Investing for Beginners: Start With $100 and These 3 Steps
You do not need thousands to start investing. Here is the simplest possible plan that actually works.
Step 1: Open a Roth IRA at Fidelity, Schwab, or Vanguard (free, takes 10 minutes). Step 2: Set up automatic monthly investment of whatever you can afford — $50, $100, $500. Step 3: Buy a single total stock market index fund (VTI, FXAIX, or SWTSX). Done. That is the entire plan.
Why This Works
A total stock market index fund owns thousands of companies. You are diversified from day one. The expense ratio is 0.03-0.10% (almost free). It has returned approximately 10% annually over the last 100 years. You are not picking stocks, timing the market, or paying advisor fees. You are buying the entire market and holding it.
The Power of Starting Small
$100/month at 10% annual return: $76,000 after 20 years. $207,000 after 30 years. $584,000 after 40 years. You contribute $48,000 total over 40 years. Compound growth adds $536,000. Starting with any amount is infinitely better than waiting until you can afford more.