Got an extra hundred bucks? With financial products like fractional shares, index funds, ETFs, brokerage accounts and robo advisers, $100 can go a long way.
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Thanks to investment products like fractional shares and exchange-traded funds, or ETFs, you can enter the market for dollars and cents — and quickly build a diverse portfolio with little money. Not to mention the apps that can help you save or invest spare change. Why you want to invest also informs how much risk you’re willing to take. Investments always involve risk, says Hemphill. It’s normal for markets to go up and down, and you need to understand that before you start investing. If you need the money for something in the next five years, for example, a high-yield savings account might be a better option because even though your money has less growth potential, there’s less risk involved.
If you’re not and want to start saving for retirement, you can set up a tax-advantaged plan on your own with an individual retirement account, or IRA. Since some providers do require account minimums for IRAs, be sure to look for a provider with a low or $0 minimum. In buying a share of an index fund or ETF, you’re instantly gaining access to shares of a wide range of companies, offering easy and quick portfolio diversification, which makes them an excellent choice for beginners. However, note that while index funds and ETFs are similar in many ways, they have their differences.
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