Majority of people think that you need a lot of money in order to start investing, this fact is simply not true. I am here to prove it that you don’t need a lot of money in order to start investing and you don’t need a lot to start!. These days many financial institutions or even investing companies will offer you free money just for you to invest with them. For example you can get free $5 when you just sign-up for Acorns. You can also read about Acorns and my review and why you must have it.
Here’s something for you to chew on and see what I’m talking about – If you invested $100 in Apple in 2000 on May 12th which is exactly 18 years ago from this post being published, you would have almost $5,000 today! Here’s something that hurts to even look at for me if you invested $1,000, you would have almost $50,000 today! This is something that if you told somebody you could turn their $100 into $50,000, they will sign up immediately!
Graph for Apple Stock Price since the beginning:
Another example is Amazon – if you invested $100 in Amazon on May 12th in year of 2000, you would have about $3200, and $1000 would give you around $32,000
Graph for Amazon Stock Price since the beginning:
I am hoping that this serves as a little proof to you that you don’t need a lot of money to start investing. In fact, any extra money you might have right now might be worth much more if you invest it.
What I go over in this post:
- Where Do I Start with Just $100?
- Decide What Account to Open
- Open a Savings Account
- Peer To Peer Lending
- Ally Invest
- Your Debt
- Roth IRA
- CIT Bank
Where Do I Start Investing with just $100?
Even though it might seem like nothing to you, the first step is to try to open investing account and a brokerage firm. If you are starting out with less than $100 then you need to find a a bank or open an account with zero or low account minimums, and also low fees. My favorite of all is M1 Finance. Why is it my personal favorite? $0 commissions, very friendly application and almost everything is available for free.
Just a little note that almost every broker change some kind of commission and how would you feel spending $5-25 out of your $100 just for the commission. So, relating to the articles $100 or less that’s already 5-25% you would lose just by investing in something or paying annual fee which makes no sense.
Whatever you choose to invest make sure you read the rules and conditions before pulling the trigger and opening investing account. For that reason if you are not experienced yet, M1 Finance is great for you to start with and understand how the process works in the first place without losing any money with larger brokerage firms.
Decide What Account to Open
There are many accounts available for you to choose from and choosing the right one is very crucial. In other words, are you looking for a short-term or long-term account? If you are focusing on long-term investment, then retirement account is the best bet for you. IF you are looking for a short-term, then you should keep your money in taxable accounts.
See my post on secret to life success: Getting paid to do what you love!
Open Savings Account
What would I do if I had $100. I would definitely open a savings account and build it more and more until it gets to certain milestones like $1000 or more where more and more opportunities open up as you have more and more money.
The whole point of opening investment accounts is for the money to work for you and not worrying about it and with right steps and guidance along the way, you can earn much more. Opening a savings account should be your temporary solution because I so call it a slow moving slope, you will earn enough from interest acquired but what if I tell you that you can double or even triple or more of that amount if you don’t just put all the money into savings for the rest of your life. This system is for people who don’t care much about their finances and many other options.
Another catch is you need to make sure that you have emergency money backed up, usually if you put money into savings account, you should be prepared to keep them there for a whole because there are going to be fees to take out money earlier than your currently set term with them.
Peer To Peer Lending
If you just don’t want to deal with stock market with your $100, then consider becoming a peer-to-peer lender on a site like LendingClub or Prosper. The Peer-to-Peer lending is just like how it sounds, you lend money to others and in return they pay you back with interest.
I talked about Acorns before and could not recommend it enough for everybody. Acorns is a part of investment advisor that offers portfolio management online without the need for human interaction, or so-called “robo-advisors”.
So, instead of sitting down with your financial advisor and paying them for their time, or fees on your investments, “robo-advisors” ask you a series of questions and and invest your money for you, based on your risk level.
Ally Invest is an online broker that allows you to trade for $4.95. That is the lowest price I could find just as Charles Schwab, Fidelity, TD Ameritrade and Scottrade.
You can also fund an IRA or Roth IRA with less than $100, in fact there’s no minimum to start with Ally Invest. The only downside as with many other discounted online brokers is that you don’t get investment advises but you do get a portfolio manager that helps you with risk levels.
This is probably the easiest way to invest your money. If your job offers a 401(k), then you most likely aware of it that you can have a certain amount of money deposited into your account on your chosen basis. Employers might even offer a match dollar-for-dollar, nothing can beat that.
Books make you smart and change lives. I absolutely never liked reading books especially at schools but after reading some of the best books that relates to finance I realized the importance of them.Read them and you will become so much smarter and develop so many critical skills to success!
Here are few book that will help you improve your finances and people skills:
- The Millionaire Next Door
- How to Win Friends and Influence People
- The Total Money Makeover
- The 4-Hour Workweek
Having a debt is like having an investment that goes opposite direction (you don’t want that). If you want to have maximum amount of return, you need to get rid of your debt first.
One thing that’s better than money is tax-free money! With $100 you can open an online investing account and then later when you are retired – take it out tax-free. Problem is the most you can contribute is $5,000 in many cases, but it is a best place to get started and watch your money grow.
CIT Bank is in by no means associated with Citi Bank. CIT Bank has been around for a long time (over 100-years), so you can be assured and confident investing your money with them. Here’s a little info from their website:
“Founded in 1908, CIT (NYSE: CIT) is a financial holding company with approximately $50 billion in assets as of Dec. 31, 2017. Its principal bank subsidiary, CIT Bank, N.A., (Member FDIC, Equal Housing Lender) has approximately $30 billion of deposits and more than $40 billion of assets. CIT provides financing, leasing, and advisory services principally to middle-market companies and small businesses across a wide variety of industries. It also offers products and services to consumers through its Internet bank franchise and a network of retail branches in Southern California, operating as OneWest Bank, a division of CIT Bank, N.A.”
Current savings rate at CIT bank is 1.85% APY (annual percentage yield). The name of the account is “Premier High Yield Savings“. Remember that you only need $100 to open account. This is absolutely the one of the best picks from my experience.
According to CIT Bank, the average savings rate is at 0.08% in U.S, where CIT Bank’s return is 20x more.
No matter what you choose to do, don’t just let your money sit around or worse yet, spending it on items that you want like gadgets. Nothing wrong with spoiling yourself once in a while, but the smart thing to do is to set aside some into investment account on monthly basis from every paycheck you get.
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