Is $100 Too Little to Invest?

Is $100 Good to Start Investing? Although starting with more would obviously be better, $100 is a good start to an investment account. One of the best ways to invest $100 is to put it into an ETF or index fund. These funds track the stocks of many companies at once, providing more diversification than individual stocks.

Is $100 Too Little to Invest?

At one time, it would have been very difficult to begin investing with just $100. Between minimum account balances, commissions and requirements to invest in full shares, investors 10 or 20 years ago would have found it virtually impossible to invest with such a small sum.

Fortunately, the stock market has become vastly more accessible over the last decade. One of the biggest developments has been commission-free trading, a model most commonly associated with the online brokerage Robinhood.

Commission-free trading reduces trading costs for investors by allowing brokerages to make money from interest, payment for order flow and other methods. While not truly free, this model does make it much easier for investors working with very small sums to get started in the stock market.

Another helpful development in this area has been the widespread adoption of fractional shares. These are small pieces of individual stocks that investors can buy and sell in amounts as small as $1. With fractional shares, investors can buy into companies whose whole shares would otherwise be too expensive for them.

How Much Will I Have If I Invest $100 a Month for 20 Years?

Thanks to the power of compounding interest, even small amounts of money deposited over long periods of time can turn into fairly large sums. The final amount, however, will depend heavily on the interest rate you can earn on your investment.

Investing $100 monthly at 10 percent over 20 years would give you about $69,400. At 7 percent, that number drops to $49,580.

To project the outcomes of different deposit amounts and interest rates, you can use the free compounding interest calculator provided by the United States Securities and Exchange Commission.

How Much Should I Invest as a Beginner?

Because different investors have different financial situations, it’s usually best to use rules based on income instead of strict dollar amounts to determine how much you should invest.

One of the most popular guidelines for investing is the 50-30-20 rule. This rule suggests that you should spend 50 percent of your income on essential needs, 30 percent on wants and 20 percent on savings, investments and debt repayments.

For example, a debt-free person bringing home $3,000 per month would save or invest $600 monthly. If that person’s monthly post-tax income rose to $5,000, the amount dedicated to investing would also rise to $800.

Even if your income isn’t large enough to invest much, it’s a good idea to get in the habit of adding funds to your investment account on a regular basis. As your earning power grows, this habit will help you work up to larger and larger contributions.

What If I Invest $20 a Week?

Investing $20 per week works out to a monthly investment of about $87. Assuming your investment returns 10 percent annually, you would have around $60,380 after 20 years.

If you’re investing for a longer period of time, however, you could see a much larger final number. At 30 years, for instance, you would have about $173,250.

If you began investing this much when you were 20 years old and continued until you were 65, you would end up with a final balance of over $750,000.

How Can I Turn $100 Into $1,000

As we have already seen, small investments that are allowed to grow over time can multiply many times over. If you invested $100, earned 10 percent and made no additional investments, you would reach $1,000 about 25 years later.

When it comes to turning $100 into $1,000, however, the best and fastest approach is to simply continue adding to your investment account.

If you start with $100 and continue adding $100 monthly, you’ll have invested well over $1,000 by the end of your first year. This approach will get you to the goal of $1,000 quickly and set you up to build long-term wealth by getting you in the habit of adding to your investments regularly.

How to Turn $100 into $1 Million

Unlike turning $100 into $1,000, you can’t achieve the goal of $1 million by making a one-time investment. Instead, you will need to make regular contributions to your investment account over several decades.

It may surprise you to learn, however, that those contributions don’t need to be particularly large if you start early enough and remain consistent. Returning to the example of investing $100 at 10 percent interest, you would get to $1 million in your 47th year of investing.

With that said, you will get to your first $1 million much sooner if you increase your contributions as your income grows. A person investing $500 a month, for instance, would reach $1 million after just 31 years. At $800, that time horizon shrinks to 26 years.

As you can see, $100 isn’t all you need to invest successfully. It is, however, a good first step that can put you on the right track for building wealth over the course of your lifetime. By starting small and working up, you can gradually grow your investment portfolio through the power of time and compounding interest.

The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.