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How Do I Start Investing With Only $100?
$100 dollar bill

by - January 20, 2014 - 8 Comments

Hi Penny Hoarders -

I truly love getting your emails! I try to answer as many as possible, but with more than 100 reader emails a day (not to mention comments, FB discussion, and tweets) it can be a bit overwhelming at times! :)

This week I received this email from Christopher…

“Hey, I was wondering if you could give me some advice on making money on the stock market with only investing a 100-200$??”

 

You gotta start somewhere, right?

Let me just first say that I admire Christopher for wanting to invest even though he has such a small amount of money to get started. Sure, you’re not going to make a ton of interest off of a $100 investment, but the important thing is to just get started.

I’ve told the story about how I escaped the “paycheck to paycheck” lifestyle and saving the first $100 really is the hardest part.

Not only will you start earning some interest, but more importantly, it can help you get in the habit of saving each month.

And if you needed any other motivation, consider this… If you had invested $100 in Coca-Cola back when it first when public in 1908, it would be worth an astonishing $24.5 million dollars today! So, yes, Christopher! I whole-heartedly think you should start investing with just $100.

 

Where should I invest?

This is where it gets a little tricker. I’m not going to offer any stock advice, but I can tell you that one of the biggest problems with investing such a small amount of money is that brokerage fees can be exorbitant. Consider that buying and selling one single stock can cost as much $20 at a place like E-trade!

All of the sudden your $100 investment is only worth $80 before you even get started.

So, my suggestion is that you look for a free brokerage account at place like Loyal3. There are a few others, but that one just happens to be my favorite because they don’t charge you anything to buy or sell stocks, nor do they have any type of minimum balance requirement.

They also allow you to invest in IPO’s (new companies that are just hitting the stock market), which is kind of unusual, but definitely very cool!

 

Don’t feel comfortable investing in stocks?

If you aren’t interested in investing in the stock market, I have a couple of other suggestions. First, have you thought about just opening an online CD? It can be really helpful to put money in an account that’s not connected to your checking account and not as easily accessible. I find that I’m less likely to withdraw the money. ;)

There are several banks that offer them, but my favorite is GE Capital because they offer a 2.23% interest rate (not a ton, but it’s certainly more than anyone else is offering right now).  

 

Other options…

Finally, my last piece of advice is to check out a place like LendingClub.com. LendingClub is a person-to-person lending network that is regulated and protected and it’s another free way to invest.

It works by people like you and me investing, through the network, to fund loan requests from others you elect to help. Basically what happens is the banks are cut out of the loop, lowering the rates for borrowers and increasing returns for investors. The only people that lose in this scenario are the banks.

I’ve been investing in LendingClub for awhile now and constantly see returns between 14-15%. Again, that’s not going to earn you a ton of money on a $100 investment, but it will certainly get your started. :)

I hope that helps! Please let me know if you have any questions in the comments below…

Good luck Penny Hoarders!


 

  • http://www.saveandconquer.com Bryce @ Save and Conquer

    At his insistence, we just opened a custodial account for our son so he could invest half of his $1000 bank account savings in the total stock market. He is 12 years old. We opened the account with Charles Schwab because they offer their Schwab total market index ETF (SCHB) for no cost trades, and the expense ratio is a very low 0.04%. One share of SCHB is currently trading at $44.87, so he will purchase 11 shares with a little over $6 in cash left over. I made sure that he understands the risks involved, and he said he is OK with it. I also made sure to tell him that this account is for the long term, like 10-20 years. He said he understood that, too. Like you said, you gotta start somewhere.

  • http://fitnpoor.com Michelle @fitisthenewpoor

    I am interested in starting a very small (like maybe $200) investment in to stocks. I really know nothing about stocks at all, so I think it may be a good experiment without much risk involved.

  • Nelson Beck

    You can start out investing into stocks monthly in very small amounts, $50 or even $25 per month by using DRIP’s. These are direct purchase dividend reinvestment plans offered by many companies such as Walgrens, Conoco Phillips, and several hundred others. Some require a lump sum of $250 or more but many allow you to start investing monthly with no large lump sum. Investing is done through transfer agents such as ComputerShare or Wells Fargo.

  • http://teletrade.bg/ Bradley Jonson

    One has to start off somewhere and with something. Agreed. Plus there are some immediate advantages of being a small investor. In fact, as per reports around 70 percent of the mutual funds do not succeed in beating the market that leads many to believe that they are better off investing passively rather than working on their portfolio.

  • http://thebrokeprofessional.com Syed

    I would say being young with little capital is the best time to start investing. That will start the learning process which is just as important as investing the actual money.

  • Daphenie

    Can someone overseas (Caribbean) invest in the Lending Club?

    • http://www.thepennyhoarder.com Kyle Taylor

      Not yet. Sorry Daphenie!

      Kyle

  • Stevetuck313

    Best approach to picking a stock in your first days is to find a brand or product you like/love/ and or believe in. Believe in not with hope but more so informed numbers. Picking a brand you are interested in will help alleviate the pains in researching the numbers and growth of the company.

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