The following article is strictly the opinion of the author and is to not be considered financial/investment advice. Call to Leap LLC and the author of this article does not claim to be a registered financial advisor (RIA) or financial advisor. Please visit our terms of service and privacy policy before reading this article.
So, you want to get started with investing but you don’t have alot of funds.
That’s okay and totally understandable!
In this article, we’ll give you a few ideas on how to start investing with just $100.
Spoiler: This is not a cheat code on how to turn $100 into $10,000 in three months or anything like that.
But if you want to learn how to build long term wealth, you’ve come to the right place.
1. Fractional investing
Some brokerage apps allow you to invest in stocks even if they’re over $100. For example, APPL is currently at $171.15 per share. With fractional shares, you can invest in $100 worth of a share.
Some brokerages allow you to invest as little as $1 as a fractional share. This may sound appealing if you have a budget. But remember that successful investing generally requires larger capital.
2. Invest in Index funds and ETFs
No matter how experienced you are as an investor, you’ll want to look for an investment that’s safe.
Index funds and ETFs have a proven track record of giving their investors an ROI.
Don’t worry if you don’t know what any of that means.That’s why we’re here for you.
Index funds and ETFs are like baskets of stocks. And the contents of the baskets usually copy what’s listed in what’s called a “stock market index.” So, the S&P 500 is a popular stock market index with the 500 largest companies in the US. This means that ETFs and Index funds that mirror the S&P 500 are bound to go up in the long run. Even if their growth rate is longer than your typical stock.
Reasons investors might prefer Index funds and ETFs over stocks:
Index funds and ETFs are less volatile compared to most stocks.
Index funds and ETFs allow investors to diversify without buying hundreds of stocks.
3. Fund a Roth IRA
You’ve heard us talk about the Roth IRA plenty of times. So if you haven’t opened one yet, then you’re either already financially free, or you’ve got some homework to do this weekend. And thanks to modern technology, it only takes a few moments to set up an account. You can use account providers like TDAmeritrade, Fidelity, Charles Schwab, and many others to get started.
For those of you who aren’t familiar, the Roth IRA is a tax-benefited retirement account.
“But Steve, I’m only 26 years old and I don’t want to worry about retirement yet.”
That’s okay. But remember, that the younger you start, the easier it will be to compound your contributions.
That’s right. The Roth IRA allows you to compound your contributions over time if you invest your funds into an ETF or an Index fund like we were talking about earlier.
To put this into perspective, let’s say you begin to make annual contributions of $6,000 into your Roth IRA. If you invest your contributions into an ETF with a 7% annual return, your contributions would total about $83,000 after 10 years.
And you can imagine how these numbers compound if you start investing earlier.
Keep in mind that if you never invested the money at all, those same contributions would total just $60,000 in your bank account.
That’s a huge difference, right?
If you want to learn more about the Roth IRA, check out our article on everything you need to know about the Roth IRA.
4. Start a side hustle
Investing isn’t just about the stock market. Investing in yourself can be one of the most lucrative decisions of your life.
Here are some things you can invest in to start a side hustle:
Courses so you can learn new skills.
A website to market a service you offer.
A Shopify account to begin selling e-commerce products.
This is going to vary per person, so you’ll have to get creative with it. Imagine if you could invest in a skill that could give you extra income for the rest of your life. What would you do with that extra income? You could get ahead financially, pay off debt, and invest more. A side hustle may be your next move to launch your journey to financial freedom.
5. Micro Invest
Micro investing is what it sounds like. You make small investments instead of investing large sums of money at a time.
But if done right, it gets more interesting than just small investments. You can choose to use a third-party app like Acorns. Which allows you to make consistent micro-investments throughout each month.
Some apps even allow you to invest your change when you make a purchase at the store. So, if you bought a cup of coffee for $4.50, you can choose to invest that .50 cents. This may not sound like a lot. But if you do this consistently over a few years and invest your funds toward a promising ETF or growth stock, your investment will grow over time.
6. Build your emergency fund
You’ve heard the saying “you need to have 3-6 months' worth of savings in your emergency fund.”
This is true. And it’s an important cushion to have when you’re investing.
But have you thought of where to put your emergency funds?
There are different types of accounts out there to help you build your savings slowly but surely. Money market accounts and high yield savings accounts are both great options. And they both offer high APYs compared to most traditional banks.
This means you can actually expect to see your savings grow by just sitting in your account.
Investments to avoid
Penny Stocks: You may get tempted to invest in a stock just because it has a low price. You may see that a new startup is coming out with technology that’s going to skyrocket its price. At Call to Leap, we believe that value investing is the safest strategy. This means we prefer stocks that have a proven history of increasing their price over the years. Even if they require more capital. At the end of the day, you’re always going to do your own research before making an investment. But be wary of penny stocks.
Hype: Because of the internet, you can see what everyone is investing in these days. One week it’s AMC. Another week it’s Pokemon cards. Then it's NFT’s. New technology and trends will always be around. So, be careful of shiny object syndrome. At the end of the day, investing is a vehicle for your financial future. And it would be wisest to focus on investments that aren’t volatile when you’re starting off.
Just get started
Investing is different for everyone. It might sound scary at first. But like most scary things - you’ll get the hang of it once you start.
If you only have $100, that’s okay. Don’t waste your time with an investment that has no track record of giving consistent gains to investors.
The investment options discussed today are all methods to help you grow your wealth at a steady pace. Start as soon as you can to reach your goals.
You can continue to educate yourself by reading the articles in our archive. And you can even join our membership. With our premium membership, we’ll teach you not only how to invest in great long-term stocks, but also sell covered calls and cash-secured puts, trade LEAPS options, and generate a couple hundred to a couple thousand dollars each month. You’ll have exclusive access to our community of wealth builders & all our content, which teaches you step-by-step on how to use these strategies. You’ll also be able to ask me & our team any questions you have & we can coach you each week!