6 Best Ways to Invest 100 Dollars

Investing can change your life for the better. However, many people are wrong when they think that  there is no right place to invest their money if they do not have thousands of dollars. The good news  is that this is not the case. You can start investing $100 or less is you know the right ways to invest.  

The most important thing – and the way you can get the most value – is to get started, no matter how  big or small your investment dollars may be in the beginning. In this article, you’ll learn about six  great ways to invest a few hundred dollars. By placing your money in one or more of these  categories based on your short-term and long-term goals, you can begin to invest your path to long term financial freedom  

Best ways to Invest $100:  

Are you looking to put $100 to work? Following are 6 best ways to do that:  

1. Start an emergency fund  

If your first thought is to start by taking your $100 and buying stocks, cryptocurrencies, or other  investments that can double, or even increase your money 10 times, it is understandable. Because  the stock market has proven to be the easiest and most affordable way for people to build their  wealth over time. There are many ways to invest in cryptocurrencies and gain huge amounts of  money.  

However, stocks are also volatile. Their value can drop very sharply with little or no warning and  often without a clear reason. This is not a big deal if you can buy and hold, and if you have another  combination of investments where your winnings can get back some of the losses.  

But what if your investments can’t keep up with the crash and you have to sell because you need  money? A bit of bad luck and timing can mean that your $100 investment is now worth $80 or $50  or less. Therefore, starting to save is more important than choosing investments that can be  drowned.  

Imagine losing your job or suffering from an unexpected illness or accident that affected your  income for weeks or even months. Having several months of cash income can mean avoiding  unexpected life events that could ruin your financial plans. Interest rates on savings accounts are not  very high, but it is about protecting yourself- not achieving high yields.  

2. Use a micro-investing app or robo-advisor  

Once you deal with financial distress, you are in a better position to start investing. If you want a  fully automated approach that requires the least effort, then a robo-advisor may be exactly what you  are looking for. One of the best ways to invest is to invest in some kind of Robo-Advisors. Robo  Advisors use applications or websites to find out about your financial needs and then create an  investment strategy that will address them. They often use basic information such as age, family  size, income, and risk tolerance to tailor the portfolio according to your needs. Robo Advisors will  then process all the details of the investment, purchase, and sale selection and will inform you. 

You can also use a micro-investment application that allows investors to deposit small amounts of  money over time. For instance, a micro-investment application may allow you to make credit card  purchases in the nearest dollar and invest the difference while being able to deposit money if you  have extra money (such as $100).  

3. Invest in a stock index mutual fund or exchange-traded  fund  

Stocks are no doubt the most powerful wealth-creating tool an individual can buy. But, picking  winners can be tricky, and if you only invest $ 100 (or less) at a time, it may not be worth buying  individual stocks. In this case, Stock index funds are a good option.  

When you invest in a stock index fund, you buy a piece of each company that is held in that index.  In other words, if you invest $ 100 in the SPDR S&P 500 ETF Trust, you can own a small portion  of all the more than 500 companies listed in the S&P 500. You get instant diversification and  investment with a long history of making money for anyone who can stay ten years or more.  

It’s also easy. You invest your money in a stock index fund. You can choose from many different  stock indexes, from favorites such as the S&P 500 index to more specialized indices.  

ETF and mutual funds have some differences, including how they are traded, the minimum amount  of investment required, and expected fees. However, the basic idea of both is that you can invest in  the entire market or selected part through a single investment.  

Once you have a strong foundation with these funds, you can explore other investment  opportunities. However, the index fund can be everything you need to succeed in your investment.  

4. Use fractional shares to buy stocks  

Index funds make it easier to invest in stocks, however, choosing your own stocks is a great way to  get a better return. But, the combination of brokerage commissions and stock prices had held out  anyone who works with a small amount of money.  

This is no longer the case because most brokers no longer pay commissions and many large brokers  offer partial investments.  

What exactly is investing in fractional stocks? Basically, instead of placing an order to buy a certain  number of stocks, you tell your broker how many dollars you want to invest in the stock, and your  broker invests that amount in that stock for you. For instance, if you invest $ 100 in a stock that  sells for $ 500, your brokerage account will show that you have 0.2 stock in the company.  

Do you want to invest in index funds? Great News! Most brokers who invest in infractions will also  let you trade ETF shares.  

5. Put it in your 401(k)  

If you have a 401 (k) or other pension plan initiated by your company, funding it can be a very good  use of your investment dollars. This is especially good if you have not maxed out the corresponding  employer’s contribution. What is it? This means that most employers will agree on the portion of  money you will invest in your 401 (k). 

For instance: Let’s suppose your company pays 50% of your contributions, up to 3% of your salary.  If you earn $ 50,000 a year, your company will invest $ 750 in your 401 (k) for the first $ 1,500 –  3% of your salary – that you invest. That’s a 50% return on the $ 125 a month you invest.  

More benefits of investing in your 401 (k) include: low taxes, every dollar you contribute to your  401 (k) is considered a tax contribution, which means that you do not pay income tax on that dollar  in the year you contribute it to your account. Even better, your investment will grow tax-free until  you start to retire.  

If you don’t work for a company, you can open solo 401 (k), and benefit from pre-tax contributions  and untaxed growth.  

6. Open an IRA  

Is there another $ 100 you want to invest in retirement outside of your 401 (k) business? An  individual retirement account (IRA) is a good opportunity and can make even a small amount of  money big over time.  

Let’s suppose you’ve saved $ 100 a month in an IRA for 30 years. Based on the historical  performance of the S&P 500 index, the $ 36,000 invested will be worth about $ 180,000.  

Why IRA? In a word, taxes. With a traditional IRA, you get the same benefits as a 401 (k),  however, with a Roth IRA, you get the same untaxed growth as a traditional IRA. But instead of  reducing your income tax each year, you contribute; your pension payments are 100% tax-free.  

Be careful of this way to invest $100  

One fraud you need to be aware of is penny stocks. Penny stocks are usually low-priced small or  thin companies. While it seems fair that small businesses or stocks that trade only cents per share  (or less) have the highest earning potential, the truth is that the world of penny stocks is full of  fraudsters and pump-and-dump schemes.  

Basically, when you wonder that should you invest $ 100 in penny stocks, the answer is, “No.”  Don’t wait to invest  

If you are saving for a longer period of time, don’t wait any longer. Take your $ 100 and choose one  or more of these six ways to use them. You will be amazed at the difference this can make.