Investing in the stock market may seem intimidating to some people, but it’s really really easy to get started – even if you don’t have thousands of dollars and your own broker to build a portfolio. You can start for just $ 100 or less and watch your portfolio grow from there. Here are three great ways to get started.
1. Open an online brokerage account
There is currently a huge influx of new investors into the markets as the brokerage firm Charles Schwab detailed in a recent survey. The survey, released in April, said 15% of all current investors just started investing in 2020 during the pandemic.
There are probably several reasons for this, but one of them is the ease of investment provided by online platforms, like Schwab and Robinhood, to name a few, which do not have of fees or minimum to start. So you can open an account in a matter of minutes and get started by investing as little as you want: $ 20, $ 50, $ 100 or whatever. You can invest in a few stocks, add more positions and funds, trade, and hopefully watch your portfolio grow, all from one app.
2. Invest in big companies for little money
Even if you only have $ 100 to invest, that doesn’t mean you have to pick up a flyer to buy only penny stocks and hope for luck. Chances of finding the next one Amazon or Apple are not in your favor. But you can access these types of businesses for just $ 100 in a number of ways.
You can invest in exchange-traded funds, or ETFs, which are baskets of stocks that track an index and trade like a stock. For example, you could invest $ 100 in an ETF that tracks S&P 500 and invest in the 500 largest companies on the planet. The S&P 500 has averaged an annual return of around 10% since its inception in 1926, so you’re going to see that capital appreciate over time.
There are thousands of ETFs, which track hundreds of different indices, many of which are customized by the fund company. So if you want to invest in technology, for example, you can invest that money in an ETF that tracks the Nasdaq 100.
Investors can do the same with fractional shares, a new type of investment that has started to take hold over the past two years. By investing in fractional stocks, you can invest in a portion of a stock for as little as $ 1. So while Apple, for example, costs over $ 140 for a stock, you can invest in a fraction of that stock’s price through this method. It allows you to build a diversified portfolio of large cap stocks that you wouldn’t be able to invest in otherwise.
3. Contribute to your 401 (k)
If you have a 401 (k) plan, this is probably the easiest way to put your investment money to work. Funding for your plan, of course, comes from your paycheck and usually includes an employer contribution, but you can add additional contributions in any amount you choose. For example, you could contribute an additional $ 100 per month to the plan, and that money would be used for investments in your plan, which are typically a selection of mutual funds.
When you invest in a 401 (k), you can contribute as much or as little as you want. You can set up your account to invest a fixed amount weekly, monthly, or by paycheck, or whenever you want.
It doesn’t take much to get started as an investor, and by using these three ideas, you can do it for little money. These strategies will also help you invest that money wisely. The earlier you start investing, the more time that money has to work for you, so the initial $ 100, if you start early enough, can get a lot bigger.
Consider this: $ 100 invested now, adding $ 100 per month, with an annual return of 10%, would grow to $ 133,000 in 25 years. It’s a beautiful piece of change.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.