How to Invest 100 Dollars

Investing can be complicated. There are many types of investments and just as many types of accounts that can be used for investing. It is even more difficult with a small amount like $100, which will not be enough to meet most investment minimums or minimum-account balances. However, there are options.

Investing $100

Step 1

Determine the purpose of your investment, including goals, risk tolerance and time frame. This will help you eliminate unsuitable investments. Research investment choices to determine where you want to invest your $100.

Step 2

Investigate account types and investment companies. Some companies offer nontraditional ways of purchasing investments. One such company is called ShareBuilder. It allows people to invest with no minimum in various stocks. However, they do charge a commission. A $4 commission is part of your investment, so keep that in mind. Another good way to invest in an individual stock is through a Direct Reinvestment Plan. Some companies allow you to purchase stock directly from them. Your dividends are then reinvested in more stock, which allows you to build up shares of stock over time. Not all companies have DRIP programs.

Step 3

Open an account. Generally, you cannot purchase investments from a regular banking account you already have. With a small amount, many brokerage firms will not open an account, so you'll need to find one with a low minimum balance if you want to go that route. Make sure there is no fee for a low balance on any account you open. Also make sure there is no annual fee. Your best best is probably an online financial institution. If you want to use a DRIP program, contact the company directly.

Step 4

Purchase your investment. Mutual funds are good, but most have a higher minimum than $100. There is a way around that. Many mutual funds offer lower limits (some as low as $50) for mutual funds purchased inside an IRA account. Of course, in an IRA account, you cannot withdraw money until you are 59 1/2 without penalty. If you are using a DRIP program, your money will be automatically invested in company stock.

Tip

You may wish to save your $100 in a regular bank account or CD until you have more money to invest.

Warning

Beware of fees and charges. Paying someone to invest $100 doesn't make much sense, even to get a better return. At $100 the difference between a 10% return and a 15% return is $5. Hardly worth it for even a $25 fee.

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