How To Start Investing With $100 For Beginners

If you have $100 in your bank account and you want to turn this $100 into $200, or $1,000, or even $10,000, you have to know how to take this $100 and put it to work. This is the art of investing money. And unfortunately, if you were not born with rich parents, chances are nobody taught you how to invest your money. But that changes today, because in this video, I want to show you how you can invest that $100 in seven different ways that way now your money can start making you money even when you're not working. Investment option one, pay down your debt. This one has the lowest risk because if you pay down your student loans, or your credit card debt, or your car loan, or your mortgage one year early, you get a guaranteed return on your money. Let's assume that you have $8,000 worth of credit card debt, which is actually less than the average household credit card debt level in America today. And your credit card is charging you 25% APR. Now, the first thing you have to understand is if you get a guaranteed return, because if you pay off your credit card debt one year early, that is a guaranteed 25% return, which will beat pretty much every other investment out there. In fact, let me show you the power of this. Let's assume that you never swipe your credit card again. You have $8,000 worth of credit card debt, and then you only make the minimum monthly payment of $200 a month. Now, it's going to take you about seven years to pay back this credit card debt, and then you're going to end up paying $9,379 in interest, not in total payments, but in interest on this $8,000 worth of credit card debt, which means you're going to pay more money in interest than you will to actually pay back the principal balance on your credit card. Option number two, keep the $100 in cash. This is another very low-risk opportunity, because you know that if you deposit $100 in your bank account today, if you open up your mobile banking tomorrow, you're going to see that $100. And at the time of me recording this video, if you open up a high-yield savings account or a certificate of deposit, CD, you can get somewhere around a 4% return on your money, which isn't the best, but that money is sitting there, and you don't really have much risk besides the risk that your bank could collapse or inflation. I'll talk more about inflation later. This means you don't have to worry about losing money per se, and you know that after one year, you should have around $104 in your bank account. Not the best return, but it's better than you taking this $100 and spending it on an avocado-stuffed animal. The third way you can invest $100 is to put this money into a tax-deferred retirement account, something like a 401k or an IRA or a 403b. When most people think about investing, this is what they're thinking about because your 401k or IRA is the most accessible place to start investing, and this is where most people start investing, but this is just the beginning. And there are five things that I need to understand about this. Number one, the advantage of a 401k is if you can get a company match. A company match is where some companies will give you some free money, essentially, if you invest your money to a 401k. So if you invest $100 into a 401k, a company might say, we'll give you a 50% match, meaning $50. Maybe we'll give you a 100% match, $100, just depending on what your company offers, but this is going to vary company to company. The second thing you want to understand about a 401k or an IRA is that you are now locked in. You generally cannot pull your money out without paying a penalty until you are at least 59 and a half years old. Can you access your money? Sure, but you're going to pay penalties and fees if you tap into your 401k or IRA before you turn 59 and a half years old. Number three, you have to understand the tax benefits or non-benefits of a 401k and IRA. There are two types of accounts. You have Roth and traditional accounts. This applies for IRAs and 401ks. A traditional is where you make money, and then this money goes directly into your account. So you make $100, and then this $100 goes into your 401k or IRA pre-tax. So all $100 that you make goes into the account. Then this money can go tax-free, and then when you turn 60 years old, you can start to pull this money out, but then you're going to pay taxes when you're 60, 65, 70, and you start pulling this money out of your 401k or IRA. Then you're going to pay taxes at whatever your tax rate is when you are retiring. Now, what some people like to say is, when I'm 70 years old, I'm not going to have an income, so my tax rate should be lower. My concern is, number one, my goal is to increase my income every single year through my investments, so I'm hoping that I have more income when I'm older. And number two, I have no idea what the tax rates are going to look like when I'm 60 or 70 years old. I know that the government has a lot of debt, and I know that there's a big chance that the government could be raising taxes in the future. So when you take a traditional 401k or IRA, just know that you're going to pay taxes when you pull the money out, and we don't know what that tax rate is going to look like. With a Roth, what that means is you're paying taxes on that money today. So if you made $100, you're going to pay taxes on that $100 today. And so maybe you're left with $80 after paying taxes, and then this $80 goes into your Roth 401k or IRA, and then this money can grow generally tax-free, and then whatever money you have in this account when you're 60, 65, 70 years old, you can pull out tax-free because you pay the taxes when the money goes in. So with a Roth, you pay taxes when the money goes in. With a traditional, you pay taxes when the money comes out. Fourth, you have to think about fees, because when you put your money generally into a 401k, your money is going to go into some sort of mutual fund generally. And these mutual funds, even if it's an index fund or ETF, all these funds have a fee. It's called an expense ratio. So if you didn't know that your 401k is costing you money, your homework after this video is to go out and look at what your expense ratio is. The average expense ratio on an actively managed 401k fund, meaning a mutual fund in a 401k, is 1%. Now that might not sound like a lot of money, but you have to remember, this is a 1% fee on every dollar that is invested in your 401k for every year that your money is invested, including every dollar of profit that you earn. So this 1% fee is compounding along with your potential growth, and this 1% fee can add up to a little over 25% of your total investment value over the life of your investments. So if you were thinking you would have a million dollars excluding fees after fees, you would have a little bit under $750,000 left in your account because you had to pay this 1% fee. And then number five, you have to think about options. Because when you invest in a 401k or IRA, you generally have limited options on where you can invest. Now, yes, you have more options with an IRA. IRAs have a little bit more flexibility. They give you some options to invest in real estate. There are options to do that with an IRA. With a 401k, you're very limited on where you can invest your money. This is why one of the things I like to say is when you're investing your money, your 401k and IRA is just the beginning. This is not the end of your investments. This is just the beginning of where you start your investments. And now I can't recommend what I do to anybody else because my investing journey is unique and different, and so is yours. But for me, I don't use a 401k or IRA because I know that I can get better tax advantages by investing my money into things like real estate and into things outside of the 401k and IRA. So I don't use these because they just don't make sense for me. Now, they're a great place to start, but this is where I want you to continue investing in your financial knowledge and financial education that we can find the best investments, that we can get the best returns for yourself. And before we move on to number four, I want to remind you that my team at Briefs Media publishes a free daily newsletter called Market Briefs, where every day my team is breaking down what's happening in things like the economy, the stock market, the housing market, the crypto market, and the global economy into a fun, witty, and easy to read newsletter. We have hundreds of thousands of investors that read it every single morning. So if you have not joined Market Briefs yet, well, I got the link for you to join for free down in the description below. The fourth way that you can invest that $100 is by putting this money into the stock market. Now, this is outside of your 401k or IRA. This is now you creating your own stock brokerage account. There are so many brokerages out there. You could check out my links down in the description if you want to help finding some. But now you're going to find a stock brokerage, and now your goal is to grow your money through the stock market. And there are two ways that you can invest your money in the stock market. I like to call this a passive method and an active method. Passive is where you're just going to throw your money into the markets. So there are funds, ETFs, mutual funds, index funds. What this means is these are baskets of companies. These are groups of companies. So instead of investing in, say, the Amazon stock, you're investing in a group of maybe 500 of the largest companies in the stock market, and Amazon is one of them. This way, now, you don't have to worry about analyzing the perfect company and picking the perfect stock. You're just going to throw your money into a fund. This is what I call passive investing. And the way that you succeed as a passive investor is you got to CPA. You got to be consistent, you got to be passive, and you got to be automatic with this. What this means is you want to pick a cadence, whether it's every week or every two weeks or every month. And then you just put your money into these funds and you let the markets do their thing. So I do this and I do this. For me, my CPA strategy is every Wednesday. I picked Wednesday because it's in the middle of the week. There's no science to this. But every Wednesday, money is pulled out of my check-ins account and is automatically invested into my portfolio of funds. Now, I have funds that give me exposure to a lot of different things, some to the general stock market, some to dividends, and some to a little bit more innovation. But this is where my money is being automatically invested. And you just got to figure out what types of funds you want to invest in because there are funds for pretty much everything. For example, there is an ETF, and I'm not telling you what to invest in. I got to remind you as well, investing has risks. You are never guaranteed to make money when you invest. In fact, you will lose money at some point. So make sure you always do your own due diligence and never blindly trust a random guy on YouTube. There's an ETF out there called VTI. This is created by an institution called Vanguard, and this gives you exposure to the total stock market. So if you just want to buy the American stock market, VTI gives you exposure to the total stock market. Another example, SPY. This is an ETF that gives you exposure to the S&P 500, which is a group of the 500 largest companies in the stock market. So if you just want to invest in the 500 largest companies in America that are trading on the stock market, SPY, you can create a system that invests into this. And what we've seen is that over the long term, markets go up, markets go down, market crashes happen, recessions happen, market booms happen. But over the long term, markets have generally gone up, but this is where you just got a CPA through the ups, the downs, and the sideways consistently, even through the tough times, and that's where the wealth is built. Active investing is a little bit different. This is where you're going to put aside some money, and then you're going to actively find a good investment. Now, when I say active, I don't mean trading. I mean looking for a good investment. This would be now you're looking for either a fund or a stock to invest in that's a little bit more niche. Maybe you're looking for a new market shift. You're looking for an opportunity. You're looking for something to invest in, but now you got to study the financials. You got to do the research and you got to put in the time to make sure that this is the investment that you want to be involved in, but it's not automatic. You have to go and deploy this money when you see a good opportunity. Again, you don't have to pick one. I do both of these, but you got to find the right strategy for you. The fifth way that you can invest that $100 is into passive real estate. So just like with the stock market, you can invest in real estate actively or passively, and I specifically said for this example, talking about passive real estate because active real estate requires more work and more money. Active real estate, real estate investing is when you go out and you buy a property. It could be a single family house. It could be an apartment complex, an office building, a manufacturing building, whatever it is. You're going to go out and buy this property and then lease it to a person, a family, a business, whatever, and they're going to pay you rent for using a property. That is active real estate investing, and that's going to cost you more money. You might have heard people talk about no money down real estate. Does it exist? Absolutely, but I'm going to tell you the reality about no money down real estate. No money down real estate has made me a lot of money because people will go into no money down real estate thinking that it's so easy. I can buy properties with no money, no credit, no experience, and then people get in way over their heads. They take on way too much debt. They don't know how to manage the property. The banks force you now to sell that property at a huge loss to somebody like me. Yes, no money down real estate has made me a lot of money because people who do it, who don't know what they're doing, have to sell those properties at a huge discount, which is why I am not an advocate for you to do no money down real estate. I'd rather you, if you're just getting started and you only have $100, to consider more passive real estate. Once you have more money and you want to be more involved, go out and be an active real estate investor. It is a great opportunity, but it takes more work and more money. Now when we talk about passive real estate, this is where now you can use a crowdfunding service or you can be involved in syndicate real estate deals where you find somebody else who is doing the deals and you are going to give them some money. Yes, you could do this with as little as $10, $100. Sometimes they're going to want more money, but it just depends on the deal. It depends on the operation. You could go to a real estate investor conference in your area. They happen all over the country and the world and you can meet investors that need money because there's always going to be investors and developers that need money for a deal. You can fund them directly or you can use different services online. There are crowdfunding services online that you can invest into that you will get exposure to these deals and you don't have to worry about dealing with tenants. You don't have to worry about unclogging toilets. You don't have to worry about dealing with the city or property managers. You just invest your money and then you can see your returns on your portal. Again, is there a risk involved? Absolutely, because you're investing in real estate. Real estate goes up and down and there's issues that are involved, but you don't have to worry about being active when you are a passive investor and you can start investing with much less money. So if you want to get exposure to real estate, that's something that you can consider. And if you're wondering where you can do that, again, you can check out some of our advertisers that help you with this type of crowdfunding real estate down in the description. The sixth way that you can invest that $100 is into speculative assets. These are things like cryptocurrencies, startups, trading cards. These speculative assets are the exciting part of the investing world. This is what some people assume investing should be like, that it should be so exciting and energizing and crazy. Markets go up and markets crash all the time. But the reality is, and I'm going to say this and I'm going to sound like a really old person, speculative assets should be part of the speculative piece of your portfolio. And what that means is if you're just getting started, probably less than 10% of your total investments should be speculative. Maybe as you build more wealth and you build a more foundation of your other investments, now you can kind of push it up closer to that 20%. But that's kind of it. Because your speculative investments can go up very quickly, but they can crash just as fast. So for me, I don't want to take on all that risk. Yeah, I get it. It's fun. And I invest in some startups and I invest in some cryptocurrencies and I know that they can go up just as fast and I know they can fall just as fast. But for me, I know that this is speculative. So I keep it as a smaller piece of my portfolio because I know that stocks and real estate have been proven through the test of time. And so those are the bulk of my investments. The speculative investments are treated like speculative investments in my portfolio. The reason why I say this is because I've met a lot of people, especially younger people that are struggling with money. They're living paycheck to paycheck. Life is hard. Inflation is hard. I get it. And now you want to get started with investing and you start to hear about how stocks and real estate, they can give you 7, 10% returns a year over the long term, but it doesn't sound that good because if you invest $100, that's a $7 return or a $10 return after one year. And so now you start to look for something a little bit more exciting with a little bit more upside. Some people turn to sports betting and other sorts of gambling. Some people turn to things like crypto or meme stocks or other types of speculative investments, hoping that they can double their money quickly. Can it work? Absolutely. But now you're taking on a lot of risk. And if you're really trying to build wealth, your wealth is going to be much more sustained through things that have been proven. Now, I'm not saying don't have any speculative investments, just understand what is speculative, what's not. That way you can weather the storms when they go up and down because the reality is markets go up and markets go down. We've seen this happen decade after decade after decade. And when you're talking about speculative assets, well, those go up even faster and they can fall even faster. And if you can't withstand the psychology, then you're going to be stuck in a lot of pain. And then option number seven is to invest this $100 into your own business. My largest investment is my business, Briefs Media. Briefs Media spun out as a byproduct of Minority Mindset. I started Minority Mindset with less than $500. And I say $500 as a kind of a big cushion because when I started Minority Mindset, I didn't have a camera. I didn't have any fancy editing software. I didn't have a fancy mic. All I had was a $25 or $35 tripod that I bought off of Amazon. I recorded the videos off of my phone. And then I think I bought a $25 or $35 light. I don't remember what my other expenses were, but I'm just going to round it up to $500. But I started off like that. Eventually, this brand started to grow and started to make some more money, which then started to build Briefs Media and that started to grow. And now we have a beautiful office in downtown Detroit. We have a team of market analysts and employees that are working every single day, and it all started with a small investment. But a lot of time, a lot of headache, a lot of work, and a lot of stress, and you got to be willing to go through the ups and downs. But if you're willing to do that, if you're willing to learn, if you're willing to apply things, watch YouTube videos, read books, take classes, and reinvest the money that you make, you can start to see more larger returns. I mean, there's no investment that can give you a better return than your business, but it's risky. I mean, most businesses fail. They say 90% of businesses fail within the first five years, but maybe that means you got to start five businesses to really figure out what it takes. And this is where, if you are an entrepreneur, this can create a great opportunity for you if you're willing to go through that process. It's not for everybody. I'm not saying everybody needs to start a business, and most people shouldn't start a business. You don't need a business to build wealth, but it is an option. If that's something that has been on your mind, it's something that you want to do, you can start a business and use your money to invest as seed capital into your own business, and maybe it'll work, but at the very least, you're going to learn something. And those are the seven ways that you can start investing $100 today. Which one is the most interesting to you? Let me know down in the comments. I can't wait to read what you have to say. Buy low, sell high. But what do you do in an economy like today where markets are setting record highs, even though many people are still concerned about the economy, and now investors are hopeful that Trump is going to save the economy and boost the stock market? So is this the time to double down and buy even more? Or is this the time to sell high and cash out of your profits?