Many of us are so busy making end meets and trying to save, that we think investing is something that is beyond our financial reach. The truth is it’s more a case of it being beyond our psychological reach.
Throughout my career as a financial journalist, I can’t tell you how many times I’ve heard members of the ‘99%’ say “investing is for the rich.” Not only does this false belief come with a built-in poverty mentality, it also prevents millions of us from doing the one thing that makes the rich, rich: growing money.
To prove that investing is not beyond the reach of us ‘99%ers,’ I asked three of my favorite financial advisors if it’s possible to ‘grow’ money with just a $100 investment. They all gave me a resounding “yes,” and shared their suggestions.
1. Ash Cash, financial expert and author of Mind Right, Money Right: 10 Laws of Financial Freedom: With $100 to invest, I would open a brokerage account with Scottrade. E*Trade, TD Ameritrade, Charles Schwab, and Fidelity. All are good discount brokers, but at $7 a trade, Scottrade is the most economical. After I opened the account, I would buy three shares of PowerShares Build America Bond ETF, symbol: BAB. Being that discount brokers do not provide financial advice, I would also buy The Wall Street Journal Guide to Understanding Money and Investing. I’ve read many books on investing and this, to me, was the easiest to understand.
Many people have the misconception that they need to be rich in order to invest. But it is important to realize that without investments as part of your financial plan, you will never be able to attain financial freedom. The truth of the matter is that there are many low-cost ways to invest our money wisely, but as the saying goes, ‘If we knew better, we would do better.’ That’s why financial education is vital, especially in low-wealth communities.
2. Rick Kahler, CFP, president of Kahler Financial Group and author of Conscious Finance: Uncover Your Hidden Money Beliefs and Transform the Role of Money in Your Life: I would go to TD Ameritrade and buy one share of Vanguard Total World Stock Index, stock symbol: VT, for $57. I would go to Amazon.com and buy one “very good” condition copy of The Investment Answer by Daniel C. Goldie and Gordon S. Murray for $2.87, plus $3.99 postage or $6.76. I would invest $10 in a Starbucks card for coffee expense while I read and internalize everything in the book. Getting ready to catch more fish: I would put the remaining $26.24 into a money market fund, in which my dividends from the VT would accumulate, and use those funds to eventually buy another share of VT.
3. Jacquette Timmons, financial behavior expert and CEO of Sterling Investment Management Inc.: I’m pretty fascinated by the investing app Acorns, so, I’d recommend opening an account with the entire $100, and then selecting the recurring option to invest your spare change. The business model is incredibly appealing because it supports the idea that no dollar amount is too small to invest; a concept that resonates with me since I often say small is the new significant.
My vote would also go to Acorns: My 10-year-old son has been investing my spare change for about 2 months in the apps aggressive model, which buys exchange traded funds that tracks the S&P 500. He’s made nearly $300 and is obsessed with watching the money change value in real-time on the apps’ stock market chart. The service is only $1/month for accounts under $5,000. Regardless of which option you choose, the moral of this story is that, not only is it possible to invest small sums of money, it’s also imperative if we want to become less dependent on the cycle of only working for money instead of also making our money work for us.