consider opening a high-yield savings account or investment account that offers a solid interest rate. Platforms like Ally Bank and Marcus by Goldman Sachs provide high-yield savings accounts where your money can grow safely while you plan your investment strategy.
Alternatively, you can explore accounts like Series I Savings Bonds, which are tied to inflation rates, ensuring your money retains its value over time. While this isn’t a traditional investment, it’s a secure way to build capital for future opportunities.
8. Invest in Yourself
Investing in yourself is one of the smartest financial moves you can make. Use your $100 to purchase books, online courses, or workshops that teach you about personal finance, investing, or career development. Knowledge gained through platforms like Udemy, Coursera, or Skillshare can pay dividends throughout your life.
By improving your financial literacy, you’ll be better equipped to make informed investment decisions, manage risk, and maximise returns. This initial investment in education could be the foundation of a prosperous financial future.
Final Thoughts: Small Steps Lead to Big Gains
Starting with $100 might seem modest, but every great financial journey begins with small steps. By choosing one or more of these strategies, you can make your money work for you and start building a habit of investing. Remember, consistency and patience are key to growing wealth. Over time, as you add more to your investments, you’ll benefit from the power of compounding and the momentum of a well-planned portfolio.
Investing is not just for the wealthy—it’s for anyone willing to take the first step. With tools and platforms more accessible than ever, now is the perfect time to start.
