Investing doesn’t have to be intimidating, nor does it require a huge amount of money to get started. Many people mistakenly think that to begin investing, they need thousands of dollars. In reality, you can get started with as little as $100. Thanks to the rise of fractional shares, micro-investing platforms, and low-fee brokerages, it’s never been easier for beginners to dip their toes into the investment world without needing a large sum of money.
In this guide, we’ll walk you through five easy steps to help you start investing with $100 or less. By following these steps, you’ll learn how to make the most out of your small initial investment while building the foundation for long-term financial growth.
Step 1: Set Clear Financial Goals
Before diving into any investment, it’s important to establish your financial goals. Knowing why you want to invest and what you hope to achieve will guide your decisions and help you stick to a plan. Even if you’re starting with a small amount, having a goal will keep you focused.
Ask yourself:
- Are you investing to save for retirement?
- Are you building an emergency fund with growth potential?
- Do you want to save for a big purchase, like a home or a car?
Having a clear goal will help you determine how much risk you’re comfortable with and the types of investments that might suit your needs. For example, if your goal is long-term growth, you might choose more aggressive options like stocks or ETFs. On the other hand, if you want something safer and more stable, bonds or high-yield savings accounts could be better options.
In this step, also consider your timeline. Short-term goals may require less risk and more liquidity, while long-term goals can tolerate more risk in exchange for potential growth.
Step 2: Choose the Right Investment Platform
The good news is that with just $100, you have access to a variety of investment platforms that cater specifically to beginners. Many online brokerages now offer low minimums, fractional share purchases, and user-friendly apps that make it easy to invest small amounts. Here are a few popular platforms to consider:
- Robinhood: Known for its zero-commission trades, Robinhood allows you to invest in stocks, ETFs, and even cryptocurrency with no minimum balance required. You can also purchase fractional shares, meaning you can invest in big companies like Apple or Amazon with just a few dollars.
- Acorns: Acorns is a micro-investing app that rounds up your everyday purchases to the nearest dollar and invests the spare change. You can also make one-time or recurring deposits starting as low as $5.
- Webull: Similar to Robinhood, Webull offers commission-free trading and allows you to invest in fractional shares of stocks and ETFs.
- Stash: This platform combines investing with education, helping beginners understand the basics of investing. It also offers fractional shares and low investment minimums.
When choosing a platform, consider fees, investment options, and the ease of use. Many platforms charge small monthly fees or have trading fees, so be sure to select one that fits your budget.
Step 3: Start with Fractional Shares
One of the biggest barriers to entry for small investors has traditionally been the high price of individual stocks. Fortunately, fractional shares have removed that barrier by allowing you to buy a portion of a share rather than needing enough money to purchase a full one.
Let’s say you want to invest in Amazon stock, but one share costs over $3,000. With fractional shares, you can invest as little as $10 and own a small portion of that stock. This is a great way to diversify your portfolio without needing a large upfront investment.
Most platforms like Robinhood, Webull, and Stash offer fractional shares, making it possible to invest in big-name companies even with $100 or less.
Step 4: Diversify Your Investments
Even with just $100, you should aim to diversify your investments. Diversification is one of the fundamental principles of investing because it helps spread risk across different assets. Instead of putting all your money into one stock or one asset type, you spread your $100 across different investments to minimize the risk of losing everything.
There are several ways to diversify your small investment:
- Exchange-Traded Funds (ETFs): ETFs are collections of stocks or bonds that are traded like individual stocks. By investing in an ETF, you get exposure to multiple assets with a single investment. For example, an ETF like the S&P 500 gives you partial ownership of 500 companies in one go. You can often invest in ETFs with fractional shares, making it a great option for small budgets.
- Bonds: Bonds are loans you give to companies or governments, and in return, they pay you interest. Bonds are generally less risky than stocks and can be a good option for diversifying into safer investments. Many brokerages allow you to invest in bond ETFs or individual bonds with a small amount of money.
- Real Estate Crowdfunding: Platforms like Fundrise allow you to invest in real estate with small amounts of money. This gives you exposure to a different asset class entirely, without having to buy property directly.
Even with $100, spreading your investment across different types of assets (stocks, bonds, and even real estate) can help reduce risk and increase the potential for returns.
Step 5: Automate Your Investing
One of the best ways to ensure consistent growth with a small investment is to set up automated investing. Automation allows you to regularly contribute small amounts over time, without having to think about it. This approach also takes advantage of dollar-cost averaging, which means you’ll buy more shares when prices are low and fewer when prices are high, reducing the impact of market volatility on your portfolio.
Many investment platforms allow you to automate deposits and investments. For example:
- Acorns: Automatically invests your spare change from daily purchases, making it easy to invest consistently without large one-time deposits.
- Stash: Allows you to set up recurring transfers as small as $5 per week.
- Betterment: A robo-advisor that automates investments based on your goals and risk tolerance.
By automating your contributions, you can steadily grow your portfolio over time. Even small amounts like $5 or $10 a month can add up, especially with the power of compound interest.
Conclusion: It’s Never Been Easier to Start Investing with $100 or Less
Investing may seem daunting when you’re just getting started, especially if you don’t have a lot of money to spare. However, as this guide shows, you can begin investing with as little as $100, and even small contributions can grow into substantial wealth over time.
The key is to:
- Set clear financial goals.
- Choose the right investment platform.
- Start with fractional shares.
- Diversify your investments.
- Automate your investing.
The earlier you start, the better positioned you’ll be to build wealth and achieve your financial goals, even if you’re only investing small amounts. So don’t wait for the “perfect” time to start or until you have more money—investing $100 today could be the first step toward long-term financial growth.