The Best Way to Invest - Even If You Only Have $100

By: Danielle Pietersen | November 20, 2020

Is $1000 Enough To Start Investing?

Yes! Even $100 is enough to start investing, in fact, there are some really simple ways to start investing your money regardless of how much you have. If your extra money is just sitting in your checking account, it’s not growing as it could be.

Investing Is For You Too

One of the biggest myths about investing is that you need to have a lot of money to start investing. What would you do if you won the lottery or if an unknown and distant relative died and left you a small fortune? Buy a few things you’ve had your eye on and invest the rest? Right?

Investing is often moved to the realm of fantasy for many of us. It’s something we imagine only fabulously wealthy people do and something we dream about.

The good news is though, that you don’t need to be rich to start investing. Instead of leaving a little money in your checking account where it isn’t growing and where you’re far more likely to spend it, you can invest it. Start saving and investing with a small amount of money. Can you save $100 here and there? Do that ten times and you’ll have saved $1000.

What Should You Do With $1000?

So what exactly can you do with $1000? It might be a relatively small amount of money when it comes to the world of investments, but that doesn’t mean that you can’t start investing wisely and watching your money grow.

It’s not going to get you onto the property ladder, so if investing in real estate or your own home is your dream, then the best plan of action is to start investing small amounts in the short term and saving them up until you have enough to start making larger investments.

Get Rid Of Debt First

Debt is expensive. If you have credit card debt, a vehicle to pay off, or a student loan, then you are more than likely paying more interest on that debt than you could be earning if you invested your money. Use your extra money to pay that debt off as quickly as possible so that you can start investing your money and watching it grow.

Now Answer These Two Questions

How much is your time worth?

Some investments require almost no effort or commitment from you and may be as simple as moving your money into an account or signing a form allowing your money to be moved. Other investments like real estate can require considerable effort.

It’s important to do your research well before you invest and have a good idea of what you’re taking on. Decide how much time you can dedicate to making your investment grow and what your risk tolerance is.

Are your investments going to require you to spend significant time online doing research? That time can be better spent. Getting help with your investments will free up time that you can spend making money instead.

Consider how much time you can save if you choose investments that don’t require much work from you. That extra time could be well spent making more money. You could take on some freelance work or even just earn money and rewards online, through a website like Swagbucks. Swagbucks allows you to earn extra money in your free time by doing simple tasks like taking surveys.

Working online is a great way to way to add a little (or a lot) to your income and free up money for investing. Sites like Swagbucks also help you save big with online coupons and all those little savings get you closer to meeting your financial goals.

What are your goals?

Are you investing for your retirement one day? Saving up to do renovations? Putting money aside for your children’s college expenses? Hoping to start generating a passive income? There are so many reasons to invest. How you plan to spend the money will also affect how you invest it.

If you need to use the money soon or need it for emergencies, then you’ll want to invest it somewhere where it’s easily accessible and has low volatility. You’ll want to avoid investments that require you to give long periods of notice before you can withdraw your money. It’s often tricky to withdraw money from volatile investments, because you want to withdraw when the investment is doing well, not when you urgently need money.

If you’re looking far into the future and won’t need to spend the money soon, then you can choose options that tie your money up for longer and have higher volatility, but also, often, better returns. These sorts of investments are perfect if you’re saving for your kids’ education expenses, your retirement or building a passive income.

First Steps

Now that you’ve figured out what your goals are and what you want from your investments, you’ll need to find a way to get advice and make investments. There are a few ways to do it.

Speak To A Financial Advisor Or Broker

A financial advisor will be able to help you understand the differences between the various options that are available and will help you choose investment options that are best for your situation. They’ll be able to advise you about how to build a diversified portfolio, which will help you meet your financial goals. Your investment strategy can be high risk or low risk, with higher risk investments generally having higher returns, but also higher volatility.

Open Your Own Brokerage Account

It’s easy to open an online brokerage account where you’ll be able to trade individual stocks, ETF’s and even buy retirement products (among many other things). Some brokerage accounts are managed, by humans, others by Robo-advisors, but you can also choose to manage all of your own investments. It’s important to realize though, that managing your own finances on a platform like this is by no means risk-free and if you’re not trained in personal finance, you could end up losing money instead of making it.

Use A Robo-Advisor

Using a Robo-advisor like Betterment has many of the same benefits as getting advice from a financial advisor. Robo-advisors can also help with diversification which will help you build an investment portfolio. They are low-cost compared to traditional advisors and the initial investment amount required is much lower. Some Robo-advisors have no minimum investment requirements.

Three Really Simple Ways You Can Invest Today

In a hurry to get investing? Here are three really simple ways you can start investing your money today.

Savings Account

A savings account or money market account won’t have the best interest rate, but it’s a great way to save up extra money which you may want to use in the short term.

When you’re investing your money, the idea is to save or spend it in a way that generates more money for you. A high yield savings account is a great way to invest money that you might need to use in the near future. Be sure to choose an account that meets your needs. Many savings accounts require a notice period before they will release the funds. If you expect to need your money in a hurry, then choose an online savings account that doesn’t require you to give notice. Always ask how long it will take for your funds to become available when opening a new account.

Mutual Funds and ETF’s

Mutual funds, exchange-traded funds, and index funds all work in similar ways. They use either algorithms or a team of financial experts to pool your money with the rest of the fund and invest it in a variety of ways. Often they will use algorithms to track specific exchanges like the New York Stock Exchange.

Different funds have different focus areas and could be weighted to include investments in the stock market, bonds, dividend stocks, cryptocurrencies, or real estate investments. Some funds will even prioritize environmentally or socially responsible investments. Each fund will be able to tell you the level of risk that is associated with their fund which will help you choose the best investments.

Put It Towards Your Retirement

You always need to be saving for your retirement and there are some great ways you can be using investment accounts to make your nest egg grow.

There are a lot of good investment options when it comes to retirement accounts. Roth IRA’s and traditional IRA’s are good options. If you choose a Roth IRA you’ll pay taxes now, but they’re tax-free when you draw the money out. If you’re managing to save big and expect to pay a lot of tax in retirement, then a Roth IRA is the way to go.