Is Investing in the Financial Market Only for Those with a Lot of Money?
No, actually, the scenario has changed significantly, and anyone, regardless of their financial situation, can start investing.
A clear example of this is the concept of “low-cost investing,” which allows any investor to start building their portfolio with just $100.
Here are some tips for investing with a limited budget in 2025.
What is low-cost investing?
Low-cost investing refers to the practice of investing in financial instruments that have reduced costs.
The goal of cutting costs involves eliminating brokerage fees, fund management fees, and transaction commissions.
The central idea is to minimize the expenses associated with investments so that a larger portion of your money is allocated to the investment itself rather than being consumed by fees.
How to Invest with $100
The amount doesn’t have to be an obstacle but rather an opportunity to learn how to enter the financial market.
Here are some low-cost investment options you can explore as you begin your journey:
1. ETFs (Exchange-Traded Funds)
One of the most accessible options for beginner investors is ETFs, which are funds that can be bought and sold like stocks on the stock exchange.
However, instead of investing in a single stock, the investor chooses a diversified set of assets.
With a relatively low amount, you can purchase a fraction of an ETF, which reduces risk and provides immediate diversification.
2. Low-Cost Mutual Funds
Another interesting option for beginners is to invest in low-cost mutual funds. These funds pool money from several investors to purchase assets, usually with low management fees, like those offered by Vanguard.
Mutual funds can be an excellent choice for beginners, as they offer an easy way to diversify investments, even with a small budget.
3. Low-Cost Stocks
Buying individual stocks can be intimidating for a beginner investor, especially with the high price of stocks from companies like Amazon or Tesla.
Nowadays, many brokers offer fractional stock purchases. For example, if a share of Apple costs $150, you can invest only $50 and buy a fraction of that stock.
This type of investment is an excellent way to start building a stock portfolio with a small budget.
4. Robo-Advisors
If you don’t have the time or desire to select your investments individually, robo-advisors are an excellent option.
Platforms like Betterment and Wealthfront offer automated advisory services that create diversified portfolios based on your risk profile.
These robo-advisors charge very low fees compared to traditional financial advisors, making them a great option for beginner investors.
Tips for Investing with $100
First of all, this is a small amount, so don’t expect massive gains, but instead see it as an opportunity to take the first step and get started. Here are some other important tips:
Start with Diversification
Although it may be difficult with a small amount, try to diversify your investments, especially in ETFs, mutual funds, and other sources that spread your money across various assets.
Consider the Long Term
Low-cost investing generally benefits from a long-term strategy. When starting with $100, keep in mind that the best results come with patience.
Don’t expect immediate profits; instead, focus on gradual growth over the years.
Avoid Transaction Fees
Although brokerage fees have decreased significantly, it’s important to choose platforms that don’t charge excessive fees.
If you pay high transaction fees, a significant portion of your profits will be eaten up by these expenses.
Automated Investments
If possible, set up automatic contributions to your portfolio.
By investing regularly, even in small amounts, you will be harnessing the power of consistent investing and the effects of compound interest over time.
Is It Worth Starting to Invest with a Small Amount?
Investing with just $100 in the United States is more accessible than ever, thanks to the growth of the low-cost investing market.
With various options like ETFs, mutual funds, fractional shares, and robo-advisors, you can start building a diversified portfolio without needing large sums of money.
The key to success in low-cost investing is discipline, a focus on the long term, and choosing platforms with reduced costs.