You can use $100 to get started on your investment journey, regardless of whether your student loans have been forgiven or you were given a gift.

You can quickly create a diverse portfolio of investments with very little money thanks to fractional shares or exchange-traded funds (ETFs). There are also apps that will help you save and invest your spare money.

If you’re lucky enough to get that extra Benjamin, here are some things you should know: how to invest, financial products that will help you diversify for less and how to make money work for you.

Things to Consider Before You Start

Make sure to take care of your immediate financial needs, such as paying off high-interest debt or building up a rainy-day fund. Jen Hemphill is an accredited financial counselor in Fairfax.

Even if you have all the basics covered, it can be nerve-wracking for some to start putting cash into an investment account. Hemphill suggests that you can overcome your fears about investing by focusing on your goals. She also works with clients and offers free bilingual financial education via her podcast, “Her Dinero Matters.” ”

Hemphill recommends that you consider the reasons you are interested in investing. You need to consider why you are investing, whether it is for college, retirement, a house, or medical procedures. The type of financial product that is best suited for you and your goals will also affect your timeline.

The reason you are interested in investing also influences how much risk and what you are willing to accept. Hemphill says that all investments involve risk. Markets can fluctuate and it’s okay to be concerned about that. Before you invest, you should understand this. A high-yield savings account, which has a lower growth potential but offers less risk, might be the best option if you have immediate needs.

If you have a long investment time, you might take more risk with the hope that it will pay off.

Hemphill states that “when the market is down”, you have to “just press on.”

How to invest with little money

For beginners, it is easy to feel lost or confused about where and how to invest.

Maggie Gomez, a certified financial planner based in Orlando, Florida says that the hardest thing for newbies is actually to start to deposit money and click “Buy”. Gomez was a victim of financial insecurity early in her life. She also experienced homelessness. This has influenced how she approaches financial education and services to a wider audience.

Are you unsure where to start? Here are four options.

1. Retirement plans to help you reach your retirement goals

Retirement is your investment goal. If you are enrolled in an employer-sponsored plan 401(k), you may already have invested.

You can create a tax-advantaged plan with your individual retirement account (IRA) if you are not a taxpayer and still want to save for retirement. Some providers may require IRA account minimums. Make sure you choose a provider that has a low minimum or $0.

Roth IRAs provide tax-advantaged accounts that allow long-term investors to invest after-tax money and then withdraw the funds tax-free. Traditional IRAs allow you to make pretax investments. This type of account allows you to withdraw money pretax and then pay income taxes.

2. Low-cost brokerage accounts to help you reach your financial goals (nonretirement).

A brokerage account might be the right choice for you if you have another investment goal. You can invest in stocks, ETFs, and index funds with brokerage accounts. These accounts are easy to open. They differ from retirement accounts in that they can be sold at any time and your funds can be withdrawn without penalty. If you make money from your investments, you will likely still have to pay capital gains tax.

When opening a new brokerage account, make sure you look for one that does not charge commissions and has a minimum account balance.

A brokerage may offer fractional shares. This allows you to purchase a portion of a stock instead of buying a full share. Fractional shares are a great option if you have only $20 to invest in a stock priced at $50.

3. ETFs and index funds

Selling individual stocks is a risky business. ETFs or index funds are a group of investments that includes dozens, hundreds, or even thousands of stocks. These products can track different assets such as stocks, bonds and currencies, as well as the entire market.

You can instantly gain access to shares from a variety of companies by buying shares in an ETF or index fund. This allows you to quickly diversify your portfolio and makes them a great choice for beginners. While index funds and ETFs may look similar, there are some differences.

After you have chosen an account, you can decide whether you want it to be invested immediately or over time. You could make your first contribution of $100, or split it into smaller amounts like $20 per month.

Dollar-cost averaging is a strategy that spreads out your purchases over time. Micro-investing apps can also be dollar-cost average. They round up purchases to a debitcard and invest tiny amounts in ETFs.

4. Robot-advisors can help

Robot-advisors are automated investing services that make portfolio recommendations after you have completed a questionnaire about your risk tolerance, investment preferences, and time horizon. ETFs are often used to create portfolios that can be conservative or aggressive. The robo-advisor will do the investing for your portfolio once you have chosen it.

Some robo-advisors charge portfolio managers fees of around 0.25%. Others charge no management fees at all. Look for robo-advisors that have low or no account minimums.

While there are many things to think about when you start your investment journey, Hemphill says that the most important thing is to “start where you are at.”