Investing doesn’t require thousands of dollars or a finance degree. In fact, you can begin with as little as $100. If you’re wondering how to invest $100 as a beginner, you’re not alone. This comprehensive guide will show you five smart ways to start investing online with just $100—along with actual returns after four years.
From stocks to crypto, REITs to index funds, this post analyzes each option based on learning curve, passive income potential, tax efficiency, risk, and performance.
1. Investing in Individual Stocks
What Are Individual Stocks?
When you buy a stock, you own a small part of a company. This could be Apple, Tesla, Samsung, or any publicly listed business. You profit either through price appreciation or dividends.
Learning Curve: High
Understanding financial statements, company fundamentals, and market trends is essential. Investing apps with demo accounts can help you practice before using real money.
Passive Income: Good
Some companies pay dividends—regular payouts to shareholders. You earn money without selling the stock.
Tax Efficiency: Great
Use tax-advantaged accounts like a Roth IRA (US) or Stocks and Shares ISA (UK) to shield your earnings from taxes.
Risk Level: High
Individual stocks are volatile. Poor choices can lead to losses, especially without diversification.
4-Year Return: -32.34%
$100 in a randomly chosen stock (Samsung) is now worth $67.76. By contrast:
- Apple: $170
- Microsoft: $188
- Nvidia: $908
Key Takeaway: Individual stock picking is risky and requires research. Luck alone won’t cut it.
2. Real Estate Investment Trusts (REITs)
What Is a REIT?
REITs allow you to invest in real estate without buying property. These trusts own commercial and residential buildings and share rental income with investors.
Learning Curve: Moderate
Understanding how REITs generate income and choosing one with quality assets is necessary.
Passive Income: Great
REITs are legally required to return at least 90% of profits as dividends, creating steady income.
Tax Efficiency: Great
REITs held in tax-free investment accounts are very efficient. For example, in the UK, they can be held in a Stocks and Shares ISA.
Risk Level: Medium
Diversification lowers risk, but economic downturns or industry-specific issues (like COVID-19 affecting commercial real estate) can impact returns.
4-Year Return: +10.52%
Initial value: $100. Current value with dividends: $110.52.
Key Takeaway: REITs are solid for passive income with moderate risk, especially for long-term investors.
3. Cryptocurrency (Bitcoin)
What Is Cryptocurrency?
Digital currencies like Bitcoin and Ethereum are decentralized and run on blockchain technology. They’re secure, transparent, and borderless.
Learning Curve: Moderate
You must understand wallets, exchanges, and security protocols. Popular exchanges include Coinbase and Binance.
Passive Income: Moderate
You can earn rewards through staking or yield farming. However, these come with higher risks.
Tax Efficiency: Poor
In many countries, every crypto trade is taxable. You can’t use ISAs or Roth IRAs to protect earnings.
Risk Level: Very High
Crypto prices are extremely volatile. Hacking risks and scams add another layer of danger.
4-Year Return: +552.24%
Initial investment: $100 in Bitcoin. Now worth: $652.24.
Key Takeaway: High risk, high reward. Only invest what you can afford to lose.
4. Gold
Why Invest in Gold?
Gold is a traditional store of value and performs well in times of economic uncertainty.
Learning Curve: Low
You can buy physical gold (coins, bars) or gold ETFs. The latter is easier and more liquid.
Passive Income: None
Gold doesn’t generate income. It’s purely a store of value.
Tax Efficiency: Good
Certain gold coins like Britannias in the UK are capital gains tax-free. ETFs in ISAs or Roth IRAs are also tax-efficient.
Risk Level: Medium
Gold is stable but lacks growth potential. It’s best used as a hedge, not a growth engine.
4-Year Return: +40.1%
Initial value: $100. Current value: $140.10.
Key Takeaway: Gold is a solid hedge against inflation but not ideal for aggressive growth.
5. Index Funds (S&P 500)
What Are Index Funds?
These funds track a market index like the S&P 500, offering instant diversification across top-performing companies.
Image prompt: “A pie chart displaying diversified holdings of Apple, Microsoft, Amazon, and other major firms under the S&P 500 umbrella.”
Learning Curve: Low
No need for stock-picking skills. One-click purchase through platforms like Vanguard or Trading 212.
Passive Income: Moderate
Some index funds pay dividends. These can be reinvested for compounding growth.
Tax Efficiency: Great
Index funds held in Roth IRAs or ISAs allow for tax-free growth and income.
Risk Level: Low
Diversification makes index funds one of the safest long-term investment options.
4-Year Return: +79.57%
Initial investment: $100. Current value: $179.57.
Key Takeaway: Index funds offer consistent returns and are perfect for beginner investors focused on long-term growth.
Final Comparison Table
| Investment Type | Learning Curve | Passive Income | Tax Efficiency | Risk Level | 4-Year Return |
|---|---|---|---|---|---|
| Individual Stocks | High | Good | Great | High | -32.34% |
| REITs | Moderate | Great | Great | Medium | +10.52% |
| Cryptocurrency | Moderate | Moderate | Poor | Very High | +552.24% |
| Gold | Low | None | Good | Medium | +40.1% |
| Index Funds | Low | Moderate | Great | Low | +79.57% |
Conclusion: What’s the Best Way to Start Investing $100?
If you’re wondering how to invest $100 as a beginner, the best choice depends on your goals, risk tolerance, and time horizon:
- Low Risk & Steady Growth? Go with Index Funds.
- High Income Potential? Try REITs.
- Hedge Against Inflation? Consider Gold.
- Adrenaline & High Reward? Test Crypto.
- High Risk/High Reward with Research? Study Individual Stocks.
Pro Tip: Diversify. Spread your $100 across two or three of these options to balance risk and reward.
FAQs
Q: Can I start investing with just $100?
A: Absolutely! Use beginner-friendly platforms like Vanguard, Coinbase, or Trading 212.
Q: Which investment is safest?
A: Index funds are the safest due to diversification.
Q: Which one earns the most passive income?
A: REITs, due to mandatory high dividend payouts.
Q: What should I avoid as a beginner?
A: Avoid high-risk crypto or speculative stocks without research.