Let’s say you’re curious about investing but have never done it before. You don’t want to throw all your money into a world you don’t quite understand, but without getting your feet wet, there’s no way you’ll be able to learn the ropes. But that shouldn’t scare you, because, for as low as 100 dollars, you can start investing today and see significant returns over time. Here are a few ways how:
1. Retirement Fund
While $100 bucks might sound like small potatoes, you can begin your retirement savings today with jut that tiny amount. While certain criteria must be met as per the rules of whatever financial institution you’re looking to set up your account through, the easiest way to start saving for your retirement is through a plan that is offered up by your employer, typically, some sort of 401(k) with the company matching back a certain percentage amount, thus compiling your savings even faster. This is usually contributed to right out of your paycheck, and require no much management after initially setting the parameters of the account up.
But if your employer doesn’t have this kind of plan, or if you’re self-employed or looking for additional accounts, you can also look into the following:
a.) A Traditional IRA, which is when you defer the taxes on your income by putting it into an account where it can grow, and won’t have to pay taxes on it until you go to take the money out, at which point it should have grown enough to cover it. If you’re under the age of 50, you can put away up to $6,000 into a Traditional IRA each year.
b.) A Roth IRA, which differs from a Traditional IRA insomuch as you will pay the taxes on the money before you put them into the account, meaning that when you withdraw from a Roth, you will not be paying any more taxes on that money. The same as with a Traditional IRA account, folks under 50 can put away up to 6,000 dollars yearly.
c.) SEP IRAs, or Simplified Employee Pension IRAs are geared for people who operate their own business and are often able to be deducted from your taxes at the end of the year. Additionally, you are permitted to put away more money than in the other IRA options, up to 56,000 dollars annually.
Maybe retirement is just too far away, and you have more immediate needs for your savings; paying off a mortgage or purchasing a new vehicle, let’s say. With just 100 dollars, you can invest in the short-term and get a return in less than three years. While not as lucrative as retirement savings, you will be able to get your money sooner for those big purchases or emergency needs.
A few short-term investments worth looking into are the following:
a.) Government bonds are an excellent place to start, as they have a fixed return rate and can be cashed out after a set amount of time as determined by the terms of the bond
b.) Short term bonds function quite the same way as government bonds too, except these are purchased through corporate entities instead of the government. Terms also vary per bond.
c.) CDs have a fixed interest rate too and are backed up by the government with a set date, functioning similarly to a bond as well.
3. Passive Investment with an App
Have you heard of the term robo-advisor? It’s a website or an app that does all the work for you, and you can start investing with some of them with 100 dollars, or even less. They are as the name implies, completely automated, using different types of equations and algorithms to figure out the best place to put the money to get the outcome you desire.
Different robo-advisor programs have different minimum balances required, and also they charge different fees for their service, but some go as low as 5 dollars to start with, or even less.
With the various options these days, you can start your investment journey with basically just pocket change. Investing is no longer the purview of men in business suits. It’s something you can do from the comfort of your home, with very little capital to get the ball rolling.