How to Start Investing With Less Than $100 and ZERO Overwhelm

Want to start investing in stocks, but not sure where to start? This is something all beginner investors struggle with.

Entering an unknown world can be intimidating, but just like walking, talking and writing, everything in life is and can be learnt.

Many beginning investors put off investing in the stock market because they simply don’t know where to start. It can be scary, stressful and totally overwhelming. This is very common so you shouldn’t feel alone.

Even though it may feel that way now, it will likely be one of the best financial decisions you can make for yourself.

By investing, you are putting your money to work for you instead of continuing to rely on exchanging your time for money. That means you’re making money even in your sleep.

It can help ensure you don’t work for the rest of your life to make ends meet. That you don’t have to postpone your retirement. That you have more money to do the things you love. And with compounding interest, the sooner you start the more you make!

If you’re looking for more reasons why investing might very well be the best financial decision you’ll ever make and why you need to stop delaying it, check out:

While you may not know how to start investing now, that will all change after you read this post. The reality is that it doesn’t take much to get started.

Disclosure: This is general advice, and you should seek help from your own professional as situations can vary. Please note this post contains affiliate links. Please read my affiliate disclaimer for more information.

 

How to start investing for beginners

 

1. Save

Setting money aside is the number 1 thing you need to do.

How much you put aside is entirely up to you and yes, the more the better. But don’t let that discourage you.

The key is to start saving right now!

No matter how much or how little. You could be saving $1 a day and that would be a huge improvement from $0.

There is no minimum amount to start investing these days so don’t let that stop you!

Let’s be real, saving can be tough. Between you and I, my bank balance still sometimes catches me by surprise.

Personally, I don’t think budgets aren’t for everyone. The human brain simply was not made to be able to consistently account for and neatly categorize hundreds of transactions.

If that sounds familiar, I’m about to rock your world.

Acorns is an app that rounds up all your purchases and invests the spare change for you.

EVERYTHING is automatic.

That means no worrying about budgets, no worrying about savings and no worrying about investing.

It’s a game changer!

Click HERE to effortlessly start saving and investing with Acorns.

 

2. Choose the right broker

Much like you buy a car at a car dealership, stocks are bought through brokers.

Now that you’ve started to save money (even if just $1 a day), you need a broker.

Here are the main types of brokerage firms you need to know about:

  • Discount broker – for DIY online investing (the upside being lower fees)
  • Full-service broker – provides an investment plan based on your personal needs and goals including periodic reviews (the downside is it costs more)

Personally, I like the freedom to invest in what I want, to be able to control my money and not feel pressured by someone else’s opinion. So I prefer a discount DIY broker.

I’m also of the opinion that full-service brokers may or may not have my best interest at heart.

It’s important to know that brokers earn a commission for each transaction. That means they have an incentive to tell you to sell/buy even if it may not be the best decision for your money.

If you sign up for a full-service broker, you should be skeptical if the broker is constantly advising you to trade stocks (instead of holding on to them) You should also know that each time you sell a stock, any gains become taxable.

Here is a list of brokers I’ve tried or have heard great things about

FYI: none of the bullets below contain affiliate links. I wanted to give you the very best advice even if it meant forgoing my commission. I recommend these companies over the ones I could have received a commission on because I love and trust them.

  • Robinhood – this is the new kid on the block that’s shaking things up for the old school brokers. It’s a free trading app for stocks, options, ETFs and cryptocurrency. The best part is there are no commissions or fees and no minimum investment. The app is really easy to use and only takes a few minutes to set up. Where Robinhood falls short is it does not support mutual funds or bonds and has more limited investment options than some of its competitors.

 

  • Fidelity Investments – this one is known for its mutual funds but it doesn’t come short on any of its other investments. While the commission is more than with Robinhood, the cost is reasonably set at $4.95 per transaction. As with Robinhood, there is no minimum investment required. Fidelity is best for retirement investors and has amazing research tools. As far as falling short, I personally use Fidelity and there isn’t much I don’t like about it. Of course, I would like to see free transactions (instead of $4.95) but the tools and support are so great that I don’t mind paying it.

 

  • TD Ameritrade – with no minimum investment and exceptional free features (such as research and data, investor educations and support, portfolio building guidance and an awesome trading simulator), it’s no wonder TD Ameritrade has kept its reputation for so long. It’s a great platform for a beginning investor with tons of investing options but each stock trade will cost you $6.95.

 

3. Contribute to retirement accounts

If your employer has a retirement plan, then you definitely want to look into contributing to the plan.

A number of employers offer to match contributions. That means each time you contribute they do too.

It’s pretty much free money and could really help boost your investment size.

Before you get too excited about your employer’s retirement plan policy, be sure to read up on the 401(k) and why it may not be a good fit for you.

Most brokers offer Individual Retirement Accounts (IRAs). It’s basically a tax-free account. While the money you deposit into it is still taxed, any money you make on your investments is NOT taxable.

That’s roughly 25% more money in your pocket on everything you make. The caveat is that when you take it out of the IRA, it becomes taxable.

But, as long as you keep that money where it is, you won’t owe the IRS anything.

 

4. Establish financial goals and risk tolerance

If you want to succeed, it is crucial that you invest based on your own goals and not based on what others say or do.

No one, and I mean no one, knows with absolute certainty what will happen with an investment. At the end of the day, everyone is simply expressing their opinions.

Beyond the fact that they could be completely wrong, their investment goals may be totally different from yours.

Figuring out what your goals are and what you should invest in might just be one of the most challenging parts of getting started.

Basically, your goals are what will help you decide where to put your money.

At the core of your goals lies your risk tolerance which is directly related to how much your willing to lose and how much time you have to watch your investments mature.

The general rule of thumb is the more time you have to more risk you can take (and vice versa).

If you’re in your 20’s you can take plenty of risk because even if you fall flat on your face, you have more than enough time to recover and ride out the highs and lows of the market.

But time isn’t the only factor to consider. Maybe you need money to get married or maybe you’re trying to buy a house. You need to factor in major financial events in your life and how soon you expect them to take place.

If you’re going to need cash to buy that dream home, then it is not advisable you put that money in a risky investment. Yes, the gains could be incredible but it may not be worth losing it all.

 

5. Choose from different types of investments based on goals & risk tolerance

How do you decide between stocks, bonds, funds, and other investment options? How are they even different from each other?

Here’s a breakdown of different kinds of investments and what they mean. The decision to chose one over another should be aligned with your financial goals and risk tolerance.

1. Stocks

When you buy a stock, you buy a portion of a company. This is the only investment in which you actually own something.

Much like owning a piece of land, it’s yours and when the value of that company goes up, so does your investment. Unlike land, companies are living organizations that have one goal and one goal only: grow and make money.

While most of us assume land will always increase in value, there isn’t as much working in your favor as with stocks and it’s a bit more of a gamble.

If you haven’t guessed it yet, stocks are your biggest money making opportunity. The key to success is picking the right companies because if you don’t the results can be devastating.

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Check out my FREE 10 Ingredient Recipe to successfully trading stocks HERE. It’s a great starting place for regular people (with ZERO experience) to get the confidence to pick winning stocks and avoid losing their money.

2. Index Funds

If you think of the stock market as made up of hundreds of thousands of companies, an index is a portion of the market.

Let’s put it into perspective with a more relatable example.

Say you want to start wearing lipstick so you go to your local beauty store. You don’t usually wear lipstick and you’re not sure what shade to pick. You decide to buy a lipstick pack of 5 which includes multiple shades.

Think of the lipstick as the market (it includes a ton of different shades). One specific lipstick shade is like the stock of a company listed on the market. The 5 pack you bought is the index fund.

It doesn’t include all the lipstick shades that exist but it does have several shades in it. That variety pack gives you diversity. If one of the shades in there sucks you still have 4 other shades to fall back on.

An index fund can be thought to work in the same way. If one stock tanks, the impact on your overall portfolio is minimal. In other words, it’s a great diversification tool to minimize your chances of losing money.

3. Bonds

Much like a bank giving out a loan or mortgage, a bond is you (the buyer) lending money to a company or government. You are essentially the bank and in return, they will pay you back your loaned amount in increments with interest.

Bonds are known to be less risky but unfortunately, less risk translates to fewer returns.

As a general tip, I would avoid bonds of low quality. These are often called junk bonds.

Basically, it would be like the bank giving out a mortgage to someone who doesn’t have a job, has bad credit and is already in debt. While the bank jacks up the interest rate for those kinds of individuals, they also take the risk of never seeing their money again.

The same goes for you investing in low-quality bonds which are essentially companies that are financially unstable and may never pay you back.

4. Mutual Funds

A mutual fund is a mix of investments managed by a company. When you invest, you don’t choose specific stocks or other securities; the mutual fund does it for you.

Basically, they have different baskets of investments already created and offer you one of their premade baskets.

It’s like buying a pre-made salad. It’s certainly easier but the dressing could be awful and you don’t have much of a say as to what goes into it. You just take it as it is; which is convenient.

Because mutual funds contain a number of different kinds of investments (stocks, bonds, etc) they are regarded as being less risky than individual stocks.

The downside of mutual funds is that you have ZERO control over what you’re investing in. You’re basically hoping that they’re putting your money to good use. Also, mutual funds usually require an initial deposit of $1,000 or more.

5. Exchange-Traded Funds (ETFs)

ETFs are similar to a mutual fund but often have lower minimum investment requirements and fewer expenses. You can buy an ETF for the price of a single share through a broker (compared to $1,000+ mutual fund minimums).

Another advantage of an ETF over a mutual fund is that you only incur taxes when you sell the fund whereas with a mutual fund, taxes are incurred as the shares within the fund are traded.

In other words, there are tax benefits for ETF you don’t get with mutual funds.

10 Ingredient Recipe successful investing

6. Monitor your investments

The next step is to regularly track your investments. This is important because you may eventually have to change what you’ve invested in, put more money towards your investments, and so on.

Now, the key here is to not go crazy. You don’t want to check your investments every hour of the day. It won’t help you and small changes in the stock market most likely won’t matter.

One great platform I use to track my money and investments is Personal Capital.

It is a FREE service that allows you to sync all your financial accounts into one location. That means, budgeting, 401(k) analyzer, display of upcoming bills, asset allocation target, investment portfolio tracker and many more.

It’s like Mint but better. Click here to set up your FREE Personal Capital account.

Track your money, investment and net worth with Personal Capital

To protect my privacy, this image is not my Personal Capital account – it was provided by Personal Capital.

 

7. Surround yourself with the right people

One thing I’ve learned is that you’re only as good as the people you surround yourself with.

You need to find mentors and friends that are excited about the same things as you like investing and personal finance. Find people that actually want to talk about money instead of making it taboo.

Believe it or not, there are plenty of them out there (The Making Coins Count private Facebook group is a great place to start).

I’ve met a lot of wealthy people in life and through my work, and the common denominator is that they are just as picky about the people they associate with as they are with their investment decisions.

 

8. Rinse and repeat

Learning how to start investing is the first step, but investing is a process you continue over a lifetime. You refine your skill and keep growing your wealth more and more profitably.

But, now that you know what steps you need to take to get started, it will only get easier from here!

Here are a few recommendations for you:

  • Continue adding funds – the more you contribute, the more money your money will grow
  • Be patient – investing can sometimes take people through emotional rollercoasters but don’t let that get to you. Fluctuations are a normal part of the game. In the long run, you’re not going to lose because the stock market has historically never lost money over a 10-year period. As long as you’re investing money that can stay in the market for longer periods of time, it will ride out recessions and grow over time.

 

Final Words

In investing, you’ll learn that not all the things will go your way. You may find yourself making mistakes that will cost you money.

Those mistakes are part of the learning curve and will help you improve so you can become a better investor.

When it comes to investing, always make sure that you know the risks and rewards and that you keep in mind your ultimate goal.

It’s easy to get sucked into the commotion that goes on in the marketplace but it’s always in your best interest to be rationale so as not to lose your perspective.

What questions do you have when it comes to how to start investing for beginners?

Investing is possibly the best financial decision you can make. Unfortunately, it can be scary and not knowing where to begin means we put it off. Here\'s everything you need to start investing with less than $100 and ZERO overwhelm.

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