﻿What’s up everybody, Logan Allec, CPA here, and today I’m going to talk about some ideas
on how you can invest $100. It wouldn’t have been very practical to invest $100 ten, twenty, thirty
years ago because it wasn’t enough, but with so many low-cost apps and online brokerages available
there really aren’t any barriers anymore to getting started with a smaller amount of money.
I know it can be a little scary or overwhelming if you’re new to investing, you don’t want to throw
your money away on something that’s too risky, but at the same time you want to be able to earn
a decent return and start turning that initial deposit into more and more money to hopefully
encourage to invest more and more money over the course of your lifetime and reap those rewards.
Ultimately the right way to invest depends on you, what your financial situation is, how long
you’re planning to keep the money invested, how much risk you’re willing to tolerate,
et cetera, and of course the information in this video is not financial advice, it is
just for general informational purposes only. With that in mind I want to highlight some relatively
safe options with low risk and a lower potential reward, along with some more adventurous choices
for those of you who have a higher risk tolerance. And I’ll also talk about some sign-up bonuses and
other unique opportunities that will allow you to turn that $100 into more money overnight.
So with that let’s get right into it, these are six ideas to invest $100.
Number one, take advantage of your 401(k) employer match. Unfortunately not everyone
has this opportunity, obviously there’s no employer match if you’re self-employed, and you
might also work for a company that either doesn’t offer the match or doesn’t offer a 401(k) at all.
But if your employer offers a full or even a partial match then you should do everything
you can to take advantage of that every year up to whatever the limit is. If you’re not familiar with
an employer match, basically what happens is you put some money into your company’s 401(k) plan,
maybe you contribute $100, well your employer will match either the full amount or some portion of
that contribution on the other side. So let’s say they offer a 50% match up to six percent of your
salary, so if you make thirty thousand dollars a year, then they’ll match fifty cents on the dollar
for every dollar you contribute up to eighteen hundred dollars, so in this scenario if you
contribute six percent of your salary, or eighteen hundred dollars to your 401(k),
your employer will also put in nine hundred dollars. If you put in a hundred dollars, then
your employer will also contribute fifty dollars. So that’s an immediate fifty percent return,
that’s incredible, that’s absolutely incredible, if your employer offers 401(k) matching,
that is honestly where I would start with your first hundred dollars you want to invest. I’m
not going to make this video all about 401(k)s, I’ll probably do that in a future video, but
suffice it to say that if you’re OK locking your money up and investing it through a 401(k)
until you turn at least fifty-nine and a half, I would probably recommend fully taking
advantage of your 401(k) employer match before you think about putting money elsewhere. On that note,
make sure that you’ve updated your settings in your employer’s 401(k) so that the money in your
401(k) is actually invested in the stock market and it’s not just sitting in cash, if you don’t
know how to do that, ask your company’s H.R. or specific benefits department and they will be
glad to help you figure all that out. Number two, invest in the S&P 500 through a taxable brokerage
account. The S&P 500 is a market index that tracks the performance of 500 major U.S. companies,
and it’s weighted toward the largest ones, so there are higher percentages of things like Apple
and Amazon and lower percentages of companies that are closer to the bottom of the list.
The nice thing about the S&P 500 is that you only have to invest in one thing, you’re investing in
the index, but you’re also diversified because none of those companies can tank your investment
on their own. Of course even diversifying doesn’t totally remove risk, the S&P 500 will go negative
for short periods of time or even for entire years at a time, but historically there have been a lot
more ups than downs. For example SPY, one of the main funds people use to invest in the S&P 500,
dropped all the way from $337.60 in February 2020 down to $228.80 in March 2020 at the peak
of the fears surrounding the coronavirus, that’s a decrease of over 30 percent which was a little
scary for me and everyone else who had money in the S&P 500. But it ended up getting back
to where it was just a few months later in August, and by August of 2021 it was almost double where
it was at the lowest point in February 2020. Of course it’s not going to do that well every year,
but the point is history indicates that those ups and downs are going to level out over the
long term. And this idea to invest $100 is kind of related to the previous one because the 401(k)
plan through your work could very well offer an S&P 500 index fund as an investment option.
For example, my old 401(k) plan at the accounting firm I worked at before I hung my own shingle
offered the Fidelity 500 Index Fund, which is basically an index fund that tracks the S&P 500
index, as a 401(k) investment option, and I just invested my 401(k) contributions in this fund.
Number three, sector ETFs. ETF stands for exchange-traded fund, so you can buy and sell
the fund just like you would buy and sell a stock, but you’re also getting pieces of many different
assets. Sector ETFs in particular are designed to track the performance of particular industries,
so for example you could invest in a tech ETF, a healthcare ETF, whatever. And there are even
more niche ETFs for things like semiconductors or marijuana. You might be confident that a
particular industry is going to do well, but maybe you don’t know enough to invest in a specific
company, or maybe you don’t want to put all your eggs in one basket. So if you’re in that situation
then a sector ETF will give you returns based on the performance of that specific industry, but you
won’t have to bet on which specific companies are going to come out ahead. Examples of sector ETFs
are VCR, the Vanguard Consumer Discretionary ETF, which tracks the consumer discretionary sector
which includes industries such as apparel, automotive, and consumer electronics,
there’s VHT, which is the Vanguard Health Care ETF, which obviously tracks healthcare companies,
there’s VDE, which is the Vanguard Energy ETF, which tracks energy companies such as oil and gas,
coal, et cetera, there are other companies than Vanguard that offer these kinds of sector ETFs,
I’m just mentioning Vanguard because I personally really like their index funds and index fund ETFs.
Number four, peer-to-peer lending. This is something that’s getting more and more popular,
and even though it’s a loan rather than an asset it can still help you earn some interest on your
extra cash. Essentially how it works is that you go through a loan marketplace,
personally I have experience with LendingClub, there’s a link to that platform in the description
for any of you who want to check it out, but there are a lot of other options out there as well. So
the marketplace gives people who have extra money the opportunity to loan it out for interest,
and on the other hand it gives people access to funds who for one reason or another might not be
able to qualify for a loan from a bank. Of course there are always risks involved in lending money,
but the marketplaces often cover some of that risk themselves, so you want to be really careful about
reading the fine print if you’re looking at opportunities for peer to peer lending.
That said, full disclosure, my LendingClub investment significantly underperformed the
S&P 500 throughout the length of time I invented in LendingClub notes, I did get a return of
a little over 7% on average per year on the initial $5,000 investment I made in LendingClub
notes on March 22, 2016, but the S&P 500 had an annualized total return of over 17% since then,
assuming reinvested dividends, which makes it apples to apples with the LendingClub returns
because any cash in your LendingClub account gets reinvested automatically, or at least you can set
it that way. Number five, Bitcoin and other cryptocurrencies. Now cryptocurrencies can
be incredibly volatile compared to other kinds of assets, especially compared to index funds,
sector funds, and other investments that track the performance of multiple stocks, just look at
the fluctuation in the price of bitcoin since the beginning of the year, huge run-up to over sixty
thousand dollars only to crash down below thirty thousand dollars just weeks ago, now back up to
forty-five thousand dollars again. That is extreme volatility. And on top of that there’s a lot of
regulatory risk still, will countries essentially ban bitcoin at some point in the future, what
would that do to the market, so many questions there. But the fact remains that Bitcoin and
other coins have generated some incredible returns for their investors over the last decade or so,
of course that doesn’t necessarily mean the trend is going to continue, but still there’s
a lot of upside in crypto compared to those low-risk, low-reward type of investments.
So if you’re excited about Bitcoin or another coin, crypto is a good investment opportunity
for either the short term or the long term, but again I would only recommend investing
in something like crypto if you have some money that you can truly afford to lose,
and I cannot emphasize enough that this is not a recommendation to invest in cryptocurrencies,
this is merely sharing an idea with you. I personally own some cryptocurrency in
BlockFi, I currently have over forty thousand dollars worth of cryptocurrency in my BlockFi
account at the moment, BlockFi actually allows you to earn interest on your cryptocurrency balances,
as you can see on this screenshot from my account I’ve earned over five hundred dollars in interest
on my cryptocurrency balances already this year, and also right now if you use my link in the
description below to sign up for BlockFi, you will get a Bitcoin bonus based on the amount of your
deposit, and yes, they do pay out the bonuses, I got my bonus of point zero zero seven bitcoin
on July 8, which on that date was worth about two hundred and fifty dollars worth
of bitcoin. Number six, individual stocks, so far when it comes to the stock market we’ve
talked about investing in index funds and index fund ETFs, but some people do prefer to have some
if not all of their portfolio in individual stocks. The downside to individual stocks relative
to those index funds I mentioned earlier is that you take on a lot more risk, because if something
goes wrong for that particular company then it could have a dramatic effect on your portfolio
if a lot of your portfolio is wrapped up in that one particular stock. On the other hand
if you invest in an index fund, of course you’re still exposed to the usual risks of the market,
but no individual stock is going to have that much of an impact
on your returns. Of course the flip side of that is that individual stocks come with a
much greater potential reward, so if you’re really bullish about one company or another
then you can go ahead and invest in that particular stock directly. If you end up going
with this option, keep in mind that it’s really important to understand what you’re getting into
when you’re focusing on a narrow investment instead of diversifying across multiple companies
or multiple industries. Obviously any given stock has the chance to do well at any time,
but even professionals struggle to beat the market consistently over time, it’s
just difficult to get an edge on other investors when there’s so much information out there and so
many people are working to optimize their trading strategies. So I wouldn’t recommend investing in
an individual stock with any money that you need, particularly in the short term, and I would also
advise against it unless you have really good reasons for believing in a specific company.
I recently created a video on all the stock brokerages where you can get free stocks right
now, if you want to check out that video, check it out right over here and I also have my video
on investing for beginners right down here, I encourage all of you to get started with
your investing, even if it’s only with a hundred dollars, I will see you in those videos, buh-bye.