Think $100 is too small to get started with investing? Think again! Investing an amount as small as $100, can be a major turning point in your life and with your finances.
When it comes to getting started with investing, it is less about the initial amount you put in and more about about educating yourself, and building the consistency to invest and build wealth over time. As you make progress, you can work towards increasing your investments and expanding your portfolio.
"When it comes to getting started with investing, it is less about the initial amount you put in and more about about educating yourself, and building the consistency to invest and build wealth over time."
Here are a few ideas on how you can invest with just $100.
Invest by using a Robo Advisor
Robo advisors are basically automated online financial advisors that provide financial management services and advice using algorithms and technology without the need of human financial advisors or planners.
They provide customized recommendations of diversified investments based on your individual situation and use software to manage your investments without the high cost of a real life advisor. Some robo advisory firms also provide the option to get advice from a real person at an additional cost.
Some benefits of using a robo advisor include low minimum investment requirements, low fees, regular and automatic portfolio rebalancing and automated investing. A couple well reviewed and low starting cost robo advisors are Betterment and Acorns both of which don't require a minimum balance to get started and so $100 would be a great starting point!
Another favorite of mine is Stockpile, which allows you to buy (and gift) fractional stocks and are a great way to get started with owning a piece of your favorite companies. They also give you $5 for opening an account with them!
Invest in your retirement accounts
Another great way to invest a spare $100 is to put it into your retirement accounts. Consider using the money to contribute to or start a traditional or ROTH IRA even if you have a retirement savings plan with your employer. It's never a bad idea to save more for the long term and you'll get to take advantage of the associated tax benefits in addition to the long term growth of your money. Your future self will be proud!
Invest in a certificate of deposit
Also known as a CD. It is type of savings account issued by a bank as an agreement made when someone deposits money for specific amount of time. The bank guarantees a certain interest rate as long as the terms as met i.e. the money is kept deposited for the agreed amount of time.
CD's have much lower returns that long term investing in the stock market but typically have better rates than a standard savings account and are a great place to keep money you need within 5 years e.g. savings for a house or other short term goals.
A CD is also a great place to keep your emergency fund as they are easy to liquidate. Be sure to find out about the terms if you choose to take your money out early.
Invest in your emergency fund
An extra $100 in your emergency fund can help you weather a financial storm or unplanned life circumstance. e.g. your car break down, a medical co-pay, a job loss etc. Ideally your emergency fund should be able to cover 3 to 6 months of your basic living expenses and $100 can inch you closer to that goal if you haven't reached it already. Click HERE to learn more about building one.
Invest in paying off your debt
Paying off your debt quickly, especially high interest debt, can save you a ton of money in interest payments, so why not take that $100 and put it towards your debt repayment plan? Learn more about debt repayment strategies HERE.
Your goal should be to pay more than the minimum payments required on your debt each month (as much more than the minimums as you can). This way you can get rid of your debt faster and then once your debts are gone, you can then put the money towards things you really want to do, savings and investing.
Invest in personal finance books or an online course
When it comes to developing good financial habits and learning what actions to take to become financially successful, investing in personal finance books or a personal finance course is an excellent idea.
There's no knowledge lost and books and course will keep your finances and your financially success at the top of your mind as well as motivate and inspire you to keep working towards your goals. Many online courses also allow you to join a community of like minded people that you can learn and network with too.
Check out my list of 15 personal finance books I think every Clever Girl should read HERE.
How have you invested $100 or a similar amount of money? Got any plans to take your investing up a notch?
Bola Onada Sokunbi