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Investments Start At $100: Is That For Real?

Summary

Even if your budget is tight at the moment, there are opportunities to start investing.

You can gain some extra income you need to start your own business or just to secure yourself with a backup for a rainy day.

In the beginning, it may seem difficult, yet later on, you will get a reward.

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Most start-uppers tend to wait until they have saved up several thousand dollars before sneaking into the mysterious world of investment. And that is the greatest mistake! You can start with as little as $100, and the sooner you get going, the faster you will reap the fruits. For instance, if you'd invested $100 in Amazon stock in 2000, it could have brought about $1,000 today. And what if you'd invested $100 every month since that time? You would have gained over $20,000 now. Here's what you have to consider to get started in order to move towards prosperity and your own business.

1. Types of investments

Let’s look at the three main types of investments:

  • Lending Investments. Lending investments let you be the bank in some way. This could include bonds and savings accounts. A bond is a set income investment where an investor loans funds to a corporate or governmental entity that borrows assets for a fixed period of time at a variable or defined interest rate. A savings account is a deposit account offered by a bank that provides a low-interest rate. In general, lending investments pose a lower risk and ensure lower return than ownership investments.

  • Ownership investments. This is the most profitable type of investments. The examples of ownership investments are stocks, business, real estate, precious objects, etc.

  • Cash Equivalents. The goal of the money market fund is to offer investors a secure place to invest accessible cash-equivalent funds. It is a kind of low-risk and highly-liquid mutual fund with tax-advantaged gains.

2. Where to invest

At the very beginning, you can open for yourself an investment account and a brokerage firm. No need to worry! Brokers are just like banks with the only exception that they stay focused on holding investments. Considering the fact that you are ready to invest from $50 to $100 from the start, you will obviously prefer to open an account with small or even zero funds and low fees. There are apps that you can start to invest for free, like:

Fidelity is an app that provides a range of ‘zero commission’ Exchange Traded Funds (ETFs). It allows most investors to create a well-balanced portfolio. Fidelity’s Individual Retirement Accounts also set no minimum to open and do not charge any account maintenance fees.

  • TD Ameritrade. This app ensures over one hundred free ETFs from such giants as iShares, Vanguard and more. As it offers a wide range of no-load ETF funds, TD Ameritrade attracts people who want to consider tax losses reaping the benefits independently.

  • Robinhood. This is the only application that allows you to purchase and sell stocks without any fees. With the help of Robinhood, investors can buy and sell their stock’s market value.

  • Vanguard is a well-known low price investment service supplier that continues to work for a low-fee index fund method of investment since the very beginning of its activity. Vanguard doesn’t set an account minimum and does not require a minimum purchase sum, except the price of 1 share.

  • M1 Finance. One of the most popular brokerage to get going without any hidden commissions that let you invest in any sum you want and that is for free!

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3. Account diversity

The next step is to open your own investment account. There is a wide range of investment accounts and you should choose yours based on the reason you actually get into investing. If you are going to invest on a long-term basis, it would be reasonable to stay focused on retirement accounts. If you prefer to invest in the short run, you should give your preference to taxable accounts.

4. Start-up funds

Your next task is to choose what to invest in. Initial $100 will turn into a lucrative revenue only if you act thoughtfully. To set off, you'd better invest in low-cost index-focused ETF. It may sound daunting but in practice, ETF is just a so-called basket of stocks that follow an index. It makes much sense for investors just getting started as ETF is the lowest cost place to invest in the broad-scale stock market.

5. Online mates

If you still doubt what to invest in, it can be rather helpful to use online portfolio management services like Wealthfront, Wealthsimple, Betterment, Ellevest, etc. These online robot-advisors compile data from investors about their financial position and future objectives via online research and use this information to provide advice or even automatically invest clients’ funds.

6. Alternative solutions

Still at crossroads? Here are some alternatives that can let you put your money to work for you such as:

  • Certificates of deposit. Another way to cooperate with stocks is investing in a certificate of deposit that allows to loan funds to a bank, and then they will pay you interest on your loan.

  • Saving accounts. These accounts earn interests and can be considered as your future investment; however, the idea isn’t to save your assets here for all eternity but to increase your savings until you can get more profitable investments. Savings accounts are just super safe! Anyway, you can't lose your assets in savings accounts and can earn up to 1.75% interest. You may open a saving account with such banks as Chase bank or CIT bank.

  • Peer-to-peer lending. One more alternative is becoming a peer-to-peer lender on a site like Prosper. In this case, you lend your funds to others and they repay you with a certain interest.

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7. Business promotion

Investing funds monthly gives you a great opportunity to save a substantial amount of money and promote your business in order to build a large audience and succeed. How can you start a thriving business? Rational promotional activity is a key to success for each startup as it is a really effective way for creating a widening interest around your products or services. Well, your target market is the first thing you have to take into account to develop an effective strategy. The next step would then be to streamline your website for search engines to ensure the appropriate traffic flow. And also try to minimize sale pressure on your website to make better interaction with your potential customers. Well, the business promotion might be a little bit complicated at first sight, as there are plenty of online resources that give you a chance to open an account for a tough price. Fortunately, today there are multiple platforms that let small businesses flourish:

  • Yelp. The service assists people to find local businesses like doctors, mechanics, hair stylists, etc. Every business owner can open an account without any fees and promote a certain product or service.

  • Hirerush.com. The platform provides an opportunity for local-based service professionals in each of the 50 states to create an inviting account and receive more requests from their customers. There is also an option of a business website with a unique layout. It's great for those who cannot afford or do not want to get in trouble of creating their own website individually.

  • Yellowpages. This company provides assistance for local enterprises to increase their customer bases and incomes. Users of this service have free and paid options for having their listings on the site.

  • Google My Business. It is a cost-free service that is synchronized with other Google services that ensures better search engine ranking, allows you to leave a review and add geolocation to your business venue.

Bottom line

Even if you are on a tight budget, there is a countless number of ways to start investing via online and app-based platforms that are called upon to facilitate it. You can always gain some extra income to start your own business or just to be sure you have a backup for a rainy day. It seems difficult at first, yet it will reward you later on. Once you get your first money from investment, you'll be grateful to yourself for the right decision.