How To Invest Your First $100
So you’ve got $100. You want to make it into more. But… how?
Beginning to invest is SO confusing. What do I invest in? What’s the difference? How do I even invest? Where do I invest? These are all good questions. So if you have $100 you’ve managed to save up and are ready to invest, here are three ways you can start investing!
S&P 500 ETF
Our first option is what Warren Buffet, one of the most successful investors ever, calls the “best investment most Americans make” – a low cost ETF that tracks the S&P 500 index. This basically just lets you invest in the largest 500 companies in the U.S. It’s a safe investment, because you’re not putting your money on a single or even a dozen companies, you are just betting that overall, these 500 companies will grow in the next few years.
Over the past 90 years, the S&P 500 has returned an average of 10% annually. That means that if you invested $100 in the S&P 500 90 years ago, your $100 would have grown by 10% per year to over $250! This gets WAY more impressive and fun when you invest larger amounts of money, but even that $100 grew by 150%!! So if you’re not a risky investor and want a safe option, check out SPY, VOO, IVV or any other low-cost S&P 500 ETF.
With only $100, you won’t be able to buy a full share of the ETF, but you can buy a fraction of a share and still be invested!
ETF in a Specific Sector
Okay, maybe you have it in you to go a bit more risky, to get (potentially!) higher returns. Consider our second option – investing in an ETF in a specific industry.
An ETF is just a basket of stocks, investing in one allows you to invest in not a single company, but a group of companies. So let’s say you really believe in technology, you think technology will continue growing over the next few years, then you might consider investing in the tech ETF QQQ that holds companies like Apple, Microsoft, Amazon, Facebook, etc.
This way if any of these companies come out with an insane launch next week, next month or next year, your investment will go up. But it goes the other way too – if any of these companies have a scandal, your stock will go down. But the idea of an ETF is you’re holding more than one company, so your investment isn’t dependent on a single company’s launches or scandals.
There are ETFs for anything you can think of – clean energy, social media, weed, even dogs! Find an industry that you believe in and put your money where your mouth is! Maybe you’re a fan of the semiconductor industry, then consider SOXX – an ETF that holds semiconductor companies and keeps you well covered in the industry.
Again, with only $100, you probably won’t be able to buy a full share, but buy a fractional share, keep saving up and you’ll get to buying a full share in no time.
Invest in a Company You Believe in Long Term
This last option is by far the riskiest, because it involved investing in individual stocks. BUT it also will return (potentially!) the best returns on your money – it is investing in an individual company you believe in. That could be Apple, Microsoft, Amazon, Pinterest, literally any company that is publicly traded! Do you seriously believe in the future of dog products? Maybe you want to invest in Chewy.com.
Whatever company you decide to invest in, make sure to do a TON of research before placing the trade to make sure that the company is solid and has no chance of going bankrupt anytime soon (or ever!)
Depending on the stock price of the company, you may be able to buy a full share for $100 or less, or if you’re investing in something really expensive like Amazon, you’ll get a fraction of a share for now. But hey, that’s better than nothing!
Let us know which option you’re going to go with! As always, we’re here for you if you have ANY questions while investing your first $100 or any amount!
