When you start investing at an early age, it can benefit you in a great way at a later stage. You will be more thankful for your younger self. However, only a handful of people embrace an investment strategy at a young age. The main reason why most people don’t invest from a young age is that they wait for a long time to start making the big bucks.
It is true. Not everyone can afford to invest thousands of dollars when they are getting started, but that doesn’t mean one should give up the idea of investing.
The truth is that you don’t need much to start investing. Even if you can manage to save just $100 a month, you can get started with investing. Yes, you heard that right, a $100. Don’t believe that? Well, here we share with you 6 tips on investing for beginners, which require only $100 or less to get started.
But, before we get into them here are some things you should contemplate when making any investment decisions.
Related article: 5 Ways to Build Wealth and Retire Early
Things To Consider When Creating an Investment Strategy
- Risk factor – Always make sure if you would be able to stand the risk factor involved in the investment.
- Investment period – Investment period refers to the total period of investments. Only consider investments with a duration that suits your condition.
- ROI – Return on investment refers to the after-tax income the investor gains after deducting the cost of investment.
- Inflation rate and volatility – Inflation rate and volatility refer to the continuous rise and fall of the market prices. Beginners should only consider investments with low volatility.
Now, let’s get started with some simple investment strategies suitable for beginners.
1. Get started with Acorns
Can’t afford to invest anything more than your spare change? There is a great investment strategy available for you. Acorns is a spare change savings tool that auto-invests your spending. What happens here is that you spend money with your Acorns debit card and the spare changes are automatically invested by professionals.
It’s not something that’s going to make you rich overnight, but this is an easy, less commitment-requiring investment strategy available for you to start. The automatic roundups at Acorns are quite straightforward to understand as well. You can also earn bonus investments when you shop from 12,000+ brands included in the Acorn app.
The personal plan with Acorn starts from just $3 per month. You can gain a lot more benefits when you sign up.
2. Invest in fractional stocks
Investing in stocks is one of the most popular investments in the market right. However, many people are apprehensive about getting into the stock markets considering the risks involved. Also, the share prices of some popular brands are through the roof, and ordinary people cannot even buy one share.
The good news is there are fractional stocks available in the market. Fractional stocks can easily be bought for $100 or less. As the name implies, these are fractions of various popular brands you might already know. If the price of a share is what keeps you away from the stock market, you can try fractional shares anytime.
When you invest through your Roth IRA, you can also get tax exemption and use this for your retirement planning. One thing to note here is that you would need to keep proper monitoring of every fluctuation and price change, or else you may end up with a loss.
3. Open a Roth IRA
Another great option is a Roth IRA, which lets you invest your after-tax or taxed dollars till your initial retirement. From there onwards, the invested money can grow tax-free. Once you’ve reached your retirement age (59 and a half years), these funds can be withdrawn without paying any income tax.
This method has proven to be successful for those looking for long-term investment. While Roth IRA by itself is a great investment strategy, you can maximize the benefits even further by making additional investments through Roth IRA.
For instance, if you buy a stock through your Roth IRA, you can watch it grow over time without worrying about tax. All you have to do is wait till you are 59 and a half years of age to withdraw. This is a great investment strategy for retirement planning.
If you are not sure about managing your Roth IRA portfolio yourself, you can use a Robo advising service to optimize your investments. With this, you can identify the expense ratio of every fund and choose the lowest cost option for great allocation. To know more, click the link below.
4. Open a high-yield savings
High-yield savings is not exactly an investment strategy. Even if not as an investment, you should still consider saving your money in a high-yield savings account. A high-yield savings account provides interest rates many times as a traditional savings account, which makes a big difference.
Aside from that, there also aren’t any additional costs like monthly fees, parking charges, etc. Overall, a high-yield savings account is a great option for anyone with little money who wants to get started in the world of investing.
There are solutions that offer you 0.50% APY to park your money in their banks. You can opt for a service like CIT Bank to gain high-interest earnings on your bank savings.
5. Invest in cryptocurrency
Although investing in cryptocurrency involves a good amount of risk, it’s a growing industry and is bound to get adopted widely in the coming decades. Therefore, investing in it at an early stage can turn out to be profitable.
Many well-known platforms allow you to invest in different cryptocurrencies. After purchasing crypto assets, you can also trade or sell them whenever you’re in profit. There’s no minimum when investing in cryptocurrency so you can get started with $20, $10, or even $5.
If you are not sure about buying crypto at this stage, you can mine your own currency with the help of a simple mining platform. For a one-time investment of $699, you can mine any crypto asset of your choice.
6. Invest in mutual funds
Mutual funds investment is one of the safest investments that can be made right now, and you don’t need a huge amount to get started. Just $100 a month or so will help you build a huge portfolio over time.
In a mutual fund system, professional investors invest your money on your behalf in stocks, bonds, etc. and you gain profits. Getting started with it is quite simple as well. You can even choose funds based on your risk profile.
If you wish to avoid risk, you can go with safe investment choices like treasure bonds or government bonds. High-risk investments, on the other hand, will get you high rewards. So, choose an investment strategy based on your risk profile.
Invest and build wealth
What we have covered here is just the tip of the iceberg. However, these tips on investing will get you started in the best way possible. When you search on your own, you’ll find many more different ways of investing $100.
A $100, although not a big amount, can easily get you started in the world of investing. So, get started with any of these investing strategies now to make your first step towards greater financial independence.
Don’t forget to download our FREE personal finance toolkit that can help you identify the best tools you can use to manage your wealth!