The ultimate guide to get started in less than 5 minuts
Do you always think that you want to kickstart investments but get scared every time believing that it takes thousands of dollars? Good news! You do not need a fortune to start investing — even $100 may be sufficient to take a dive, allow you enter the system and begin make money. I will discuss some easy but smart ways to invest that 1st $100 in this blog with the advantage of starting up early.
1. Invest in Fractional Shares
One of the simplest ways you can get started with a small amount of money is to buy fractional shares.
You can purchase fractional shares of a company, which means you do not need to buy an entire share and can put in less money towards purchasing the stock. So if one share of a company is worth $500, you can trade that $100 and get part of that share.
Robinhood and M1 Finance have features for fractional investing where you purchase great quantities yet diversified investments from limited funds. This makes it easier to invest in a bigger company, such as Apple or Tesla, since you simply need to buy part of a share if you like. If you would like to learn more about fractional investment, see the guide on investing tools.
Not only does this make fractional investing effortless, but it also reinforces those habits of consistency. When you invest small regularly, you are practically going dollar-cost averaging way which can reduce market volatility effect over the time. So, if you invest $100 per month in fractional shares, it spread out the buying at different market levels which could potentially lower your average cost over time.
2. Start with ETFs
Having shares in Exchange-Traded Funds (ETFs) is another great alternative for first-time investors.
Legally, ETFs are structured as funds that pool together money from multiple investors and invest in a diversified portfolio of assets. An ETF is an excellent means to invest since your $100 is allocated to several companies, thus reducing the risk advertently.
ETFs such as Vanguard S&P 500 ETF (VOO) give access to minority ownership of the biggest 500 establishments in the United States. Diversification — Pick a Sector or IndexWhenever we think of the stock market, ETFs is one of the options that automatically come into our mind that it can help in performing stock listing by investing in tocks which track an index. Looking for some more diversified options? Read this blog post on mutual funds vs. ETFs→ Here
They can serve as a great place to start as ETFs provide you with the opportunity of diving in many different stocks simultaneously, hence lowering risk. For with just $100, you can invest in an ETF that contains tech giants, energy companies, healthcare innovators and so on, allowing you to be broadly invested in a number of sectors. This kind of diversification is exactly what you need to cut down the risk and make your returns more consistent.
3. Use Robo-Advisors
Another great option when investing smaller sums of money like $100 are robo-advisors.
All of these robo-advisor platforms will build you an investment portfolio that aligns with your risk tolerance and goal. These portfolios are managed using algorithms to help intelligently decide how your money should be invested, which makes it a great choice for those just getting started with investing and aren't quite confident in picking individual investments themselves.
You can also try these tools to explore more automated investment options: Unlock the Secret to Effortless Crypto Profits and Unlock the Power of Blockchain Investing.
Both Betterment and Wealthfront are such robo-advisors, charging very low fees and often requiring almost no minimum to start. Want to read more about these platforms? Read: The robo-advisor reviews.
For example, robo-advisors are a great option for those who want to put their investing on autopilot. They automatically invest your money according to your risk tolerance and time frame. For instance, if you are young and have a long-term goal such as retirement, then the robo-advisor will invest more of your funds in stocks for growth.
By staying steady and investing steadily, sure it might be the smallest amount of money you will put into the market but I can promise your $100 will grow faster that way.Robo-advisors can also rebalance your portfolio on a periodic basis to uphold the target allocation.
This rebalancing helps to keep your investments in line with where they should be based on your goals and how much risk you want to take on, particularly when the market environment changes. It is a very easy way to invest that rids us of the guesswork and makes sure your money is being productive.
4. Peer-to-Peer Lending
Should you need an alternative investment, thinking about peer-to-peer (P2P) lending.
P2P lending performed via platforms like LendingClub will pay you interest for loaning your money directly to individuals or small businesses. So think about it this way, your $100 can be spread out rather than placed all on a single loan to dilute risk of default, and over the lifetime of the principal value being lent out, you'll also receive monthly payments!
Higher risk than traditional investments but also higher returns – P2P lending To learn more, see the P2P lending guide.
P2P lending is basically where you become the bank. We should note that while returns can sound nice, there is nothing protecting lenders from borrowers simply not paying.
To help counteract this risk, most P2P platforms let you split your $100 up into tens or hundreds of smaller loans so if one borrower doesn't pay back it won't have a significant impact. For some people, investing this way can be quite fulfilling, especially if they like helping out small businesses or doing other things just for personal reasons.
For the investors, P2P lending can also give an experience over and above financial rewards. If you prefer, you can decide to lend to entrepreneurs or projects close to your heart, this way you get the bonus of helping someone and still making money in form of interest on top.
5. High-Yield Savings Accounts
A high-yield savings account is one of the boringest things out there, but it's a super-safe and risk-free way for you to make a little interest on your $100.
High-yield accounts, on the other hand, does provide significantly higher interest rates than your usual savings account would, which can help boost your money faster. Most online banks are offering comparable interest rate with no minimum balance needed. This option is for using your investment without staying up pedding throughout the entire year and still making money on it. If youre interested in safe investing, take at look savings strategies.
High-yield savings accountsGood forEmergency funds, Short-term goalsBank account typeInterest earning depositProsEasy access to your money (generally... Even though the returns are naturally lower than those for stocks or ETFs, you can't beat the safety and liquidity.
For a new investor, an account like this is the perfect place to park your cash and watch it grow without any danger until you are about ready to make the leap into some more volatile forms of investment options.
Most high-yield savings accounts are from online banks, which enables them to pay higher interest rates because operating expenses are lower. This can add up in the long run to make a big difference in how quickly your savings grow versus simply letting that money sit in a low-interest-rate savings account.
And, as high-yield savings accounts are FDIC-insured, you are not going to lose a penny (as long as you have less than $250,000).
Conclusion
You can absolutely start your investment journey with $100, and it is a great way to gain some experience and learn smart money practices.
The bottom line is that, whether you buy fractional shares, dive into the world of ETFs or consider a robo-adviser, peer-to-peer lending or maybe open up a high-yield savings account — it really doesn't matter — as long as you actually DO something. Remember, the sooner you begin, the longer your money will grow over time due to compounding of interest. As you invest each dollar today, it will provide the peace and freedom financially tomorrow.
Consistency is Key The Point Podcast While investing 100 bucks today is wonderful, this you will only rely on accumulated capital to grow it incrementally and that typically won´t happen.
Just set up an automatic contribution every month- for any amount, it will get you in the habit of investing. Continuously putting each dollar to work for you, making a small step closer to where you want financially — and the earlier you start a journey like this owing back to compounding returns. There is power to starting small — your future self will thank you.
Plus, as you get more comfortable with investing, you can begin to delve into more advanced — and potentially lucrative — options like real estate crowdfunding or even small business investment. Start where you are and take baby steps, increasing confidence one suspension bridge at a time. This can truly make investing a fun path of growth for you and your finances.
Remember, every investor has to start somewhere; the key is just beginning. So, the more you know and know when to let something go, the better you will get at making your money work for YOU instead of the other way around. It simply goes to show that small, regular deposits can pay massive dividends over the long-term; even a relatively modest $100 could be all you need to have your money grow from there.
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