Investing with Less than $100

Hey there Money Saver! Welcome back to another week of How to Save A Buck, where we explore ways of saving money in personal finance, credit cards, and investing!

Think investing in the stock market is only for the rich and famous?

Wrong!

Here at How to Save A Buck, we are all about saving. But saving is dual-functional - you can save money by spending wisely AND socking it away in investments for a future need.

You don’t need boatloads of dough to start investing and growing your wealth. In fact, you can start with as little as $100 and still make a difference in your financial future.

How is that possible? There are several ways to invest in the stock market with a small amount of money, and they are not as complicated as you might think.

Take a basic index-style fund investment. You invest $100, and every month, let’s say you add $25. You continue this for 10 years. Let’s also assume you earn an average rate of return of 8%. So, what happens to that initial $100?

Your initial investment of $100 grows to almost $5,000! Your total deposits equaled about $3,000, but you earned almost $2,000 in gains. Not shabby.

The power of time is what helps. And while some of us may have more/less than others, it’s important to note that the dollar amount doesn’t matter. It’s the consistent nature of adding over time, and at least…starting.

The above example is one way to begin. What about others? What if you want to buy individual stocks? What if I want to start, but don’t want to manage it?

Here are some other ways in which you can start albeiof them:

• Buy fractional shares. Fractional shares are pieces of whole shares of a company. For example, if a share of XYZ costs $200, you can buy a fraction of it for $50. This way, you can invest in companies that you like and diversify your portfolio without breaking the bank. You can buy fractional shares through online brokerage firms like Schwab or Fidelity.

• Invest in index funds or exchange-traded funds (ETFs). Index funds and ETFs are collections of stocks that track the performance of a market index, such as the S&P 500 or the Nasdaq. You gain exposure to the entire stock market with low fees and minimal risk. You can buy index funds or ETFs through firms like Vanguard, Betterment, or my personal favorite, Wealthfront. (disclosure: I may receive a commission or reduced fees at Wealthfront if you sign up through this link.)

• Use a micro-investing app. Increasing in popularity in the last few years, Micro-investing apps are apps that help you save and invest your spare change. For example, if you buy a coffee for $3.50, the app will round up your purchase to $4 and invest the extra 50 cents in the stock market. You can also set up recurring deposits or choose from various investment options. Some popular apps are M1 Finance and Acorns.

Of course and as always, do your research, understand the risks, and have a long-term perspective. Investing is not a get-rich-quick scheme. You are aiming to build wealth over time.

Investing is not as scary as it seems. Nor do you have to be a millionaire to invest. It can be fun and rewarding - even with $100 to start. And you are not alone. According to Morgan Stanley, the global stock market value is around $95 trillion while the US represents about 56% of the total market capitalization.

They also found about 55% of US adults have money in the market. And you know what? I’m sure quite a few started with just $100.

So, what are you waiting for? You don’t need a lot of money to make a big difference. You just need a little courage, a little curiosity, and a little creativity. Take that $100 you were going to spend on a fancy speaker and invest it.

That $100 will sound much louder than the speaker ever will.

Save On,

Chris