How to Invest $100 in Stocks & More (And Is $100 Enough?) | The Motley Fool (2024)

Investing can change your life for the better. But many people mistakenly think that unless they have thousands of dollars lying around, there's no good place to put their money. The good news is that's simply not the case. You can start investing with $100 or even less.

How to Invest $100 in Stocks & More (And Is $100 Enough?) | The Motley Fool (1)

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The most important thing -- and the way to reach those larger sums -- is just to get started, no matter how large or small your investment dollars are at the beginning. In this article, you'll learn six great ways to invest a few hundred dollars. By putting your money in one or more of these categories based on your short- and long-term goals, you can start investing your way toward long-term financial independence.

Getting started

Our six best ways to invest $100 starting today

You have $100 and are looking to put it to work. Here are our six best suggestions for how to do that:

  1. Start an emergency fund.
  2. Use a micro-investing app or robo-advisor.
  3. Invest in a stock index mutual fund or exchange-traded fund (ETF).
  4. Buy stocks in fractional shares.
  5. Put it in your 401(k).
  6. Open an individual retirement account (IRA).

Now, let's take a look at each of these in more detail.

1. Emergency fund

1. Start an emergency fund

It's understandable if your first thought was to start by taking your $100 and buying stocks, cryptocurrencies, or some other investment that could double, triple, or even increase your money tenfold. After all, the stock market has proven to be the simplest and most accessible way for people to build wealth over time.

Many cryptocurrencies have gained enormously in value over the past few years. But those assets are also volatile. They can fall very sharply in value with little or no warning and often without a clear reason. That's not a big deal if you're able to buy and hold and you own a diversified mix of investments where your winners can make up for a few losers. Time inthe market will help you create wealth.

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A buy-and-hold strategy in investing entails buying stocks or other securities and not selling them for long periods of time, sometimes decades.

But what if you can't just hold those investments through a crash and must sell because you need the money? A little bad luck and timing could mean your $100 investment is now worth $80 or $50 or even less. That's why starting with money in savings is farmore important than choosing investments that can be volatile.

Imagine if you were to lose your job or suffer an unexpected illness or accident that affected your income for weeks or even months. Having enough cash to cover your expenses for those weeks or months when you can't earn an income could keep life's unexpected events from damaging your financial plans.

Interest rates on savings accounts have also improved greatly in the past couple of years, meaning you can actually generate some modest returns. Just remember: The main goal of savings is not to create wealth but to protect yourself and your future wealth.

2. Simplify

2. Use a micro-investing app or robo-advisor

Once you have financial emergencies covered, you're in a much better position to start investing. If you like a fully automated approach that requires as little effort as possible, a robo-advisor may be just the ticket.

Robo-advisors use apps or websites to learn about your financial needs and then develop an investing strategy to meet them. They'll often use basic information, such as age, family size, income, and risk tolerance, to tailor a portfolio to your needs. Robo-advisors then handle all the details of selecting investments, making purchases and sales, and keeping you informed.

You could also use a micro-investing app, which allows investors to put small amounts of money to work over time. For example, a micro-investing app might allow you to round up your credit card purchases to the nearest dollar and invest the difference while also allowing you to deposit funds when you have extra money (like $100) to invest.

3. Invest in index funds

3. Invest in a stock index mutual fund or exchange-traded fund

Stocks are probably the most powerful wealth-building tool the average person can buy. However, it can be really hard to pick the winners, and if you're only investing $100 (or even less) at a time, it might not be worth the time and effort to choose individual stocks. This is where stock index funds come in.

When you invest in a stock index fund, you buy a piece of every company held in that index. In other words, if you invest $100 in the SPDR S&P 500 ETF Trust(SPY 0.76%), you'll own a tiny portion of all 500 companies in the . You get instant diversification and an investment with a long history of making money for anyone who can hold for a decade or longer.

How to Invest $100 in Stocks & More (And Is $100 Enough?) | The Motley Fool (2)

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It's also simple to do. You just put your money into a stock index mutual fund or a low-cost exchange-traded fund. You can choose from a wide variety of stock indexes, ranging from popular ones, such as the S&P 500 Index, to more specialized indexes.

There are some differences between ETFs and mutual funds, including how you buy and sell shares, the minimum investments, and the fees you can expect to pay. But the general idea behind both ETFs and mutual funds is that you can invest in the whole market or in selected parts of it through a single investment.

Once you've built a solid foundation of the best index-tracking funds, you can branch out and explore other investing options. But an index fund might well be all you'll ever really need to succeed with your investing. Interested in an index fund that costs more than $100? The next topic applies to ETFs, too.

4. Fractional shares

4. Use fractional shares to buy stocks

Index funds make stock investing easy, but picking your own stocks is a great way to earn even better returns. But until recently, the combination of brokerage commissions and stock prices kept anyone working with smaller sums of money on the outside looking in.

That's not the case anymore. Most brokers nowadays no longer charge commissions, and several major brokerages offer fractional share investing.

So, what exactly is fractional share investing? In short, instead of placing an order for a number of shares to buy, you tell your broker how manydollarsyou want to invest in a stock. For example, if you invested $100 in a stock that traded for $500, your brokerage account would show that you owned 0.2 shares of that company.

Looking to invest in index funds? Good news! Most brokers who offer fractional investing for stocks will also let you buy fractional shares of ETFs.

5. Invest in your 401(k)

5. Put it in your 401(k)

If you have a 401(k) or other employer-sponsored retirement plan, funding it could be an excellent use of your investment dollars. That's especially true if you haven't maxed out your employer's matching contributions. What's that? It means most employers will match some of the money you put into your 401(k).

Here's an example: Let's say your employer matches 50% of your contributions up to 3% of your pay. If you earn $50,000 per year, your employer will put $750 into your 401(k) for the first $1,500 -- 3% of your pay -- that you invest. That's a 50% gain on that $125 per month you invested.

There's even more to like about investing in your 401(k): lower taxes. Every dollar you contribute to your 401(k) is considered a pre-tax contribution, meaning you won't pay income tax on that dollar for the year you contributed it to your account. Better yet, your investments will grow tax-free until you start taking distributions in retirement.

Don't have an employer? Or do you work a side hustle or contract gig? Guess what? You can open a solo 401(k). You won't get the free money from an employer, but you can still take advantage of those pre-tax contributions and tax-free growth.

6. Open an IRA

6. Open an IRA

Have an extra $100 you want to invest for retirement above and beyond your company 401(k)? An individual retirement account (IRA) is a great way to go and can turn even small sums of money into a big nest egg over time.

Let's say you stash $100 a month in an IRA for 30 years. Based on the S&P 500's historical performance, the $36,000 you invest would be worth almost $180,000. That's the power of compounding gains over time.

Why an IRA? In a word,taxes. With a traditional IRA, you gain similar benefits as with a 401(k), reducing income taxes by cutting your taxable income each year you contribute while also growing your nest egg tax-free until you start taking distributions in retirement.

A Roth IRA gives you the same tax-free growth as a traditional IRA. But instead of getting to lower your taxable income each year you make contributions, distributions in retirement are 100% tax-free.

How to Invest $100 in Stocks & More (And Is $100 Enough?) | The Motley Fool (3)

Best IRA accounts for April 2024

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What to avoid

One waynotto invest $100

One trap to be aware of is investing in penny stocks. Penny stocks are typically low-priced stocks of smaller or thinly traded companies.

While it may seem logical that tiny companies or stocks trading for just pennies per share (or even less) have the highest return potential, the reality is that the world of penny stocks is full of fraudulent companies and pump-and-dump schemes (think The Wolf of Wall Street). In short, if you're asking how best to invest $100 in penny stocks, the answer is, "Don't."

Related investing topics

How to Invest $1,000Four figures can produce some great returns if invested in the right places.
How to Invest in Index Funds in 2024Index funds track a particular index and can be a good way to invest. Get a fast introduction to index funds here.
How to Research StocksGood research can help investors find the best companies to invest in.
Accounts That Earn Compounding InterestInterest compounds when interest payments also earn interest. Learn how to get compounding interest working for your portfolio.

Don't wait to invest

If you've been holding off on investing, don't wait any longer. Take your $100 and pick one -- or more -- of these six ways to put it to work. You'll be surprised at the difference it will make in the long run.

FAQs

How to invest $100 FAQs

How can I double my $100?

In a word, time. The S&P 500 (a popular index that's a good proxy for the stock market) has generated an average of 9.5% in compounded annual returns since 1929. That includes multiple major global wars, recessions, and a global pandemic.

Based on that math, a $100 investment in a broad-market index fund should double in value in about eight years. So, using the compounding power of time, your $100 would become:

  • $200 in eight years
  • $400 in 16 years
  • $800 in 24 years

Make that $100 every month or week, and you can see how the math gets favorable.

How can I invest as little as $100?

The past several years have seen a lot of barriers to investing broken down. If you want to invest but only have $100 or even less, almost every online brokerage will be happy to take you as a customer. Do some research to find the best online broker for your needs.

How much money do I need to invest to make $100 a month?

That depends on a few factors. If you're looking for dividend income, you'd need to have enough capital to invest in dividend stocks with a yield high enough to generate that much income.

For example, as of Nov. 27, 2023, the S&P 500 generated a 1.62% yield (meaning $1.62 per year in dividends) for every $100 you invested today. So, it would take $74,064 invested in an S&P 500 index fund at recent prices to generate $100 per month in dividend income. Long term, you'd also see your investment gain in value, and the companies increase their dividends, growing your income payout.

You can also invest in a group of higher-yield dividend stocks, such as those held in the Vanguard Real Estate ETF (NYSEMKT:VNQ). With a yield of 4.5% at recent prices, a $26,664 investment would yield $100 in annual income and the same potential for capital and dividend growth over the long term.

Savings and money market funds are back on the menu for yield now. With many online banks offering yields of 4% and many money markets yielding over 5% recently, between $24,000 and $30,000 in savings or a money market would yield $100 per month at recent interest rates.

And while these amounts are safer in the near term and less volatile, interest rates -- which affect the future yield you earn -- may not be going up and could actually fall in coming years. You also don't get any capital appreciation from cash-based holdings, while the stocks of good companies become more valuable over time.

Jason Hall has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

How to Invest $100 in Stocks & More (And Is $100 Enough?) | The Motley Fool (2024)

FAQs

How to Invest $100 in Stocks & More (And Is $100 Enough?) | The Motley Fool? ›

In fact, you can become an investor with $100 or less. Many "everyday people" start small and, over time, watch the return on their investments grow. This is especially important with the inflation increase we've seen recently.

How to turn $100 into $1,000 in a day? ›

How To Invest $100 To Make $1000 a Day in 20 Ways
  1. Invest in real estate.
  2. Gather your savings in a high-yield savings account.
  3. Invest in the stock market.
  4. Start a blog.
  5. Use robo advisors.
  6. Invest in cryptocurrency.
  7. Start an e-commerce business.
  8. Start a dropshipping business.
Apr 1, 2024

Is $100 dollars enough to invest? ›

In fact, you can become an investor with $100 or less. Many "everyday people" start small and, over time, watch the return on their investments grow. This is especially important with the inflation increase we've seen recently.

How to wisely invest $100? ›

What are some low-risk ways to invest $100?
  1. High-yield savings accounts. Compared to traditional savings accounts, these accounts offer higher interest rates, which can help your money grow faster.
  2. Certificates of deposit (CDs). ...
  3. Treasury bonds.
Jan 10, 2024

What stock to buy with $100? ›

Alibaba Group Holding Limited (NYSE:BABA), Walmart Inc. (NYSE:WMT), Uber Technologies, Inc. (NYSE:UBER), and Micron Technology, Inc. (NASDAQ:MU) are some top stocks under $100.

How can I flip $1000 dollars fast? ›

  1. How to invest $1,000 to make money fast.
  2. Play the stock market.
  3. Invest in a money-making course.
  4. Trade commodities.
  5. Trade cryptocurrencies.
  6. Use peer-to-peer lending.
  7. Trade options.
  8. Flip real estate contracts.

How to double my $1,000 dollars? ›

One of the easiest ways to double $1,000 is to invest it in a 401(k) and get the employer match. For example, if your employer matches your contributions dollar for dollar, you'll get a $1,000 match on your $1,000 contribution.

What happens if you save $100 dollars a month for 40 years? ›

Your Retirement Savings If You Save $100 a Month in a 401(k)

If you're age 25 and have 40 years to save until retirement, depositing $100 a month into a savings account earning the current average U.S. interest rate of 0.42% APY would get you to just $52,367 in retirement savings — not great.

How much will $100 a month be worth in 30 years? ›

Investing $100 per month, with an average return rate of 10%, will yield $200,000 after 30 years. Due to compound interest, your investment will yield $535,000 after 40 years. These numbers can grow exponentially with an extra $100. If you make a monthly investment of $200, your 30-year yield will be close to $400,000.

How to make $100 a day? ›

In conclusion, making an extra $100 a day is possible with some effort and creativity. You can start a blog, do freelance writing, complete online surveys, sell products online, drive for Uber or Lyft, rent out your home or space, sell photos online, or become a virtual assistant.

How to make $100 double? ›

For a safer approach, consider depositing your $100 into a high-yield savings account or a certificate of deposit (CD). These financial products typically offer higher interest rates than regular savings accounts. While it may take some time to double your money using this method, it's a low-risk option.

Is investing $100 in stocks worth it? ›

Investing your $100 can be pivotal in generating passive income, preparing for financial uncertainties, and achieving long-term goals. The magic of compound interest implies that even modest sums can snowball over time.

What penny stocks to buy today? ›

Penny Stocks To Buy Today
Company NameLTP% Change
DIL8.45-0.59
Kanani Industries4.250.00
Dynamic Cables Ltd407.551.93
Hilton Metal Forging123.550.24
1 more row

What stocks make you the most money fast? ›

Alongside Microsoft Corporation (NASDAQ:MSFT), NVIDIA Corporation (NASDAQ:NVDA), and Apple Inc. (NASDAQ:AAPL), Adobe Inc. (NASDAQ:ADBE) is one of the best money making stocks to invest in. In its Q3 2023 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Adobe Inc.

What stock gives the most money? ›

20 high-dividend stocks
CompanyDividend Yield
Franklin BSP Realty Trust Inc.11.57%
Pennymac Mortgage Investment Trust11.26%
Altria Group Inc.9.59%
Washington Trust Bancorp, Inc.9.12%
17 more rows

What are the 10 best stocks to buy right now? ›

The 10 most undervalued stocks from our Best Companies to Own list as of March 27, 2024, were:
  • British American Tobacco BTI.
  • Imperial Brands IMBBY.
  • Reckitt Benckiser Group RBGLY.
  • Pfizer PFE.
  • Anheuser-Busch InBev BUD.
  • Polaris PII.
  • Ambev ABEV.
  • Estee Lauder EL.
Mar 28, 2024

Can you turn $100 dollars into $1,000? ›

“First, you need to understand that turning $100 into $1,000 requires a whopping 1,000% return,” said Omer Reiner, a licensed realtor and president of Florida Cash Home Buyers. “Even some of the world's most successful companies still take years to return 1,000%. However, that doesn't mean that it's not possible.

How can you make $1,000 dollars a day? ›

Jobs that pay $1,000 a day
  1. Sales representative. ...
  2. Blogger. ...
  3. Digital marketing specialist. ...
  4. Freelance writer. ...
  5. Business development executive. ...
  6. Freelance designer. ...
  7. Petroleum engineer. ...
  8. Sales executive.
Aug 15, 2022

How to make $1,000 dollars fast in a day? ›

Here are the ten most effective strategies to make $1,000 in 24 hours and increase your income:
  1. Sell Your Stuff.
  2. Freelance.
  3. Get a Side Hustle or Part-Time Job.
  4. Start a Blog.
  5. Start an E-Commerce Store.
  6. Invest in Real Estate.
  7. Set up Passive Income Streams.
  8. Make Money Online.
Sep 5, 2023

How to invest $100 dollars to make $1,000? ›

Let's dive right in.
  1. Invest in Rental Homes. Thanks to modern technology and fractional share investing, you can now invest in rental real estate for as little as $100. ...
  2. Invest in Local Businesses. ...
  3. Invest in Real Estate Investment Trusts. ...
  4. Micro-Invest. ...
  5. Invest in Crypto. ...
  6. Build a Blog. ...
  7. Buy Quality Books. ...
  8. Invest in Relationships.

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