Investing even small amounts like $100 can be an excellent way for beginners to start building wealth. With the rise of online brokerages, investing has become more accessible than ever. Follow this guide to learn how to invest $100 as a beginner and set yourself up for future success.
Research Your Investment Options
The first step is deciding where to put your how to invest $100 as a beginner. Here are some of the most common beginner-friendly options:
- Stocks: Investing in individual company stocks allows you to own a piece of a business. Stocks offer the potential for growth but also carry risks.
- ETFs: Exchange-traded funds track an index or sector but trade like stocks. ETFs provide instant diversification and market exposure.
- Bonds: Bonds represent debt that gets repaid with interest. They provide steady income streams with relatively low risk.
- Mutual funds: Mutual funds pool money from investors to purchase assets. They provide built-in diversification across various stocks and bonds.
- Robo-advisors: Robo-advisors use algorithms to automate investing portfolios. They build and manage diversified portfolios tailored to your goals.
- High-yield savings: Parking your money in an FDIC-insured high-yield savings account earns interest while avoiding market risk.
Consider your timeline, goals, and risk tolerance when deciding how to invest $100 as a beginner. Short-term savings goals may be better suited for stable assets like bonds, while long-term growth goals can be pursued with stocks and ETFs.
Choose an Online Brokerage
Once you decide what you want to invest in, you need to open an account with a brokerage firm. Some top beginner brokerages include:
- Charles Schwab
- TD Ameritrade
Key factors to consider when choosing a brokerage include:
- Account minimums
- Trading commissions
- Expense ratios
- Educational resources
- Mobile apps
Many brokerages now offer $0 minimums and commission-free trading to make investing accessible to beginners. Taking advantage of resources like educational articles and online communities can also ease the learning curve.
Make Your First Trade
Once your brokerage account is funded with how to invest $100 as a beginner, it’s time to make your first investment trade. Here are the steps:
- Analyze your options – Review potential assets and do research to decide what to invest in first. Consider risk, return potential, and your goals.
- Place your order – Log in to your brokerage account online or via mobile app. Enter the ticker symbol and amount to purchase with your $100. Specify market order or limit order.
- Check order status – Confirm the order executed and the asset purchase is complete. It may take 1-3 days to settle.
- Monitor performance – Log in to view your account balance and track how your investment is performing over time. Refresh and rebalance periodically.
Start small with $100 to get your feet wet investing as a beginner before contributing more. Pay any trading fees or commissions related to buying assets to maximize your capital.
Best Investments With $100
While many options exist, here are some smart ideas for investing $100 as a beginner:
- Fractional shares of blue chips like Apple, Google, Amazon, etc. Gain exposure to major companies.
- Individual shares of lower-priced stocks. Build positions over time.
- Dividend stocks like Coca-Cola, J&J, P&G. Earn passive income on dividends.
- Index funds like SPY or VOO. Gain diversified exposure to S&P 500.
- Bond ETFs like BND or AGG. Stable interest income.
- Sector ETFs like VHT or FDN. Target specific segments like healthcare or tech.
- Target date funds. Hands-off approach, adjusting over time.
- Index mutual funds like Fidelity Zero funds. Low cost broad market funds.
- Robo-advisor like Betterment, Wealthfront, Ellevest, etc. Automated management.
- High-yield savings account at an online bank. Earn interest with no risk.
Diversify across asset classes and fund types. Reinvest any dividends or earnings to compound gains.
|Fractional Shares||Low cost exposure to top stocks||Higher volatility risk|
|Index ETFs||Diversification, lower expense ratios||Subject to overall market swings|
|Target Date Mutual Funds||Hands-off reallocation over time||Less control over specific assets|
|Robo-advisors||Automated portfolio management||May have account fees|
|High-yield Savings||FDIC insured, no market risk||Lower return potential|
Regularly Contribute More
The key to investing success is consistency. Make investing a habit by contributing regularly:
- Schedule automatic transfers from your bank to your investment account.
- Invest windfalls like bonuses, tax refunds, and gifted cash.
- Increase contributions annually or whenever possible.
Take advantage of company retirement plans with 401k, Roth IRA, etc and receive any employer match. Max them out before investing separately.
Reinvest dividends and capital gains for compound growth. Resist pulling money out of the market prematurely.
Be patient and persistent. Let compounding work its magic over decades. Small amounts invested regularly can grow to surprising sums.
Avoid Common Beginner Mistakes
As a beginner, it’s easy to make missteps when you’re still learning. Be mindful to avoid these common investing pitfalls:
- Acting on emotions like fear or greed
- Lacking diversification and putting all money into one asset
- Trying to time the market instead of taking a long-term approach
- Chasing past returns and performance chasing
- Paying high fees like loads, commissions, expense ratios
- Trading too frequently and not letting investments mature
- Panic selling when markets decline temporarily
Stay disciplined, diversify across asset classes, minimize costs, and cultivate a patient, long-term outlook. Don’t let setbacks derail progress.
How to invest $100 as a beginner presents an exciting opportunity to put your money to work for your future. Following the steps outlined here will help you research options, open a brokerage account, execute trades, choose smart investments, and cultivate habits to grow your wealth over time. Consistency, discipline and a long-term focus are key for success.