The Power of Starting Small – How $100 Can Be the Key to Your Financial Future
If you’ve ever dreamed of having your money work for you, investing is the way to make that happen. But here’s the catch: You don’t need a lot of money to get started. You don’t have to wait until you have thousands of dollars to invest. In fact, even with just $100, you can begin building wealth that will grow over time.
Starting to invest early can be one of the smartest financial moves you’ll ever make. Whether you’re a teenager with a part-time job or someone who has a small amount saved up, you can start making your money work for you right now.
In this post, we’re going to show you exactly how you can start investing with just $100—even as a teenager—and set yourself up for financial success in the future.
Why Investing Early is a Game-Changer
Before we dive into the specifics of how to invest, let’s understand why it’s so powerful to start early.
The earlier you start, the more time your investments have to grow. Thanks to the magic of compound interest, even small investments can snowball into huge sums over time.
Let’s say you start investing just $100 a month at the age of 16, and you invest that money in the stock market, which has historically returned around 7-10% annually (after inflation). If you continue this for 10 years and stop investing at 26, your $100/month could turn into more than $20,000 by the time you reach retirement age at 65, assuming the same annual returns.
Even with as little as $100 to start, time becomes your best friend.
Step 1: Open an Investment Account
To begin investing, you first need a place to put your money. This is where an investment account comes in. The good news is, there are many options available that make it easy for beginners—especially teenagers.
Here are a few options:
- Robo-Advisors: These are apps that manage your investments automatically, based on your preferences and goals. Examples include Betterment and Wealthfront. They typically charge a small fee (around 0.25% annually) for managing your money, and they offer diversified portfolios for a low starting investment.
- Stock Brokerage Accounts: If you prefer to pick your own investments, a brokerage account lets you buy and sell stocks, ETFs, or other assets. Many brokers today offer no commission trading, which means you can invest even with just a few dollars. Popular brokers include Robinhood, Fidelity, and Charles Schwab.
- High-Interest Savings Accounts or CDs: While these aren’t technically investments, they can be a good place to park your money as you learn the basics. You won’t earn as much as you would in the stock market, but they offer a safer way to grow your money over time.
Pro Tip: If you’re under 18, you may need a parent or guardian to help you set up an account. Some brokers, like Fidelity and Charles Schwab, allow teens to open custodial accounts with parental consent.
Step 2: Set Your Investment Goals
Before investing, it’s important to define your goals. Why are you investing? Are you saving for college, a future house, or retirement? Setting clear, specific goals will help you decide where to put your money.
Common goals include:
- Short-Term Goals: These might be for things like a new phone or a vacation. For short-term goals, it’s often safer to invest in something stable, like bonds or high-interest savings accounts, to protect your principal (the money you invested).
- Long-Term Goals: If you’re investing for retirement or a big future purchase, you can take more risks by investing in stocks or exchange-traded funds (ETFs). The stock market has higher returns over the long term, but it can also be volatile in the short term.
Step 3: Choose Your Investments
Now that you have your investment account and goals, it’s time to decide what to invest in. With just $100, it’s best to go for investments that are affordable, diversified, and have long-term growth potential.
Here are the top options:
1. Exchange-Traded Funds (ETFs)
ETFs are a great option for beginners. An ETF is a collection of stocks, bonds, or other assets grouped together in one investment. When you invest in an ETF, you’re buying a small piece of each asset within the fund, which helps diversify your investment and reduce risk.
For example, a S&P 500 ETF gives you exposure to 500 of the biggest companies in the U.S., including names like Apple, Microsoft, and Tesla. These funds typically have low fees, and with just $100, you can invest in dozens of companies without having to pick them yourself.
2. Stocks
While ETFs offer diversification, you can also buy individual stocks. Stocks tend to be riskier than ETFs, but they also offer higher returns. If you’re interested in a specific company that you believe will do well over time, consider buying their stock.
For example, if you believe Apple is going to continue growing, you can buy shares of Apple. With just $100, you can buy fractional shares of expensive stocks like Amazon or Google.
3. Robo-Advisors
If you prefer a more hands-off approach, robo-advisors like Betterment or Wealthfront can help you invest your $100 in a diversified portfolio based on your goals. These platforms take the guesswork out of investing by automatically selecting stocks, bonds, and ETFs for you.
4. Peer-to-Peer Lending
Platforms like LendingClub allow you to invest in loans to individuals or small businesses. You can earn interest by lending your $100 to others. However, be cautious, as these investments can be riskier than traditional stocks and bonds.
Step 4: Start Small and Stay Consistent
You don’t need to invest all $100 at once. Start with what you’re comfortable with. Maybe you invest $50 in an ETF and $50 in individual stocks. Or, if you prefer, you can invest the whole $100 into one option.
Remember, the key to long-term success is consistency. Even if you can only invest $10 or $20 a month, you’ll start to see your money grow over time. Automate your investments to ensure you invest regularly.
Step 5: Be Patient and Keep Learning
Investing is a long-term game. Don’t expect to make a fortune overnight. The stock market goes up and down, but historically, it has always gone up over the long run.
Patience is key. Stick to your plan, keep learning, and keep an eye on your investments. Don’t let short-term market fluctuations scare you away.
The Power of Starting Early
Starting to invest with just $100 is not only possible—it’s one of the best things you can do for your future. By opening an account, setting goals, and investing in diversified assets like ETFs, stocks, or robo-advisors, you can build your wealth steadily over time.
The beauty of investing is that it’s never too early to start. By beginning as a teenager, you’re giving yourself a head start that most people don’t get. Even small, consistent investments will pay off in the long run. As time passes, your $100 could turn into thousands of dollars—and even more—thanks to the power of compound interest.
Investing is one of the smartest ways to build wealth. The earlier you start, the better. So take the first step today and start growing your future—one small investment at a time.