Investing can alter your life for the amend. But many people mistakenly remember that unless they've got thousands of dollars lying around, at that place's no good place to put their coin. The adept news is that'southward only not the case. You can commencement investing with $100 or even less.

The most important thing -- and the fashion you can get those larger sums -- is to simply get started, no affair how large or modest your investment dollars are at the kickoff. In this article, you lot'll learn almost vi great means to invest a few hundred dollars. By putting your money in one or more than of these categories based on your brusque- and long-term goals, you can start investing your way toward long-term fiscal independence.

A young woman investor sits at a table and calculates her expenses

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Our 6 best ways to invest $100 starting today

You lot have $100, and you're looking to put information technology to piece of work. Here are our six all-time suggestions for what to do with it:

  1. Start an emergency fund.
  2. Use a micro-investing app or robo-advisor.
  3. Invest in a stock index common fund or exchange-traded fund.
  4. Employ partial shares to purchase stocks.
  5. Put it in your 401(k).
  6. Open an IRA.

Now permit's accept a look at each of these in more particular.

1. Start an emergency fund

It's understandable if your starting time thought was to start by taking your $100 and ownership stocks, cryptocurrencies, or some other investment that could double, triple, or even increment your money 10-fold. After all, the stock market place has proven itself to be the simplest and nearly attainable way for people to build their wealth over fourth dimension. Many cryptocurrencies have gained enormously in value over the past few years.

But those avails are also volatile. They tin can fall in value very sharply with little or no alarm and often without a clear reason why. That's not a big deal if you're able to buy and concur, and so long as you own a diversified mix of investments where your winners tin can make up for a few losers. Fourth dimension inthe market will aid you lot create wealth.

Simply what if you lot can't just hold those investments through a crash and have to sell because you need the money? A little bad luck and timing could mean your $100 investment is at present worth $80, or $50, or fifty-fifty less. That'due south why starting with coin in savings is farmore important than choosing investments that tin can be really volatile.

Imagine if y'all were to lose your job or endure an unexpected disease or blow that afflicted your income for weeks or even months. Having several months' worth of income available in cash can mean keeping life's unexpected events from dissentious your financial plans. Interest rates on savings accounts aren't very high, but this is almost protecting your downside -- not capturing high returns.

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

Once you have financial emergencies covered, you're in a much better position to kickoff investing. If you like a fully automated approach that requires as little effort equally possible, then a robo-advisor may be just what you're looking for. Robo-advisors use apps or websites to learn nearly your fiscal needs and and so come up up with an investing strategy to meet them. They'll oft use basic information such every bit age, family unit size, income, and run a risk tolerance to tailor a portfolio to your needs. Robo-advisors then handle all the details of selecting investments, making purchases and sales, and keeping you lot informed.

You could also use a micro-investing app, which allows investors to put small amounts of coin to work over fourth dimension. For example, a micro-investing app might allow yous to round upwards your credit bill of fare purchases to the nearest dollar and invest the departure while besides allowing y'all to eolith funds when you have actress money (like $100) to invest.

three. Invest in a stock alphabetize mutual fund or exchange-traded fund

Stocks are probably the most powerful wealth-building tool that the average person can buy. However, it can exist really hard to pick the winners, and, if you lot're simply investing $100 (or fifty-fifty less) at a time, it might not exist worth the fourth dimension and effort to choose private stocks. This is where stock alphabetize funds come in.

When you invest in a stock index fund, you buy a slice of every company that's held in that index. In other words, if you invest $100 in the SPDR Due south&P 500 ETF Trust (NYSEMKT:SPY), yous'll own a tiny portion of all 500-plus companies that are in the Due south&P 500 Index. You become instant diversification and an investment with a long history of making money for anyone who can agree for a decade or longer.

It's also simple to do. You lot but put your money into a stock index mutual fund or a depression-cost exchange-traded fund. Yous can choose from a wide variety of stock indexes, ranging from popular ones such as the S&P 500 Index to more specialized indexes.

There are some differences betwixt ETFs and mutual funds, including how you buy and sell shares, what minimum investments use, and what fees y'all can await to pay. Only the general thought backside both ETFs and mutual funds is that you tin invest in the whole market place or in selected parts of information technology through a single investment.

One time you've built up a solid foundation in these index-tracking funds, you can co-operative out and explore other investing options. But an alphabetize fund might well be all yous'll e'er really demand in order to succeed with your investing. Interested in an alphabetize fund that costs more than $100? The next topic applies to ETFs, too!

4. Use partial shares to buy stocks

Index funds make stock investing easy, but picking your own stocks is a great style to earn even improve returns. All the same, until recently, the combination of brokerage commissions and stock prices kept anyone working with smaller sums of coin on the outside looking in.

That's not the example anymore since most brokers no longer charge commissions, and several major brokerages offer fractional share investing.

Then what exactly is partial share investing? In short, instead of putting in an lodge for a number of shares to purchase, you tell your broker how manydollarsyou want to invest in a stock, and your broker will invest that corporeality of money in that stock for you. For example, if yous invested $100 in a stock that traded for $500, your brokerage account would prove that you owned 0.ii shares of that visitor.

Looking to invest in index funds? Good news! Most brokers who offering fractional investing for stocks will also let you buy fractional shares of ETFs besides.

v. Put it in your 401(k)

If you accept a 401(k) or some other employer-sponsored retirement plan, funding it could be an excellent apply of your investment dollars. That'due south especially true if yous oasis't maxed out your employer'southward matching contributions. What'due south that? It means that almost employers volition match some of the coin you put in your 401(k).

Here'southward an instance: Allow'southward say your employer matches fifty% of your contributions, up to 3% of your pay. If you earn $50,000 per year, your employer will put $750 in your 401(m) for the first $1,500 -- 3% of your pay -- that you invest. That's a fifty% gain on that $125 per month yous invested.

There's even more to like about investing in your 401(k): lower taxes. Every dollar y'all contribute to your 401(grand) is considered a pre-tax contribution, meaning you won't pay income tax on that dollar the year you contributed it to your account. Meliorate yet, your investments will grow taxation-free until you first taking distributions in retirement.

Don't have an employer, or have a side-hustle or contract gig? Guess what? You tin can open a solo 401(m). You lot won't go the free money from an employer, but yous tin still take advantage of those pre-tax contributions and revenue enhancement-gratis growth.

six. Open an IRA

Have an extra $100 you want to invest for retirement above and beyond your company 401(k)? An individual retirement account (IRA) is a great way to go and tin can plow even small sums of money into a big nest egg over time.

Allow's say that y'all stash $100 a calendar month in an IRA for xxx years. Based on the S&P 500's historical performance, the $36,000 you lot invested would exist worth nearly $180,000. That's the ability of compounding gains over fourth dimension.

Why an IRA? In a word,taxes. With a traditional IRA, you gain like benefits as with a 401(k), reducing income taxes past cut your taxable income each year you contribute while as well growing your nest egg taxation-free until you start taking distributions in retirement.

With a Roth IRA, you get the same tax-gratuitous growth as with a traditional IRA. But instead of getting to lower your taxable income each year you brand contributions, distributions in retirement are 100% revenue enhancement-free.

I waynonto invest $100

I trap to be aware of is investing in penny stocks. Penny stocks are typically low-priced stocks of smaller or thinly traded companies. While it may seem logical that tiny companies or stocks that trade for just pennies per share (or even less) have the highest return potential, the reality is that the earth of penny stocks is full of fraudulent companies and pump-and-dump schemes (think The Wolf of Wall Street).

In brusk, if yous're asking how to best invest $100 in penny stocks, the respond is, "Don't."

Don't wait to invest

If yous've been holding off with your investing, don't wait any longer. Accept your $100 and pick ane -- or more -- of these six means to put information technology to work. You'll exist surprised at what a difference information technology volition make in the long run.