A lot of people don’t get started investing because they think that you need to have a lot of money in order to start. This is a flawed approach and is a little bit like waiting until you’re in good shape to start going to the gym. Investing money isn’t something that you should wait until you’re wealthy to start doing. Rather, becoming wealthy is usually the result of investing your money.
So how much money do you need to actually start trading? Let’s take a look.
As little as $5
Many investing sites, such as Robinhood, will advertise that you can get started with as little as $5. Considering this, $100 would be plenty of money to get started investing. However, since some stocks like Amazon and Google can cost thousands of dollars, you might be wondering how this is possible.
There are a few answers to this:
- Fractional shares – This is a new feature for many investing sites that allows you to buy a fraction of a share of stock. For example, if Google stock costs $2,700 and you only have $100, you could still buy 3.7% of a share of stock
- Penny stocks – Amazon and Google are two of the most valuable companies in the world. However, there are plenty of stocks that are much cheaper. Just because a stock doesn’t cost as much, it doesn’t mean that they’re not a good company. For example, Shopify stock cost as little as $24 in 2016. In 2021, it’s up over 6,000% to about $1,500. In 2017, Square’s stock cost as little as $15. In 2021, it’s up over 1,700% to about $275. There are even stocks that cost under $1, which is where the phrase “penny stocks” comes from.
- No commissions – Most brokerages have completely gotten rid of commissions for trading which makes it much more accessible. If you only had $100 to start investing and had to pay $15 every time you placed a trade then you’re going to run out of cash quickly. However, this isn’t the case anymore.
Want to learn about finance but don’t know where to start?
Strategies for getting started
There are a few strategies that you can use to get started investing and the right strategy for you will depend on your long-term financial goals.
Here are a few common strategies based on popular financial goals.
- “I want to retire comfortably” – Open a Roth IRA or similar retirement account and make consistent contributions to it.
- “I just want my savings to grow” – Open a brokerage account and buy index funds that track the overall return of the market. This way your money will be invested safely and you won’t get penalized for withdrawing your money at any point.
- “I want to be rich” – Consider getting into trading stocks and making a profit every day. If you want to pursue this strategy then you can even incorporate stock options, which can maximize your returns.
We hope that you’ve found this article valuable when it comes to learning whether or not you can start trading with $100. If you are interested in learning more, please subscribe below to get alerted of new articles as we write them.