How to Start Investing With Just $100
You do not need $10,000 to start investing. Here is exactly how to begin with whatever you have right now.
Step 1: Open a Roth IRA at Fidelity, Schwab, or Vanguard (free, 10 minutes, $0 minimum). Step 2: Connect your bank account. Step 3: Buy a total stock market index fund — VTI (Vanguard), FXAIX (Fidelity), or SWTSX (Schwab). Minimum investment: $1. Step 4: Set up automatic monthly investment of whatever you can afford. Done.
Why Index Funds
An index fund owns hundreds or thousands of stocks in a single purchase. You are instantly diversified. The expense ratio is 0.03-0.10% (nearly free). Over 90% of professional fund managers fail to beat the index over 15 years. By buying the index, you beat most professionals while paying a fraction of their fees. Warren Buffett recommends exactly this strategy for non-professional investors.
The Power of Starting Small
$100/month at 10% average annual return: $20,500 after 10 years. $76,500 after 20 years. $227,000 after 30 years. You contribute $36,000 total. Compound growth adds $191,000. The amount does not matter as much as starting. Time in the market beats timing the market every time.