How to start investing with just 100$



This amount is clearly not enough to retire on, but the point is to illustrate that by doing nothing at all your money can get to work and grow for you over the long-term if invested. Which is why investing is such a powerful tool to help you reach your financial goals and enable you to save enough to support your lifestyle and needs in retirement.

How Does Investing work?

You understand the benefits of investing, but how exactly it works can be summarized like this. Investing is simply putting your money to work for you. Here are the core types of investments any new investor should be familiar with:

When you invest in stocks, you are taking a bet on capitalism for lack of a more eloquent definition. You essentially become part owner of the companies in which you own stock. You invest in companies over the long-term. As a company grows and becomes more profitable, so do you because the stock price rises and profits may also be distributed in the form of dividends.

When you invest in bonds, you are also investing in a company or government, but you are more specifically lending them money, in which they pay you back eventually in the form of principal plus interest. These are considered safer investments and will yield a lower return rate than stocks.

When you invest in mutual funds or exchange traded funds (ETFs) you are investing in a group of both stocks and/or bonds. By owning a share of a mutual fund or ETF you are owning a piece of all of the stocks and bonds that are held in that fund, allowing you to be more diversified than owning a single stock or bond. This is generally less risky than buying just one stock or bond.

Getting Started in Investing: What’s First?

For most people just starting out with minimal assets to invest, there is a lot you can do on your own with the help of technology and online tools. Robo-advisors are automated, algorithm-based online wealth management services that provide portfolio management based on your responses to a simple risk tolerance questionnaire. They use the same software as financial advisors, but they only focus on portfolio management and don’t offer holistic financial planning services that account of other aspects of your financial life.


Read more: How to Start Investing With Just $100

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