It’s common for stock market newbies to be showing interest in an individual stock, as those are often the ones written up to be the most profitable, but these kinds of investments can be particularly expensive, and if you’re not careful, incredibly risky too.
Building a diverse portfolio through single stock purchases can set you back hundreds and sometimes even thousands of dollars, which is exactly why workarounds have been invented, to help freshly baked investors create a profitable portfolio while spending as little as $100.
IRA and 401(k)
When you’re just starting out, your best bet could be investing in an IRA or a 401(k), as these types of investment accounts are pretty much entry-level and require no additional knowledge to manage.
From the moment you set up your account, your only obligation is to invest however much money you’re able to set aside and watch it grow as time passes.
The better option of the two would be the 401(k) as it allows for automatic transfers from your paycheck, making sure you never miss out on a contribution, while IRA accounts only allow for set amounts to be transferred on a schedule you agree on.
ETFs
ETFs or exchange-traded funds are your next best option, as they offer you the ability to bulk invest on stocks, whether it be companies from a specific niche or a broad fund like the S&P 500 which includes around 500 companies, near-instantly diversifying your portfolio.
With each fund containing hundreds of stocks, your risk is lowered significantly, meaning that even if a couple of the stocks in there end up flopping, you’ll still be earning money from the rest.
Finally, this option can save you hours of your time if you’re looking to branch out into something like tech companies, sparing you the endless process of picking the right tech company for you to invest in.
Fractional stock
Last but not least, fractional stocks have been trending for a while now, as they allow you to buy a piece of a company’s stock without having to pay the hefty full price of a single share if it’s a successful company that you just had to invest in.
This means that you could possibly buy one-tenth of a company share worth $200 for only $20, and if this wasn’t enough, this also means that you can spread out your $100 over 20 stocks if you wish, reducing your risk significantly.
With all of this in mind, never contribute more than you can actually afford, because none of these strategies is foolproof, and you could easily get burnt if you go all in too soon.