Reader Question: “How Do I Start Investing With Only $100?”
This week we received this email from Christopher…
“Hey, I was wondering if you could give me some advice on making money on the stock market with only investing a 100-200$??”
You Gotta Start Somewhere
We admire Christopher’s desire to invest even though he only has a limited amount of cash to get started.
You probably won’t make a ton of interest off a $100 investment, but the important thing is just getting started.
Our founder, Kyle Taylor, has written about how he escaped the “paycheck to paycheck” lifestyle — and saving the first $100 really was the hardest part.
Investing $100 will not only start earning you some interest, but can also help you get in the habit of saving each month. Every little bit helps!
And if you needed any other motivation, consider this: If you’d invested $100 in Coca-Cola back when it first went public in 1908, it’d be worth an astonishing $24.5 million dollars today!
So, yes, Christopher! We think you should start investing with just $100.
How to Start Investing — With Just Your Phone
This is where it gets a little trickier.
We’re not going to offer any stock advice — or even guarantee investing will make you money — but can tell you one of the biggest problems with investing such a small amount of money is that brokerage fees can be exorbitant.
Buying and selling one single stock can cost up to $20 at a place like E-trade!
All of a sudden your $100 investment is only worth $80 — before you even get started.
We suggest looking for a more affordable way to invest, like the Stash app. If you’re investing under $5,000, you’ll pay a $1 monthly fee.
What we like about Stash is it’s an uncomplicated way to start investing. You choose from a set of simple portfolios reflecting your beliefs, interests and goals, and it does the rest.
Plus, you’ll earn a $5 bonus to invest for signing up.
Not Comfortable Investing in Stocks?
If you aren’t interested in investing in the stock market, here are a few 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 less accessible, so you’re less likely to touch it.
Here’s a comparison table that shows the banks with the best interest rates right now.
Other Investing Options
Finally, our last piece of advice is to check out a place like LendingClub, a person-to-person lending network that is regulated and protected. It’s another affordable way to invest.
Here’s how it works: People like us invest 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 losers in this scenario are the banks.
Again, a $100 investment probably isn’t going to make you a ton of money, but it will certainly get you started!