Five financial gurus can teach you how to invest your first $100

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  • Investing does not need a large sum of money; even $100 will do the trick.
  • A health savings account or a target-date fund may be an option.

Investing is often portrayed as a privilege reserved for the rich in popular culture. Stockbrokers in action before the market closes, yelling into their phones after they’ve lost hundreds of dollars, maybe seen in movies all the time. Knowing that they’ll only become wealthier, billionaire investors are seen on television signing over their holdings.

When presented in this way, the typical individual may be discouraged from participating in the stock market, assuming they must first reach a specific level of income or savings.

This isn’t necessary. You don’t have to invest a lot of money to make a difference. No amount of money is too little to make a difference. Insider spoke to five qualified financial advisors who provided recommendations on how they would invest $100.

Open a Roth IRA.

Wesley Botto, a financial advisor at Cornerstone Financial Group, suggests starting a Roth IRA if you have an emergency fund and have paid off any high-interest debt.

Botto prefers Roth IRAs for their tax advantages. In the end, taxes are “either going to increase, remain the same, or decrease.” What do we expect them to do? He predicts an increase in prices. “You may as well put it in an account that won’t be taxed in the future,” advises the speaker. “

When you withdraw money from a Roth IRA rather than a standard IRA, you don’t have to pay taxes on the money you get back. Your deposit is instead subject to the tax rate applicable to your situation. A “backdoor Roth” may be possible even if you earn more than the income restrictions imposed by the IRS, according to Botto, a financial advisor.

Invest in yourself

Cynthia Meyer of Real Life Planning adds, “I honestly do believe someone would get the greatest return by looking at themselves.”

Real estate investor Meyer recommends searching for ways to put the money back into yourself and generate several income streams by taking a course, creating a website, or purchasing equipment for a specialty side business. It’s possible that a younger person hasn’t recognized how much money they may make by using their passions and abilities to generate several income streams,” she adds.

Meyer puts it, “You need a lot of cash to get started in a significant sense, but you don’t need a lot of capital to set up your website and do something you’re already excellent at..”

Fill your health savings account with money.

According to a Merriman financial advisor, a Roth IRA is the most excellent way to invest $100. However, he also recommends a health savings account.

For him, the tax advantages of HSAs outweigh those of a Roth. On top of the tax-free growth and tax-free withdrawals, you also receive a tax advantage on the front end,” McLaughlin explains.

A high-deductible health plan is one of the prerequisites for setting up an HSA. Still, as long as the funds are utilized for “qualifying healthcare costs” — which everyone has — the HSA may be effective, according to Mr. Kopelman.

It’s never too early to start planning for the future.

‘I take some creative licence with the term investment,’ declares Tania Brown of SaverLife, a financial advisor and coach. The question is, “What kind of future are you wanting to invest in?”

Debt repayment is the best use for $100 if freedom from debt is one of one’s long-term objectives. A person’s ideal future may involve financial security. Therefore it may make sense to save for an emergency fund.

If you have children, Brown’s 529 plan is an excellent way to put money down for future school expenses while still allowing you to deduct the cost from your taxable income. Because of where they live, it may be tax-deductible depending on their state of residence,” she says.

No-load mutual funds are an option for those who want to dip their toes into the market. Additionally, she has no objections to someone purchasing a single stock in a single firm, even though this is a more risky strategy. She emphasizes that the goal is to educate people. This is a fantastic tool.”

Learning and losing $100 is preferable to learning and losing thousands of dollars to get insight into one’s preferences and comfort level.

Invest in a fund with a specific end date in mind.

Financial adviser Laurie Nardone, managing principal of Shira Ridge Wealth Management, often advises target-date funds for those with a lower amount of money to invest. This is what I would do if I were in their shoes,” she adds. “And if they were young, I would offer a goal date of 2050,” she continues. When you donate $100, it will be invested in an “ethically sound manner.”

She feels that the $100 may be used to create a new habit. Start, she tells you. A $10-a-month pattern is formed if you have $100 in your bank account.

You will never have what you want if you don’t start, says Nardone. “Some people will say it’s not worth it until I get this.”

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