How to Invest $100 Realistically (8 Best Ways)

While $100 isn't a boatload of money, these days, it's more than enough to start investing with, and it's definitely worthwhile to do so. Investing your first $100 will not only teach you valuable lessons, but it'll also be your first stepping stone toward building the habit of investing your money consistently.

Once you learn how to invest your first $100, you'll have a much better idea of how to invest your next $100, $1,000, $10,000, and beyond.

The question is, where should you get started?

Well, believe it or not, there are a lot of different ways to invest $100. Over the past few years, dozens of new investing platforms have popped up offering low fees and no minimum account balance requirements, making investing accessible to all. This is great for investors with little money as it allows them to experiment with different strategies to figure out what works best.

To help you come up with your own custom portfolio, we're going to break down 8 of the best ways to invest $100 below.

Things to Keep In Mind Before You Start Investing

Rule #1:Credit Card Debt Should Be Paid Off First

If you're carrying credit card debt, take that $100 and put it toward paying that debt off. Most credit cards carry interest rates of 15%+, which is tough to consistently beat with investing, so you'll get a better return on your money by getting it out of the way first.

Related:How to Build Good Credit and Increase Your Credit Score

Rule #2:Don't Forget to Prepare For Emergencies

Investing is an important part of personal finance, but as we all know, life loves to throw curveballs every now and then. Before you go all-in on investing, make sure you have an emergency fund built up. This will protect you in case of things like job loss or surprise car repairs and will prevent you from having to sell your investments in order to cover these costs.

Rule #3:Be Prepared to Lose Money

Despite what many on the internet may wish, stocks do not always go up. Along your investing journey, you will most likely experience days, weeks, or even years where your investments are in the red. It's up to you to decide what to do in these situations. Do you sell out of fear? Do you invest more while assets are on sale? Or do you simply change nothing and continue investing as you were before?

You won't exactly know what your reaction to a major market downturn will be until it actually hits you in the face, but it's a good thing to think about. And it's a good reminder to never invest more money than you're willing to lose.

Rule #4:Have Patience

Even if you're not losing money throughout your investing adventures, don't expect to get rich quickly either. Multiplying your money takes time. However, if you're patient, the power of compound interest will reward you.

Not sure how compound interest works? Here's a fun way to learn...

First, answer this question:

Would you rather have $1 million dollars today, or a dollar bill that doubles in value every day for 30 days (i.e. it would be $1 today, $2 tomorrow, $4 the next, and so on)?

Don't think about it too much, just lock in an answer in your head.

Done?

Ok, if you chose the $1 million dollars. Nice job. You're $1 million richer! However, how much would you have made off with if you had chosen the magic $1 bill?

Let's find out:

On day 1, you would have $1.On day 10, you would have $512. Not bad.On day 15, halfway through the bill's magic doubling powers, you would have $16,384.Six days later on day 21, you would have $1,048,576!On day 30, the last day of the bill's magic powers, you'd have a grand total of $536,870,912 dollars!!!

As you can see, through the power of compound interest, $1 reinvested and remultiplied over time can result in a lot of money. The same can happen with your investments. Although you won't be able to double your money every single day, with enough time and patience, even small sums can turn into large fortunes.

Excited to start investing now? Let's look at some of the best ways to invest your $100...

8 of the Best Ways to Invest $100

1. Start a $100 Business

Investing $100 in your own business will take a lot more effort than simply throwing the money into stocks or crypto, but it can also be a lot more rewarding. By starting a business, you'll learn more about sales, the economy, time management, work ethic, and much more. And who knows, you might even discover a new interest or passion along the way.

Plus, if your business ends up being a success, you'll have created an independent income stream that you have full control over. This can give you more money to invest back into the business, or into the other investment options below.

But what type of business can you start with just $100?

Good question. Believe it or not, there are quite a few options to choose from. Here are a handful of examples:

Web design. If you look at the websites of local businesses in your town, you may be surprised to find quite a few with dated designs. This is an opportunity. If you take your $100, purchase some hosting (~$5/month), and use WordPress (check out the free GeneratePress theme) to build an example website for your portfolio, you can then start pitching your web-design services to those companies. And while the web design space is quite saturated these days, the fact you're targeting local businesses in your own city gives you an edge. After you land a client or two, you can upsell them other services as well, like local SEO optimization or done-for-you Facebook and Google ads. Niche blogging. If you'd prefer to build your own website vs. helping someone else design theirs, blogging is a viable option. You can follow the same steps above of getting web hosting and using WordPress. Then, you just need to pick a niche and start creating content. For example, if you're really into house plants, you could create an entire blog around those. Don't believe me? This blog talks exclusively about succulents and it generates over $100k/year in revenue. Arbitrage. Arbitrage is the simple act of buying something in one place and selling it somewhere else for a profit. You could use your $100 to either do arbitrage with physical products or digital services. For example, on the physical product side, something as simple as buying a cooler, some ice, and a few cases of cold water or Gatorade and selling them at a hot summer event could turn your $100 into $200+ quite quickly. You could also go the classic route of hunting for products at garage sales and thrift stores and then flipping those products on a platform like eBay. On the service side, you could find people looking for, let's say, blog post writing services. You could then sell them your service and pay someone on Fiverr to handle the writing for you. This route can work out well as you don't have to spend money until you have a paying client, but it does require finding a reliable writer that you trust who's willing to do the service on your behalf (not always an easy task). Print on demand. Platforms like Redbubble have made it extremely easy for anyone to start making money with print on demand. Just create an account, upload some designs, and each time your design makes a sale, you get paid. You can quickly scale this by investing your $100 to have someone on Fiverr create your designs. Then, you just need to focus on coming up with trendy ideas and uploading them to your store page. Hand-crafted goods. If you're an artsy type, take to Etsy and start selling hand-made goods! You could get started with something as simple as selling painted rocks.

2. Get a Robot to Invest Your $100

If you're more of a hands-off type and you'd prefer to just sit back while your money is invested automatically, a robo-advisor will be right up your alley. With a robo-advisor, all you have to do is set up an account, answer some questions about your risk tolerance and investment horizon, and the rest will be handled for you.

That's not all either:

Some other reasons to consider this avenue is that it's affordable, your investments will be diversified and rebalanced automatically (reducing risk), and the account minimums are typically really low. For example, SoFi's automated investing program has a $1 minimum account balance requirement, no annual management fee, and it invests your money in low-cost exchange-traded funds (ETFs).

Speaking of ETFs, you can also:

3. Build Your Own Portfolio of ETFs

Put simply, ETFs are a collection of investments bundled up into one package and then sold on a stock exchange. In other words, purchasing a single ETF can give you exposure to hundreds of different stocks, bonds, and/or commodities (think:barrels of oil, precious metals, wheat, etc.), all at once.

As an example, one of the most popular ETFs in the world is the SPDR S&P 500 (SPY). This ETF tracks the S&P 500 index, which represents 500 of the largest companies in the U.S. By purchasing a share of this ETF, you automatically get exposure to each of those 500 companies.

There are plenty of other ETFs as well. Some of them track indexes, others track specific industries, sectors, or investment strategies. For example, an interesting ETF that was started just recently -- BUZZ -- invests in companies based on their social sentiment.

Overall, ETFs are great because they not only save you time and make it easy to diversify your investment portfolio, but they also save you money. Passively managed ETFs (like the SPY) typically have extremely low expense ratios (i.e. yearly fees) which means you get to keep more of your money, leading to greater returns in the long term.

Now, although robo-advisors (above) are a great way to build a portfolio of ETFs passively, if you want to do things on your own, you can simply open an account at an online broker like Robinhood, E-Trade, or Fidelity, deposit your $100, and then you're ready to start buying. For ideas on which ETFs to purchase, check out this list of the top 100.

4. Invest In Your Favorite Companies By Picking Stocks

ETFs are great for diversification and simplicity, but if you'd rather pick and choose each individual company that you invest in, you can do that too.

A fair warning:Most stock pickers produce weaker returns vs. passive index fund investors. According to the Financial Times, three-quarters of stock pickers performed worse than the S&P 500 last year.

That said, even though stock picking is a tough craft to perfect and by doing it you'll most likely underperform the market, there are some benefits to it. If you love to follow market news, read earnings reports, and keep up on certain industries, you'll have a lot more fun actively managing a portfolio vs. passively investing in ETFs. You'll also learn more about the markets and the economy along the way.

By picking stocks, you don't necessarily have to miss out on passive investing rewards either. Consider this strategy:

Instead of only picking stocks or only investing in ETFs, set aside a part of your $100 for each. For example, you could set aside $5-$20 of each $100 you invest for stock picking, and then put the rest in ETFs. This way, you can have fun picking companies and building a custom portfolio while also seeing the benefits of diverse ETF investing. As a side bonus, you'll also be able to easily compare your returns with both strategies to see what performs best!

If you're wondering how to start buying individual stocks, the process is essentially identical to buying ETFs. Online brokers like Robinhood and Public even allow you to purchase fractional shares of companies, making it much easier for you to invest in any company you want.

For example, even though one share of Google costs over $2,500, with your $100 and the power of fractional shares, you could still invest. For the full $100, you'd end up with around 0.03 shares of Google.

For tips and tricks on how to pick the right stocks, check out this guide from Investopedia.

5. Put Your $100 Into Cryptocurrency

Cryptocurrencies can be a very tempting place to invest your first $100, and for good reason. Bitcoin solidified its spot as the best-performing asset of the decade last year and countless other cryptos have produced returns of over 500% in recent years.

That said, there are a few things to keep in mind before getting started in the crypto world:

Cryptocurrencies are extremely volatile. Depending on which coins you invest in, $100 invested in crypto today could be $0 tomorrow or $1,000. In other words, be prepared for huge price swings! Just this year, Bitcoin is down almost 40% from its all-time high.There are a lot of scams. You need to do a ton of due diligence before investing in a crypto project. Don't just follow the advice of a random Redditor or influencer. The space is still very young. New cryptocurrency regulations are being talked about every day, and these could have a huge effect on the markets in the future.

With that out of the way, if you want to invest in crypto in a relatively safe way, here's a solid strategy you can follow:take your $100 and invest in the top 10 cryptos by volume for the past month. Then, just hold and reinvest monthly if possible.

According to the analyst that came up with this strategy, if you started it in 2014, you'd now be sitting on returns of over 10,000%!

To get started, you can find the top volume coins here (just be sure to ignore stablecoins -- those are the coins that are pegged to a certain currency like the U.S. dollar). You can then buy the cryptos that are on the list with an online crypto broker like Robinhood, Public, or Wealthsimple Trade. Each of these options allows you to get started with as little as $1.

6. Try Peer to Peer Lending

Instead of investing your $100 in stocks or cryptocurrencies, peer-to-peer (P2P) lending allows you to invest in personal loans.

Think about it like this:

Your grandma asks you for $100 to buy cat food and tells you she'll pay you back $100 + $10 in interest next week. You lend her the $100, she gets her cat food, and you earn $10 in profit a week later. Everyone wins!

That's essentially how peer-to-peer lending works except instead of lending money to your grandma for cat food, you'll be lending it to random strangers on the internet who need money for things like bill payments, home repairs, debt consolidations, and other large purchases.

The risk?

Although you can probably trust your grandma to pay you back on time, the same doesn't always go for random internet strangers. When you lend money on a peer-to-peer lending platform, there's always a chance the borrower could default and you could be out of luck on your investment. However, defaulting will typically harm the borrower's credit score and ban them from the platform, so it doesn't usually happen all that often.

Also, this bit of risk is part of what makes P2P loans profitable. If they were 100% risk-free, you wouldn't earn as much on your investment.

To get started with peer-to-peer lending, check out Prosper. It's a popular P2P lending platform that allows investors to get started with as little as $25. Or, if you're willing to take on a bit more risk, Reddit also has a P2P lending subreddit where you can find some juicy (and quick) returns.

7. Invest In Rare Collectibles and Art

In the past, investing in rare comic books, famous pieces of art, vintage video games, classic cars, and other top-of-the-line collectibles would've cost thousands or even millions of dollars. These days, things are quite different.

With your $100, you could invest in a first edition Batman comic book, a 1988 Lamborghini Jalpa, an original Banksy, or even a rare collection of wine. How? By purchasing shares. Yep, just like you can purchase shares of a company like Google, you can now purchase shares of rare collectibles and art.

Here are a few platforms making this possible:

Masterworks. One of the first platforms to make investing in collectibles accessible to all, Masterworks allows you to invest in famous multimillion-dollar paintings. Rally. Founded in 2017, Rally lets you invest in a range of collectibles including NFTs, comic books, classic cars, vintage toys, famous sneakers, and more.Vint. Founded in 2019, Vint is all about wine. Through their platform, you can invest in high-quality hand-curated collections of the best wines in the world.

No matter which platform you choose, investing in collectibles is a unique and exciting way to diversify your portfolio.

8. Get a Piece of Crowdfunded Real Estate

Real estate is another one of those things that most people wouldn't expect to be able to invest in with only $100. But, with crowdfunding, even small investors can get in the game!

On Fundrise, one of the most popular real estate crowdfunding platforms, you can get started with as little as $10. Your money will then be invested in privately managed real estate including commercial properties, apartment buildings, single-family rentals, and more.

Alternatively, through an online broker like Robinhood or Wealthsimple Trade, you could also choose to purchase shares of a real estate investment trust (REIT). REITs are companies that own, operate, or finance income-producing real estate, so by investing in them, you get exposure to things like warehouses, apartment buildings, business offices, medical centers, and more. Best of all, REITs are listed on stock exchanges, so they're easy to buy and sell. You can even purchase REIT ETFs for easy diversification and management.

Final Thoughts:Invest Your $100 Wisely

It's easy to follow the herd when you see other investors making insane gains on certain investments. We saw this at the beginning of 2021 when GameStop stock went from ~$20 to $325 in less than a month and it seemed like everyone on the internet was hopping on the hype train. Unfortunately, those that bought at the peak of that run are now down almost 70% on their investment and there's no telling if GameStop stock will ever reach those levels again.

The lesson?

Do your research before investing and be sure to watch out for FOMO (fear of missing out). Letting your emotions control your investments is a very dangerous game.