Is $100 Enough to Start Investing

Is $100 Enough to Start Investing? A Clear Guide to Small Budget Investment

Is $100 enough to start investing and grow your money to a substantial amount?

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Is $100 enough to start investing?

Yes, $100 is enough to start investing and can be the foundation to growing your portfolio.

Yet, the most common reason people avoid investing is the belief that they need a large sum of money to begin.

It’s one of the reasons that nearly half of Americans miss out on the benefits of building wealth through investments.

But not you! 

Today, you’ll learn how to start investing with as little as $100 and maximize earnings.

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Why It’s Better to Invest $100 Now vs Later

Investing with just $100 might seem like a small step, but it’s a significant one toward building your financial future. 

By investing just $100 at the beginning of each month with an average annual return of 7%, you can grow your investment to approximately $122,700 over 30 years.

Imagine how much you would make if you invested more than $100.

Compound interest would amplify your returns, significantly increasing your wealth over time.

$100 investment growth

If you don’t have an extra 100 dollars to invest each month, then there are plenty of ways to make it! 

Here’s a list of ways to make $100 fast in your spare time.

Also, consider these other compelling reasons to start investing now rather than later.

  • Less Stress: A longer investment period can help you ride out market ups and downs.
  • Beating Inflation: Early investments can help protect your money from losing value over time.
  • Good Financial Habits: Investing early helps you develop smart money management skills.
  • Retirement Security: Starting early can significantly increase retirement savings.
  • Tax Advantages: Early investments might offer tax benefits, maximizing your returns.

Now that you’re aware of the important benefits of starting your investment journey early, let’s dive into how to start investing on a small budget.

Invest $100 and grow it to six figures

How to Start Investing with $100

Starting to invest with just $100 is simple, but you’ll need a solid plan to grow it into a substantial sum. Here’s what you need to know.

Understand the Investment Market

To make informed decisions, you need to grasp the basics of the investment market. It doesn’t need to be complicated. 

Just understanding key concepts like risk, return, stocks and diversification can set you on the right path.

Investment Terms Simplified

  • Brokerage Account: An account you open with a brokerage firm to buy and sell investments like stocks, bonds, ETFs, and mutual funds.
  • Portfolio: A collection of different investments (stocks, bonds, etc.) that you own.
  • Risk: The possibility of losing some or all of your investment.
  • Return: The money you earn from your investments, usually expressed as a percentage.
  • Stocks: Shares of ownership in a company that can increase or decrease in value.
  • ETFs (Exchange-Traded Funds): Funds that hold a variety of investments and trade on stock exchanges like individual stocks.
  • Mutual Funds: Investment funds that pool money from many investors to buy a diversified portfolio of stocks, bonds, or other assets.
  • Bonds: Loans you give to companies or governments that pay you interest over time and return the principal amount at maturity.
  • Diversification: Spreading your investments across different assets to reduce risk.

The Investopedia website also has a solid financial investment terms dictionary to further help you out.

Arrived – Earn rental income, grow your equity, and diversify your portfolio effortlessly with as little as $100. Get started here.

Select an Investment Option

With $100, you have several investment options to consider. 

The most straightforward option is to look at whether your employer offers a retirement savings plan like a 401(k) or similar, which often includes matching contributions. 

I had a friend whose company offered a 1-to-1 match on her 401(k) contributions up to a certain amount. 

For example, if she contributed $100 to her 401(k), they would match it with another $100. The matching contributions maxed out at $6,000 per year. 

This ‘free money’ allowed her to rapidly grow her portfolio and significantly boost her retirement savings over time. 

Stocks, ETFs, and Mutual Funds

Investing in individual stocks can be exciting because you might see big returns if the company does well. 

But it’s also riskier since you’re putting all your eggs in one basket. 

Many people use trading apps like Robinhood and WeBull to buy and sell individual stocks. 

While these platforms make trading easy, be aware that if you trade individual stocks outside of tax-advantaged accounts like IRAs or 401(k)s, you might face significant tax liabilities on your gains.

ETFs and mutual funds are a bit safer because they spread your money across a bunch of different investments. 

ETFs (exchange-traded-funds) trade on the stock exchange like regular stocks and usually have lower fees, while mutual funds are managed by professionals and might cost a bit more. 

For beginners, starting with a stock index mutual fund or an ETF that tracks a broad market index is a solid way to dip your toes into investing without taking on too much risk.

Assess Your Risk Tolerance and Financial Goals

Before investing, determine your risk tolerance. 

If you’re comfortable with the possibility of losing some money for higher gains, individual stocks might appeal to you. 

But, if you prefer stability and lower risk, consider ETFs or mutual funds.

Assess risk $100 investing

Define your financial goals. 

Are you investing for long-term growth, retirement, or a specific milestone? 

This will influence your choice. 

For example, long-term goals might benefit from index funds, while short-term savings might require more conservative options.

Maximize Your $100 Investment

To get the most out of your $100 investment, focus on utilizing the power of compound interest and diversifying your portfolio. 

The Impact of Compound Interest

When you reinvest your earnings, both your initial investment and the returns start earning interest, which can really speed up your growth. 

For example, if you start with $100 and add another $100 every month, investing in the S&P 500 Index with an average annual return of about 10%, your money can grow significantly over time. 

After 10 years, you might have around $20,000, and in 20 years, it could grow to about $65,000.

Dividend stocks can further enhance your growth by providing regular income that can be reinvested for even greater returns.

Diversification Matters

Diversification is key to managing risk and increasing returns. 

By spreading your money across different investments like stocks, bonds, and funds, you lessen the impact if one doesn’t do well. 

For example, investing in index funds or mutual funds gives you broad market exposure and makes the process easier. 

This way, you protect your investment from market ups and downs, making your $100 go further and grow more steadily over time.

Need extra money to start investing?

Sign up bonuses are a great way to get ‘free cash!’ For instance, SoFi bank pays you an up to $325 sign up bonus just for opening a checking account and completing qualifying activities.

Use the money to start investing and passively grow your wealth!

Strategies for Growing Your Investment

To make sure your $100 investment grows, it’s important to use it wisely. 

Two great ways to do this are by using robo-advisors for automated investing and micro-investing apps to maximize your small contributions. 

These tools make investing easier and help you get the most out of your money.

Leveraging Robo-Advisors for Automated Investing

Robo-advisors use smart algorithms to manage your investments with little to no human involvement. 

These platforms look at your risk tolerance, financial goals, and how long you plan to invest to create a personalized strategy for you. 

They handle everything from buying and selling investments to keeping your portfolio balanced, helping you stay diversified without the hassle. 

Plus, robo-advisors often cost less than traditional financial advisors, making them a budget-friendly choice. 

Some popular options include Betterment, Wealthfront, and M1 Finance

These services usually require a small initial investment, so you can start with just $100. 

Your money gets spread across stocks, bonds, and other assets to aim for the best returns while keeping risks in check.

You’ll find that many of the finance investing apps offer lucrative sign up bonuses. The Swagbucks site has a list of finance app sign up bonuses if you join these apps through their site.

Power of Micro-Investing Apps

Micro-investing apps like Acorns and Stash are a great way to start investing with small amounts of money. 

These apps let you invest spare change from everyday purchases, making it easy to grow your investment bit by bit. For example, if you buy a coffee for $2.50, the app rounds up to $3 and invests the extra $0.50. 

They also offer educational resources to help you make informed decisions. 

With the ability to buy fractional shares, micro-investing apps allow you to diversify your portfolio even on a tight budget. 

Plus, they have user-friendly interfaces, making them accessible for all levels of investors.

invest $100 in a small budget

Final Tips to Investing $100 Wisely

$100 is enough to start investing in the stock market when you maximize the use of micro-investing apps, robo-advisors, and fractional shares, all of which allow you to build a diversified portfolio with minimal funds.

Consulting a certified financial planner (CFP) can also offer tailored advice to align your investment with personal financial goals. 

Additionally, emulating the strategies of successful investors can significantly enhance your investment journey. 

Many millionaires stress the importance of starting early and reinvesting earnings to take full advantage of compound interest for maximum returns.

There’s a lot of money you can make with your initial $100 investment when you invest it wisely and start early.

If you need a way to make more money to add to your investment account, then read about these next side hustle ideas to make an extra $700 fast!

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