How To Invest $100 Every Month for Big Returns
If you’re new to investing, you may be entering the game under the mindset that you need to have a lot of money to invest to make meaningful returns. However, the truth is that with a bit of strategy and pragmatism, you have the potential to make large returns on small investments. Everyone is coming from a different perspective, though, and if cash is short for you, even $100 a month may seem daunting.
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Fortunately, there are easy ways to afford the investment. You can choose a couple of days during the week to not eat out for lunch, for instance. A great way to think about it in a more attainable way is to push yourself to save $25 every week. Once you have the money in hand, here’s how to invest as little as $100 a month and still make big returns.
1. Pick an Investment Company
Fidelity and Charles Schwab are popular choices; if you opt for a different one, you want to prioritize zero charges for trades and be sure there are no unnecessary fees. When it comes to the type of investment, your best option is exchange-traded funds (ETFs) or index funds. Single stocks have a risk of losing everything you’ve put in, but with ETFs — or pooled securities — you drastically reduce the likelihood of your investments failing.
2. Automate the Process
Large returns from a $100 investment will feel even more rewarding through optimal automation that makes it possible for you to benefit passively. Many of the popular platforms allow you to automate the monthly stock purchasing to ensure that you don’t go too high or too low, lending to a more seamless process.
3. Possible Returns
With the right choice of ETFs or index funds, you’ll see an average return rate of 10% — that’s $200,000 after 30 years, and because of compound interest, this will amount to $535,000 after 40 years. Of course, were you to add another $100 on top of this each month, the growth would be exponentially higher, but even with $100, the reward is high. As a smart long-term investor, in just 20 years you’re in good stead to come out ahead.
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One last thing to consider? Don’t forget to reinvest any earnings in the form of interest or dividends to grow your returns.
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This article originally appeared on GOBankingRates.com: How To Invest $100 Every Month for Big Returns
