There’s a common misconception that you need a significant sum of money to invest successfully. Fortunately, this simply isn’t true. With as little as $100, you can start growing your money when you put it in the right place.
1. Invest in a Certificate of Deposit
A certificate of deposit (CD) is a simple investment with a very low risk factor. CDs come with different terms which determine how long your money will be tied up. These investments also offer varying interest rates, which indicate how much you’ll earn on the CD while you’re holding it. Compare interest rates carefully, so you understand what you’ll make on this investment. The APR (annual percentage rate) is the annual rate for the CD while the APY (annual percentage yield) tells you what you’ll earn over several years if you hold the CD for a longer period of time.
You can’t get your cash out of most CDs, so you should only use this option if you’re confident that you don’t need the money until the specified time is up. Keep in mind, however, that this choice isn’t as risky as other quicker options, where you can potentially lose it all.
2. Purchase Dividend Stocks
Dividend stocks are a great choice if you’re interested in investing your $100 in stock trading. Dividend stocks yield steady payments in the form of dividends paid out by the company. You can reinvest these in additional stock opportunities, or take the dividends for another purpose, such as paying off debt or building a healthier emergency fund.
Companies that offer dividends are typically well-established and financially healthy, making them a great pick for beginning stock investors. These are usually a lower-risk option than other stocks which may have high volatility.
3. Trade Exchange Traded Funds
If you’re limited to just $100 for your investment, you typically can’t get into mutual funds. Exchange traded funds (ETFs) are a more accessible alternative. An ETF is a basket of securities with multiple holdings. You will pay a trading fee for buying or selling ETFs, but there aren’t any annual maintenance fees to worry about. ETFs trade like common stock. Compared to mutual funds, they have a higher daily volume, giving you a wealth of opportunities to explore in this area.
4. Invest in Index Funds
An index fund is an appealing choice for your $100 because it offers several stocks in one well-rounded package. You don’t have to worry about making individual stock purchases, so you can enjoy a strong investment portfolio with minimal effort. One of the most common options for index funds is the S&P 500, but this isn’t your only choice, so you can explore this area to find an index fund that suits your needs.
If you have an extra $100 that you can afford to invest, there are several options available to you. Select one of these approaches and see how quickly you can grow that $100 into something more. With so many choices, you can easily find an investment that’s suited to you.