Investing

How To Invest $100

A $100 may seem small, but you can start investing with that amount. This way, your money yields more returns than when you keep it in a savings account. Plus, you can be on your way to financial freedom.

There are plenty of ways you can start investing. In this guide, we’ll offer some creative ideas for how to invest $100. Let’s get started!

What Is Investing?

Before diving into the best ways to invest $100, it’s essential to explain investing. The idea behind investing is to put your money to work for you so that it grows over time, better than it would in a savings account.

You can invest to save money for retirement and more short-term goals like opening a business or taking an extended vacation. While most people equate the stock market with investing, the truth is that investing is a lot broader than that.

Anything that helps build wealth for the future can be considered an investment, whether it’s individual stocks, a new business, or even education. The most important thing is that you use the money you want to invest with an eye towards the future instead of simply spending on things that don’t offer a potential monetary benefit down the road.

Investing money

Can You Invest With $100?

Although $100 isn’t much money in the big scheme of things, investing with just $100 is entirely possible. That said, there are some significant differences to keep in mind when investing with $100 instead of larger amounts like $1,000, $10,000, $100,000, or more.

How to invest $100

When you’re just investing $100, you’ll probably want to leave behind some of the usual rules of investing. Building a diversified investment portfolio, for example, doesn’t make much sense when you only have $100 to invest. You’d only own a few dollars’ worths of each company in your portfolio, and your potential upside is severely limited.

Along those same lines, you’re likely to want to take on more risk when investing just $100 than you might if you were investing a larger sum. It takes a gain of hundreds or thousands of dollars to make the time you spend investing worthwhile. So even a 100% gain is only $100 when you’re investing a small amount of money.

Another thing to remember is that the most you could lose if your investment goes badly are $100. So why not take a chance? Investing $100 is an excellent chance to experiment and try out something you might not be willing to risk more money on.

How To Invest $100

There are dozens of different ways to invest $100. Here are some of our favorite ideas:

Use Acorns To Auto-Invest

Acorns, Stash, Betterment, and other Robo financial advisor services allow you to begin investing with as little money as you want. You can start fractional share investing of exchange traded fund (ETFs) that track the entire stock market, so your $100 investment buys you an entire portfolio of stocks. An ETF is like a mutual fund, but it has lower fees.

The catch is that investing just $100 in a diversified portfolio isn’t enough to change your financial situation, even if you leave the money to grow for many years to come. So, if you go with a service like Acorns or Stash, make sure you follow up on your initial investment. A Robo-advisor allows automated monthly transfers from your bank account so that your investment grows over time.

Pick a Winning Stock

Investing in a single stock is risky. But if you’re only investing $100, your potential loss is very limited relative to your potential upside. After all, if you pick the right stock, you could turn $100 into $1,000. 

If you’re going to invest in stocks, especially in a single stock, make sure it’s a company with explosive growth potential. Tesla, for example, is up 644% for the year, which would leave you with a total of $744.

If you invest in an established company like Coca-Cola, you’re not likely to see returns in the hundreds of percent. However, most brokers will allow you to buy fractional shares, so don’t worry if the stock price is over $100.

If you need help picking stocks, check out these stock picking services. You can also seek independent financial advice by contacting an SEC-registered investment adviser.

Flip Products Online

If buying fractional shares from the stock market is not your thing, you can also use your $100 to buy used or collectors’ items and then flip them online. Limited edition shoes and clothes and sports memorabilia are relatively easy to get started with, especially if you have an eye for what’s valuable.

You can also buy and sell items like used electronics, appliances, or sports equipment if you have the know-how to repair busted products. eBay, Amazon, and even Facebook Marketplace are all good options to sell your wares.

Product Flipping Online

Pay Off Debt

If you have debt, putting your $100 towards paying it off is one of the best investments you can make. While $100 won’t clear your student loan debt, it’s one step closer to being debt-free and reducing future interest payments.

Start a Simple Business

Another way to start investing with $100 is to invest in a simple money-generating business, such as a blog. For example, $100 is enough to buy a domain name and a WordPress template. Or open up a basic storefront with an eCommerce site like Etsy or Shopify.

Blogging

Alternatively, you can put the money towards online ads to market yourself as a freelance writer, a virtual assistant, or anything else you’re skilled at.

Get Educated

One of the best ways to use $100 is to invest in your own education. $100 won’t put you through college, but it could buy you a stack of books about investing or budgeting that help you earn more money down the line. 

$100 worth of books

You can also use the money to sign up for an online course about whatever topic interests you. Masterclass offers an all-access pass to hundreds of online classes for just $180 per year.

Online High Yield Savings Account

A high yield savings account differs from traditional savings accounts at a local bank. However, local banks pay higher returns on money market account and certificates of deposit. But the minimum initial investment for these accounts is above $100.

With online high yield savings accounts, you get high-interest rates, and it does not require a minimum investment. Your compound interest grows slowly over time, but you should consider monthly contributions. You can also consider a savings builder account. It is a tiered interest rate account with a $100 minimum opening.

Peer-to-Peer Lending

While $100 may not get you mutual funds, it can help you start peer-to-peer lending. P2P lending platforms are where people come to borrow money for personal loans. So while $100 may not be enough to become a lender, you can invest in loans.

There are peer-to-peer lending platforms where you can invest in slices of loans referred to as notes and not the entire loan. For example, you can buy a note for $25. So with your $100, you can spread your investment across four different loans.

However, note that interest rates vary across the borrower’s credit profile. Lastly, money made from peer-to-peer lending is subject to income taxes.

Participate in Your Employer-Sponsored Retirement Plan

If the company your work for has an employer-sponsored retirement plan, it is the best way to begin investing. You can start investing with $100, and it has tax benefits.

At least some of the $100 you invest in the retirement plan will return to you in the form of a lower income tax bill. Different employers offer a variety of plans, so find out what your employer offers. This is one of the best ways to start investing $100, so don’t miss out.

Open a Traditional IRA or Roth IRA

Suppose your employer doesn’t have a retirement plan. You can make contributions to a traditional IRA or Roth IRA. You can contribute $100 monthly or have it deducted from your payroll.

If you steadily keep contributing to the account, your money will grow steadily. Also, since retirement accounts are self-directed, you can invest the money in any way you want. However, note there are some differences between a traditional IRA and Roth IRA.

First, your contributions to Roth IRA are not tax-deductible. Second, you can take distributions tax-free if you’re at least 59 and half years old and have contributed to the Roth plan for at least five years.

Conclusion: Investing Your $100

Investing $100 could change your life. It might seem like a small amount of money, but you’re building your financial future. There are plenty of options for how you can invest $100. Be creative and consider taking risks that you might avoid with a larger investment.

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Kevin

Kevin is an ambitious entrepreneur that is obsessed with all things related to finance. From a young age, Kevin has always been involved with side hustles ranging from online selling to freelance work. Over the years, Kevin graduated from side hustles and started launching multiple online and offline businesses. Kevin is a serial entrepreneur who loves starting new businesses and exploring all things related to business and finance. He is constantly looking for new ways to save money, invest money, and create income streams.

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