How To Start Investing With As Little As $100 (2024)

Investing is an essential habit you should cultivate to attain financial freedom. An investor risks capital invested in an asset or business with the hope of receiving higher returns after a period of time.

Anyone who desires a better income, improved financial status, or financial freedom in the future must be able to invest some money in making that goal a reality.

So…

What Is Investing?

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Investing can be defined as the method of acquiring assets that appreciate in value over a period of time and offers revenues in the form of capital gains or income payments. Investing also has to do with spending money and time towards making your life or that of others better.

Generally, it involves purchasing items of value such as securities and real estate to earn more money and increase your overall net worth.

Why Should I Invest?

Investing is very important in making your financial goals a reality. Unlike trading, investing is often a long-term commitment you create for yourself. There are so many reasons why you should invest, and here are a few to consider:

Investing Gives You Control Over Your Future

You give room for financial chaos in the future if you do not know where your money is going. Investing gives your money a task to bring in more money for you. And that’s what makes you wealthier!

While investing isn’t always about getting richer, it is also about creating a financial haven for your future.

You’ll attain an age where you’ll have to quit working. When that time comes, it would be tough to keep carrying on if you haven’t created investment support for yourself, even if it is a regular paycheck. Better still, you may want to quit working whenever you feel like. Having investment working plans can help you enjoy this financial freedom.

Investing Can Bring Compound Interest

“Money makes money. And the money that money makes, makes more money.” –Ben Franklin, one of the leading figures of early American history. He was a political philosopher, scientist, writer, inventor, statesman, diplomat, and even a financial adviser!

Now imagine you have $1000 this year, which brings you returns of 10%. This means that you do not have just $1000 in your account, but $1,100.

And if you are unable to make any contribution in the following year, you are still entitled to the 10% returns the next year. And you’ll be having a $110 increase instead of just $100.

That figure is because of your $1,100 balance!

That is how compound interest grows. Your money keeps bringing in more and more returns even without any work on your part.

Investing Gives You Opportunity To Earn Free Cash

You may be able to enjoy an employer match when you work for a company that offers a 401(k). And what this means is that you’ll be able to match your 401(k) contributions dollar-for-dollar to a specific figure.

For instance, if you make a 5% contribution of your basic salary to your 401(k) paycheck, your employer will also make a 5% paycheck contribution for you. This method will help you to double your retirement savings by saving some cash amount.

Matching programs differ from employer to employer. Your employer may even be more generous than the instance cited here. But then you should really consider this opportunity.

See your company’s HR for more information on 401(k) employer match. And understand how it works.

When Should I Invest?

You should start investing now.

Starting anything for the first time can be quite terrifying especially if it has to do with your money. This is basically because there is a possibility of running into loss. But then, there is a bigger potential for making gains if you focus on doing things right.

You may be jittery about the state of the market and looking out for a much favorable time, or perhaps considering becoming an expert first.

But you are very likely losing out already on some attractive gains by delaying your decision to start investing. In fact, according to investment experts, 40 percent of people have run into loss in their finances because they procrastinated.

When you begin to invest, you will be able to make the desired difference between what you started investing with and the amount you finally come out with. The earlier you begin, the better.

Ways to Start Investing Your Money

1. Annuities

When you acquire an annuity, you obtain a contract with an insurance company and get paid at intervals. While you may start getting paid, it may begin immediately or at a given date, and may continue only for a specific period or till death in other cases.

They have quite low risks but do not have high growth. However, they are a very reliable supplement to build your retirement savings.

2. Bond

When you make a loan to the government or a company, you engage in bond investment. This kind of investment is a fixed-income investment where you permit the bond issuer to make use of your money and make a refund with interest.

Bonds do not have as many risks as stocks do, but then, their returns are low too. In addition, the less risky the bond is, the less the interest rates will be.

The prime risk you are likely to be faced with is the possibility of the issuer defaulting. This is similar to any other loan risk. But the “full faith and credit” of the United States removes the effectiveness of that risk.

Investors generally receive payment in regular installments. This could come once or twice annually, and the total principal is paid when the bond finally matures.

3. Certificates of Deposit

This kind of investment involves giving out a specific cash figure to a bank for a projected period of time. You get your money back with a specific interest rate after the time elapses. Interest rates increase based on the length of the loan period.

This form of investment is FDIC-insured for up to $250,000 with no real risk in view. However, it is advised that you are very sure you will not have a cause to withdraw the money early as there are consequences such a move could attract.

4. Stocks

By investing in stocks, you buy a portion of a company’s assets and earnings. Companies often sell shares of their stock to prospective investors to raise money for their businesses. So, you can buy the shares and even sell them to other investors.

While stocks can be very profiting, it also comes with huge risks. In fact, it has more risks than most of the other kinds of investments. This is because companies can fall out of business or lose their value over time.

As an investor, you will be able to make money when the value of the stock you own rises, and you can quickly resell for a good profit. Some stocks can also bring in dividends. Dividends are portions of the net profits of a company which are shared among a particular class of shareholders or investors. They can be issued in the form of shares of stock, cash payments, or other forms.

If you are considering investing in stocks, here are a few important things you should be aware of:

a. Reduce your risks by spreading out your investments in different companies. This approach protects your investments in case stocks nose-dives in a particular company. The odd side is that additional brokerage fees are required. And this puts your returns at risk in the long run.

b. Get accustomed to filings. Get every required detail from company finances to risk factors and potential conflicts.

c. There is no perfect metric for investing in stocks. Every investor has working measures that are favorable to them for value and growth.

d. Ensure that you know what kind of buy and sell order you are having.

e. In your best interest, take the day-to-day market news flow as an interesting read, rather than a cause for altering your strategy.

5. Mutual Funds

A mutual fund involves pulling funds together from several investors and investing it in a company. The funds put together by investors are often managed by a professional manager to be invested in bonds, stocks, and others.

The collective holdings of the mutual funds are regarded as portfolios. And they can be managed by several companies each with hundreds of funds. These companies differ in their strategies.

When you acquire a mutual fund, you own the share of the mutual fund. The value each mutual fund receives is called Net Asset Value. Mutual fund shares are constantly traded while their prices are regulated after concluding every business day.

6. Options

In the case of this kind of investment, contracts are offered to purchase or sell stocks at a given price and time. Options are advanced investing practice and a bit more complex approach to buying a stock. There are two types of options, and they are put options and call options.

To get started with trading Options here are a few things to know:

What Will Be Required to Open an Account

You’ll need to prove that you are sure of what you are doing before you get started. You’ll also need to be prepared with a reasonably huge capital, good trading experience, and an understanding of the trading risks.

You will have to make available a prospective broker:

a. The broker will need access to your investment knowledge, experience, and your yearly trade total.

b. Your investment objectives which could include speculation, growth, or capital preservation.

c. Personal financial data, Annual income, employment information, total net worth, and your liquid net worth.

d. Trading Options type you want to consider.

Choose The Direction You Expect The Stock To go

If you expect the stock price to increase, then buying a call option should be considered. And otherwise, a put option would be fine. A call option lets you buy a stock fixed price within a given time, while the put option offers you the right to sell shares at a specific amount before the expiration of the contract.

Consider The Possible Time Frame For Stock To Move

Options contracts are liable to an expiration date, which can vary in periods, and are restricted to the options you are given when you call up an option chain.

Daily and weekly options are best considered for experienced option traders because of their very high risks. Long-term investors should preferably consider monthly and yearly expiration dates. This longer expiration period helps the trading option to retain time value, and also gives time for investment thesis to be played out and sufficient time for the stock to move.

7. Real Estate

This method of investing is very popular. But from record, investing in real estate generally requires a huge financial commitment to begin. But you can consider leveraging on crowdfunding to begin with a reduced amount of money.

Crowdfunding in real estate can make investing in real estate interesting and intriguing. You’ll be able to diversify your assets and also get a good knowledge of commercial real estate. Investors like you pool cash together to invest in some properties.

With Crowdfunding, you can invest just $1000 as a co-owner in a property. And the good news is that you do not have to be an accredited investor before you join.

Consider these platforms to be part of crowdfunded real estate investors:

a. RealtyMogul

Investors have the opportunity of choosing from a wide range of properties from RealtyMogul. These options include commercial properties, residential, mixed-use, and retail. Rather than charging their investors a fee, the property holders bear the burden. One good thing about this platform is that, as an investor, you will begin to see returns on your investment just after a few weeks.

b. Fundrise

With Fundrise, you can invest as low as $500. This platform is great for newbie investors. You’ll be able to make property purchases without making huge payments. And when you manage your own portfolio, you’ll have to bear for just 1% while Fundrise offers a satisfaction guarantee of 3 months.

c. DiversyFund

This platform requires no net worth requirement and no management fees. They make it easy for willing investors to enjoy affordable and accessible real estate investments. They also make several educational resources available to help you improve your knowledge of profiting from real estate investment.

8. Treasury Security

The US Treasury security is an investment method to consider. While you are never going to make wealth through this medium, your money is sure going to be in a safe place with gradual interests being generated. You can stick to this medium, alternatively known as savings bonds, till you are able to invest in higher-risk investments.

Also, you can purchase the fixed-income Treasury securities of the US government with maturities that fall between 30 days to up to 3 decades, for as little as $100.

You should also consider making use of Treasury Direct to purchase Treasury Inflation Protected Securities (TIPS). You’ll not only be able to earn interests, but there is also the opportunity to make major adjustments periodically to account for inflation based on consumer price index variations.

With Treasury Security, you can also organize for funding of your Treasury Direct account through payroll savings.

Final Thoughts

There are countless investment opportunities to consider to create a safe financial future for yourself. While many of these investing strategies require huge capital to get started, many others require just a little amount of money.

But then, it is always a smart decision to begin, and begin now. You will always find out easier and better ways to go about your investment moves as you go on.

Check out Investopedia for more financial knowledge about investing. It is also advisable to speak with your broker or investment manager for professional advice.