Wondering how to invest 100 dollars? That’s a fantastic idea! Find out the different options you have to make your $100 work for you.
Did you get a bonus at work, or won some money in the lottery? Or did you manage to save $100 by making cuts in your newly established budget? (Hurray!)
Or maybe you’re actually taking that amount from your budget to start investing, but just don’t know what you should invest in. Either way, we got you!
To many $100 might not seem like a lot of money to invest, as this practice is usually though of as being reserved to the very wealthy people, or needing a massive amount of money to get started.
This isn’t true (at all!), and since you can technically start investing with as little as 5 dollars, $100 is a very decent number to get started.
In this post you’ll find a variety of options in which you can invest those hard-earned dollars, from the traditional investments you’re probably expecting, to some alternatives that you might have not thought about before.
The ideal investment will depend on you, on your interests and financial goals, so start reading and find out how to invest 100 dollars in the most convenient way!
Start an Emergency Fund
Emergency funds are a vital part of your financial life, and one of the greatest investments you can make. A good emergency fund should be able to cover your living costs for 6 to 12 months, so building one takes considerable time (over a year in most cases!)
While $100 might not seem much in view of such an important amount, it’s definitely a first (and very important) step to get your fund started. You might even be comfortable having an emergency fund that covers you for 2 or 3 months, and that’s a much more attainable goal to start with.
Emergency funds are the key to avoiding getting into debt when crisis arises, and for a healthy financial life, you want to steer clear of debt always.
So, what are these emergencies that will have you breaking the piggy bank? Your emergency fund can be used for anything from urgent medical care to a leaky roof in your house, major car repairs, or sudden unemployment. Any unplanned event that requires money expenses will be covered by it, which now has a brand new $100 bill and counting. *yey!*
Emergency funds doesn’t necessarily have to be for negative circumstances, although as its names implies, it’s ideally saved for unexpected events that would otherwise set you back considerably, or even force you to ask for loans. But you could also use that money to start a new business or to support a friend’s or family member’s new enterprise.
If you were to use it for one of these examples, though, make sure to have some money left and start building up your emergency fund again as soon as possible: the thing about emergencies is that you never know when they’ll occur, so you want to be prepared!
Open a Retirement Account
Thinking about retirement is as crucial as having an emergency fund, if not more. Regardless of where you are in your life, you should start thinking seriously about retirement right now.
In fact, your early 20’s are the best time to set up a retirement account and begin your contributions – even if you’re just starting out on your career and think you have your whole life ahead of you to start worrying about that.
Let me break it for you: it’s never too soon to worry about retirement in a financial way. The sooner you start contributing to it, the longer that money will have to generate interest, and the more comfortably you’ll get to retire. This is especially important if you hope to maintain your current lifestyle after you’ve parted ways with your career (or even improve it!)
100 dollars is obviously a small amount in the grand scheme, but if it’s what gets you started, then it’s the most important dollar bill of all. To start contributing to your retirement, you’ll need to open tax-advantage accounts like 401(k) and IRA, where your money will be earning interest as it sits there.
It’s a good idea to first check with your employer, as they may be able to match your contributions to your 401(k), which will substantially increase your retirement money (and you definitely, definitely want that!)
Otherwise, you can open your own retirement account and place your $100 in it – smile satisfied with yourself, and keep contributing to it: this has just gotten started!
Start Saving for a Goal
Your goals and dreams are of major importance to your quality of life and happiness, so you shouldn’t disregard them as a great investment. And just so it’s clear, by goal or dream we do not mean a shopping spree or treating yourself to dinner every Wednesday! To be a good investment, it has to add real value to your life; otherwise you’re just splurging.
Your lifelong goal might be to own your own house, or to be able to pay for your children’s college fees and save them from the dreaded student loans. Maybe you’re planning your honeymoon, and your goal is to save money to travel to a specific destination.
All of these are great life experiences, and as long as you don’t have to get out of debt or have other urgent expenses to attend to first, allocating your $100 toward achieving a goal is a great (and very satisfying!) investment.
So, how to invest $100 toward your goals? Start a new savings fund, and contribute to it on a regular basis. A hundred dollars is a great starting point and will give you the motivation to keep going, but the key is to be consistent and continue to allocate money toward your goal, even if it’s in small sums. This goes for all of your investments and funds!
Invest in your Education
Investing in yourself is as important, or even more, than investing in the stock market or brokerage accounts, especially if you’re just getting started.
And the best way to do so is through education. Learning about finances, investments, stocks, how to retire early, or how to better manage your money will help you take full control of your economy. You’ll also be more able to determine where to invest your money, how to steer clear of debt and ultimately achieve all of your financial goals.
Buying books and podcasts, or signing up for a course are great ways to take your knowledge to the next level, and $100 can take you far in this area.
Maybe you don’t want to dig that deep on finances, though, and that’s ok. You can further educate yourself to advance in your career, land better jobs, or gain a promotion with a salary increase. Or you could develop a whole new profession out of the knitting classes you took as a hobby, or your creative writing workshops.
As a side note, educating yourself doesn’t necessarily require money, as you can invest your time and self-teach you through blogs and free lectures, but if you’re serious about mastering your financial life (or any other subject), you might need to make some monetary investments.
In any case, investing in your education is always a good idea, and a fantastic use of your $100.
Buy (Fractional) Stock
To many people, the word investing is tied to the words stock market. And while investing can take many (many!) forms, it can also involve buying shares in the stock market, sure.
But how to start investing with 100 dollars? Is it even doable? It certainly is, and you can do so by buying fractional shares of a stock.
Think of a single stock as a pie, which is divided into many slices: buying fractional shares is the equivalent to getting a slice of the cake. Depending on the stock or business you’re interested in investing in, you could buy one or quite a few slices of the pie for a hundred bucks.
Buying fractional shares also helps you diversify your portfolio at a much lower cost than if you were buying whole shares of stock. It’s the easiest way to invest $100 dollars in the stock market.
Bear in mind that there’s no way you can know how much money you can make investing 100 dollars, as it will depend on many factors.
And as with the previous investment alternatives, if you really want to make profit out of it, the $100 will only be the starting point, and it’s important that you continue to invest in your chosen asset, even if it’s a little bit at a time. Every coin matters, remember?
Pay Off Debt
Granted, $100 alone will probably not be the solution to getting out of debt. But if you’re indebted in any way, paying it off should be your main priority.
No investment is as important as getting rid of debt, whether it’s government loans, credit card, or debt to friends and family members. Owing money, especially if it’s to a financial institution due to the interest rates, can really set you back financially, so you want to settle your debts before you start saving for a trip or buying stock.
Not all debt is bad, though: there’s the so-called good debt which comprises student loans, business loans, and mortgage. While this loaned money should actually help you build your wealth, because it was used for a great investment (education, home, business), you still want to be on top of your payments to avoid getting caught up in increasing interest rates and the consequences of missed installments.
So whether you’re building a fund to pay off your debt in its entirety, or are paying it in installments, devoting that $100 toward that goal is an excellent (and vital) investment. As long as you’re consistent, even with small amounts of money, you’ll eventually get there – and there’s nothing like the feeling of being debt-free!
Exchange Traded Funds (ETFs) are, to put it simply, a bundle of different assets which allows you to have a very diversified portfolio with a single purchase and usually at a reasonable price.
ETFs tend to track a specific index or sector, and they can be bought and sold just like you would a stock, fluctuating in price throughout the day.
ETFs usually contain stocks, but also bonds, commodities, and other investments, and they’re fairly affordable to get, so it could be a good way to grow 100 dollars.
Some of the most popular stock market indexes tracked by ETFs include S&P 500, and FTSE 100, so those could be interesting to consider.
If you’re not sure if ETFs are for you, or don’t fully grasp the concept, it might be a better idea to first educate yourself about them, and only buy when you feel confident about your investment.
Open a Brokerage Account
If you’re looking into investing in the stock market but are not sure what kind of stocks to buy, or if ETFs would be profitable, or don’t know how to even get started, opening a brokerage account might be a good solution.
A brokerage account is basically a taxable account where you can have stock, bonds, ETFs, and mutual funds, becoming an investment portfolio of sorts. Through it you can buy and sell those assets, but also use it to set aside your retirement money, or build your emergency fund.
One of the biggest advantages of brokerage accounts is that you can withdraw money at any time, without having to pay any penalty fees.
A brokerage account is managed by a brokerage firm that will be executing your trades, that is, buying and selling the stocks and bonds you choose when you ask them to. You’ll have full control of your assets, but won’t be the person doing the transaction.
100 dollars is a very nice sum to invest in a brokerage account when you’re just starting out to get a sense of what it’s like, but you’ll eventually want to continue investing in it. If you’re looking for how to invest $100 dollars a month, it’s a good option.
Invest in a Mutual Fund
Mutual Funds work very similar to ETFs, comprising a selection of stocks that grant you great diversification when you invest in one. You’ll then own a very small fraction of all the companies that the stock index you choose has, with one single investment.
Just like ETFs, you can invest in indexed mutual funds that copy other market indexes such as NASQAD 100 or S&P 500.
Mutual Funds, though, don’t fluctuate in price as stocks or ETFs do, and their value is assigned once a day after the market closes. For this reason, they can’t be bought or sold throughout the day.
Some mutual funds have actually a pretty steep price for the first investment you make in them. If you already invest in a mutual fund, then you can certainly allocate your $100 to help grow your capital. Otherwise, you should look for options that allow you to start investing that amount of money.
👉 If you still don’t know how you’d get $100 for investing, check out my post about how to make 100 dollars a day.
How to Invest 100 Dollars FAQ
There are many ways you can invest $100, from opening a retirement account and investing in your education to mutual funds, ETFs, and stocks.
You can start trading with 100 dollars, as you don’t need more than a small amount of money to begin with.
No amount is too little to invest! Sometimes people think you need to invest big amounts of money to make some profit, and while it’s true that you should continue contributing to your investments, you can certainly start with $100 or less.
You can invest in stocks with just $100, although you’ll want to continue growing that investment in order to gain better profits and build a good portfolio.