When we think about investing, it’s easy to get discouraged. While we know it’s best to invest money at a young age and watch it gain interest over several years, many young people don’t have that much money to put towards it. The good news? It’s never too late to start investing. Similarly, you don’t need much money to begin. In fact, you can become an investor for just $100.
If you can spare $100, here are some ways in which you can invest that money.
Build a Portfolio: Fractional Shares, EFTs and Bonds
One of the wisest ways to invest your money is to build a diverse portfolio. In this portfolio, you can invest in fractional shares, exchange-traded funds (ETFs) and bonds. With different types of investments, you’re protecting yourself from volatility because you aren’t putting all of your eggs into one basket.
A fractional share is a portion of an equity stock that is less than a full share. For instance, you may not be able to afford a share of Apple, which is over $360. However, with the right broker or robo-advisor, you could invest in a fraction of a share with $100 or less.
An ETF is an investment fund that is composed of commodities, stocks and bonds and is traded on a stock exchange. Additionally, bonds are loans you make to corporations and governments.
All three of these investments have varying levels of risks and interest rates. You can choose riskier investments to hopefully earn more interest or go for a more stable option.
Many investors avoid individual stocks because they are difficult to diversify and trading costs can eat into profits. M1 Finance allows clients to purchase fractional shares of over 6,000 options so you can diversify even with a small investment. There are no fees on trades, so all profits are yours to keep.
With M1 Finance, you can take your $100 and build your diverse portfolio or fractional shares, ETFs and bonds, as well as sign up for their 1% APY checking account, M1 Plus. You’ll earn 25x the national average for your account and get 1% cash back on qualifying debit card purchases. You can then take that 1% cash back once it adds up and reinvest it.
|Slick Tip: M1 Finance offers a bonus of up to $2,500 for new account transfers.|
Just Buy Fractional Shares
You may just be interested in investing in the stock market. This is a good option if you’re looking to invest for the long term, like several decades. However, if you need to grow your $100 right away, then don’t use the stock market, because it tends to go up and down frequently. You don’t want to drive yourself crazy always tracking your investments.
With only $100, you could buy a few shares of a company with a lower stock value, or you could purchase some fractional shares of high-revenue companies instead. The easiest way to purchase a fractional share is through a brokerage like Stash, a micro-investing app where you need only $1 to get started with investing. You can access hundreds of stocks and nearly ETFs to invest in. Stash’s site shows you the stocks in different categories like health care, retail, consumer staples and insurance.
Stash allows you to buy fractional shares for any amount, and you won’t have to pay add-on trading commissions. You’ll also get a free checking account with no fees, and you’ll earn stock-back rewards when you use your debit card. To get the debit card, all you need to do is put $5 into your Stash account.
|Slick Tip: Get a $5 bonus when signing up for Stash through this link.|
If you have $100, you can put it into one of the best high-yield savings account and let it blossom for a short or long period of time. You’ll have to look at savings accounts terms and conditions. Additionally, you may need to put a minimum amount of money into your account or pay monthly maintenance or ATM withdrawal fees. These types of fees can quickly eat into your savings.
Also, some accounts will say you can earn interest, but then you see that there is a large minimum amount you need to invest. However, the CIT Savings Builder, which provides a Monthly Savers Account. With just $100, you can qualify for the current average percentage yield (APY). You’ll get free electronic banking transfers (ACH) between your Savings Builder account and an account at another bank, allowing you to easily transfer money in without having to worry about a fee.
Keep in mind that interest on a high-yield savings account can change at the discretion of the bank. If you notice you suddenly start earning less interest, you can always ask the bank what’s going on or if there’s anything you need to do in order to increase your interest again.
Start an Emergency Fund
You should always have an emergency fund that can cover at least three to six months’ worth of expenses just in case you have a big unexpected bill you need to pay or you unexpectedly lose your job.
If you only have $100 to put towards your emergency fund right now, don’t fret. It’s a good start. What you can do is put that $100 into one of the best money market accounts, which is a savings account with checking features that will pay you higher interest than a regular savings account. However, if you get a debit card or checks with your money market account, you can’t use them more than six times per month. You’ll likely have to pay other associated fees, so look into the fine print of your money market account before investing.
The CIT money market account allows you to earn a high APY with only $100 in your account. There is no high minimum amount you need to invest, or accounting opening or maintenance fees. Like a savings account, it’s also FDIC insured. It’s a hybrid of a checking and savings account, allowing you to withdraw, transfer and save money all at once. The interest is compounded daily and is 15 times higher than the national average APY. With this account, you’ll build up your emergency fund in no time.
Save for a Child’s Education
If you have a child, you can begin by putting $100 towards their education. One of the best ways to save for education is to start a 529 savings plan, which is a tax-advantaged account where you can pre-determine who the beneficiary will be. Over time, a 529 plan can help cover the costs for tuition later in life. In 35 states across the U.S., contributions to your 529 savings plan will qualify for a state income tax credit or tax deduction.
You can save not just for a college education, but for K-12 tuition and related expenses (books, tutoring, transportation, etc.) as well. You can schedule to transfer money into your 529 savings account every month just to ensure you keep stashing it away automatically.
Start your 529 savings plan today with CollegeBacker. If you already have an existing fund, you can transfer it into CollegeBacker as well. If you put $100 a month into it over 16 years, by the time your child gets to college, you’ll have over $33,000 in the account, which could pay for a year or more of college. Plus, withdrawals are tax-fee, and you gain access to an SEC-registered investment adviser and bank-level security and monitoring with CollegeBacker.
|Slick Tip: Give the gift of a CollegeBacker plan to a loved one by using this link.|
Join a Brokerage
If you have $100, then signing up for a brokerage account could be a good way to begin investing. Brokerage accounts are taxable accounts you can utilize for investments like mutual funds, stocks and bonds. Brokerages help guide you on what types of investments to make with your $100. For example, if you don’t want to take a high risk, then you could invest in a mutual fund or a bond with reliable and stable returns. If you want to take more of a risk, then you could invest in a public company on the stock market.
TD Ameritrade, one of the largest brokerage firms in the U.S., is a great choice for getting started with investing $100. It doesn’t charge commissions on trades and it’s perfect for new or seasoned investors. There are no minimums for how much you can sell or buy when making a trade, but you should note that there is a $0.65 contract fee for options trades.
Additionally, the TD Ameritrade website contains many financial resources on its website if you’re unsure where to put your $100. All of the resources are free, too. If you ever have a problem, the company has outstanding customer service professionals there to serve you.
However, there are other brokerages that can help you meet your financial goals. Moreover, some of them will even award new customers bonuses after making a few eligible transactions.
Open a Robo-Advisor Account
If you’re new to investing, the idea of managing your own investment accounts can be daunting. Even if you have some experience, you may not have the time or desire to do the necessary research and work to maintain a well-balanced portfolio.
A robo-advisor can help by providing an inexpensive option to traditional investment managers. In most cases, robo-advisors use algorithms to manage your investments. In some cases, however, they may combine algorithms and human insight to help you maximize your returns.
Robo-advisors like Betterment, Ellevest and Blooom require no minimum deposit to start. Thus, you can begin investing with these platforms for less than $100.
Consolidate and Pay Off Debt
Though investments are wonderful, if you have debt, you’re likely losing more money per month on the interest than you’re gaining in your investment interest. For example, if your credit card has a 16% interest rate and you’re making 1.05% in interest on your high-yield savings account, then it makes more sense to pay off your debt with your $100 – as long as you already have that three to six months’ worth of emergency funds.
One of the smartest ways to pay off your debt fast is to apply for one of the best balance transfer credit cards. With a balance transfer card, you will pay zero interest on your balance for a certain period of time. This will allow you to catch up on payments without having to worry about ballooning interest. Just make sure that there are no extra fees like an annual fee or a foreign transaction fee if you’re traveling.
If you need a little more time to make a dent in your debt, the Citi® Diamond Preferred® Card, from our partner Citi, offers you the chance to make it happen. With a lengthy 0% APR introductory period for both purchases and balance transfers, you have opportunities to save many thousands of dollars in interest charges.
Start a Retirement Account
If you plan on retiring at some point, then you need a retirement account. You’ll have to look at how much you’ll need per year in retirement and aim to make that through savings and interest. You could put $100 in an account to start and then add more every month with an automatic transfer.
Thankfully, if you start young and you’re consistent with putting your money away, you can have enough to retire comfortably by the time you hit 65, the goal retirement age for many people. You’ll need to look into the different types of retirement accounts and their tax benefits before you begin to invest. With a 401(k), you invest your pre-tax dollars, which will lower your taxable income for the year you invest. With a Roth IRA, you will invest after-tax dollars so your investments can blossom tax-free. If you work for a company with a 401(k), take advantage of it as soon as you can.
TD Ameritrade provides many types of retirement plans including Roth IRA, a traditional IRA and a Solo 401k for businesses. You can always speak with a TD Ameritrade customer service representative if you don’t know what the differences are between the retirement accounts they offer.
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More Ways to Improve Your Financial Life
You can do a lot with just $100. With the right strategy in place, over time, that money will grow, and you can save up for the things that matter most to you in life. These TD Ameritrade offer codes can also help you find the best discounts and lower your investing fees.