The BORING but BEST Way to Start Investing With $100

Nick Sciple: So, you’ve got
an extra hundred dollars laying around. You’ve built up an emergency fund and can
provide for all your basic needs today. So now, it’s time to invest for the future. While very few people are going to retire
off a $100 investment, investing is a journey. As the ancient Chinese proverb says, a journey
of a thousand miles begins with a single step. You’ve already taken
your very first step — saving $100. Savings are the fuel that
feeds your investing engine. Make a savings plan to make sure you’ll be
able to continuously invest month after month and year after year. You can even set up your bank account to automatically
put aside a set amount every week or month to help. Next, you need to
sign up for a brokerage account. When choosing a brokerage,
be mindful of commissions and fees. While being aware of fees is important for
all investors, it’s even more important for an investor buying $100 at a time.
Many brokers will ask for $7 or $8 per transaction. If you have to pay an $8 commission every
time you buy and sell an investment, you’ll be 8% in the hole right off the bat, and 16%
in the hole if you have to take into account the commissions you’ll have
to pay when you sell the investment. As a result, you’ll probably want to sign
up with a discount brokerage, particularly ones that offer free trades. Once you’ve chosen a brokerage,
it’s time to make your first investment. Now, with that first $100, you could go out
and look for stocks that trade for less than $100 a share;
but we wouldn’t advise doing that. If you were to do that, the value of your
whole portfolio would depend on the results of one company. For just about every investor, an index
fund or ETF is the perfect first purchase. These investment vehicles allow instant diversification
because they represent an ownership interest in all the stocks in the
index that the fund tracks. So, instead of owning just one company, you own
a teeny piece of hundreds or thousands of companies. Further, these funds charge very low fees,
so you get to keep as much of your returns as possible. Even if you don’t get free trades at your
brokerage, many brokerages also allow unlimited free trades of
select index funds and ETFs. As for which ETFs to buy, if you can think of an
investing idea or theme, there’s probably an ETF for it. There are tech-centric ones, dividend-focused
ones, ones that own small companies and ones that own big companies. For new folks, we recommend starting out with
an ETF that mirrors the S&P 500, such as Vanguard’s S&P 500 ETF VOO or the
SPDR S&P 500 ETF Trust, SPY. These ETFs represent ownership in the S&P
500 index, composed of 500 of the largest U.S. companies. Now, astute investors may have looked at these
tickers and realized, “Wait a minute, shares these ETFs cost more than $100.
What am I supposed to do then?” Circling back to the point from the beginning
of the video — investing is a long-term thing. The best thing you can do with $100 now is
create a low-fee or commission-free brokerage account, put the money in it, and then put
yourself in a position to add more money to that account over time. Once you have enough saved, you can begin
buying shares of quality, low-fee ETFs. It may sound unsatisfying, but taking the
long view instead of just immediately buying shares of whatever stock happens to cost less
than $100 will put you in a far better position 10, 20, and 30 years from now. Even after you’ve bought that
first ETF, remember, this is not the end. This is the beginning — the beginning of
an investing journey that will last a lifetime and hopefully make you smarter,
happier, and richer. Thanks for watching! If you have any thoughts on the topic,
or have any future topics you’d like to request, drop a comment for us below. If you’re looking for some help with investing,
we’ve got a free starter kit over at It covers everything from money-saving tips
to buying your first stock, and it comes with a five-stock sampler
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