Most people think you need a large amount of money to start a portfolio. Sure, it is nice to have more money to play around with and invest, but you don’t need that much to get a good portfolio started. As a matter of fact, you can start a portfolio with $100. Do I have your attention?
Here is what you need to do to properly invest, and take that $100 and turn it into a portfolio.
Turn $100 Into a Portfolio
Open a Brokerage Account
You don’t want to be paying $5 or more per trade, otherwise you will just eat into your profits. The point is to turn your investments into more money, so find a good low-cost online broker. Be sure you are aware of any hidden fees, so you know exactly where all your money is going.
Fund Your Account
It is time to take that $100 and send it to your broker. You can do this a few different ways:
- Wire Transfer
- ACH Transfer
I recommend ACH transfer, which is a lot like an electronic check. A regular check will take a few weeks to process, and a wire transfer is too costly for investing such a small amount.
Take Your Money and Make Your First Investment
Here is where you really need to do your homework. What you choose to invest in is very important, especially with such a small amount of money. Professional advice would cost more than the initial investment, so it isn’t worth it. Just take some extra time to do your own research, and see what all is out there to invest in.
Studies have shown that the best returns come from a portfolio that is widely diverse. Sure, building a diversified portfolio will be tough with only $100 (that won’t even get you close to one share of Google), but if you take your time and make the right moves, you should be able to diversify eventually with your returns.
One of the best ways to diversify with a small amount of money is to invest in Exchange Traded Funds (ETFs). This type of investment makes it easier to invest a smaller amount of money into a wider variety of securities, because you are investing in shares that are part of a larger pool of securities.
Starting a portfolio with $100 is very doable. Do some homework, take your initial investment of $100 and invest it wisely, set aside a certain amount of money each month to invest, and watch your returns build up and your portfolio become more diverse and stronger.