Maybe you don’t have a lot of money to invest, but that doesn’t necessarily mean you shouldn’t invest it. With a not so large amount, like $100, you can do much more than open a savings account. We asked our top five contributing writers, and here is what they said about how to invest $100 a month wisely:

1. Index-tracking Mutual Fund

It may seem for many people that $100 a month is not enough to begin investing. However, there are some great options to start an investment strategy with few bucks.With that being said, an index-tracking mutual fund is among the best ways to begin investing. Even though you have minimal monthly assets, it will certainly give you some diversification. Besides, you will be certain that your investment will track your preferred market benchmark, such as the S&P 500 index or a more specialized one.

Stock market chart on LCD screen. Selective focus.

Moreover, there are many mutual funds companies demand having a higher minimum amount of money to create a fund account; they typically require $1000 or more. But still, if you are willing to contribute to the account, monthly or quarterly, several other fund companies have better options of affordable index mutual fund where you can start with $50 or $100. You see, there’s always a more practical and affordable alternative when it comes to investing.

Then, after establishing a sturdy foundation in your index fund account and you want to generate higher profits, you can move on to the individual stocks. Yet, those latter come with a higher risk level.

2. Individual Stocks

I encourage you to invest in individual stocks if you have an extra $100 every month and you are ready to invest this sum of money. Even if it doesn’t seem like a large amount, but if you can definitely generate high profits if you find the right investment choice; which in this case is individual stocks. However, you need to know that you are susceptible to lose 10% of your investment money with the standard commission of $9.99 to buy and sell a stock. It may seem like a considerable amount compared to the total money you are willing to invest, but you can luckily cope with this loss.

Fortunately, you will find great deals when shopping around among brokers. Various low-cost brokers on the market will help you fulfill great results due to their minimum deposit requirements and low commission fees. For example, NerdWallet highlighted TradeKing in 2005 thanks to its incredibly low commission of $4.95. Even though there are many low-cost brokers available, there are possibly a few cautions you need to consider to help you save your valuable money, like inactivity fees or additional costs associated with buying stocks trading under $2 per share. But still, choosing a low-cost broker to start investing in individual stocks is a smart move for your $100. 

Additionally, you will have the chance to outperform the larger market averages in the long term as long as you are buying individual stocks. Even more, holding a quality stock for years or decades might pay a dividend and will definitely help you generate more money. The 10% lost to the commission would be nothing by that time. Besides, the market has historically gained 8% per year, which will undoubtedly increase your chances of success over the long run.

3. Exchange-traded Fund

One of the best ways to invest a small amount of money, let’s say $100, per month is to dollar-cost average into a cheap exchange-traded fund (ETF). I believe that this the best investment approach compared to how much money you are willing to invest.

There are various reasons why many investors end up losing money rather than increasing their profit. They fall into the trap of making decisions using emotions instead of reason, which in return will lead money investors to experience a litany of behavioral biases that weakens the person’s capability to make financial decisions at the appropriate time. As a result, they end up selling stocks when they are low while they bought them when they were high.

I believe that you don’t want to fall into this trap. Even more, having the idea of losing all your money in no time may be discouraging you from starting. Fortunately, by adopting the right investment strategy, you will certainly minimize the risks of losing your valuable money. That’s why you need to commit to buying equal sums of stocks at fixed intervals; which should be $100 in your case. You can do so with an affordable ETF. You will not only minimalize the harsh influence of costs on your revenues but also you will minimize your idiosyncratic risk; which is the risk that stock of a particular company will stutter while the market goes up.

4. Emergency Fund

As the name indicates, the money you put in an emergency fund is mainly kept for emergencies and unexpended expenses. So, it might be the best way to invest your $100 a month is to keep it safe in a savings account.

It is true that you won’t get large earnings on your savings with the current interest rates. But still, this investment strategy will keep you from dipping into your investment account such as your 401(k) during harsh times, especially when there is an early withdrawal penalty.

Having an emergency fund can help you cope with any unexpected accident or illness that impacts your income for long periods. Besides, you need to keep it liquid to be able to withdraw the money without any delay.

It might not be the right investment strategy to generate more income in the long term, but having an emergency fund is your best solution to overcome unexpected events that might end up affecting your retirement plans.

5. IRA

If you are willing to invest $100, then you would better open a tax-advantaged account, such as an IRA.

First, there are primarily 2 types of IRA accounts with a major difference in tax benefits: traditional and Roth. For the traditional IRA, the contributions might be deductible on the taxes. So, if you are investing $100 a month, you may have a total of $1,200 deduction by the end of the year. Alternatively, Roth IRA doesn’t have deductible contributions, but any withdrawals you make during retirement will be free of taxes. Besides, you will have the opportunity to withdraw the original contributions (earnings are not included) at any time for whatever reason. When enrolling to both accounts, the money compounds with no dividend taxes or capital gains every year.

Moreover, you can earn a lot of money over time. For instance, if you invest $100 per month in a Roth IRA account for 30 years, you can earn roughly $180,000 based on the historical performance of the S&P 500. Having this sum of money in Roth IRA might imply $45,000 in tax savings, as long as you are in the 25% bracket of taxes during your retirement. So, it is definitely worth investing your money in an IRA account.


Many people think that the stock market is not eligible until you have a large amount of money to invest in it. However, specialists tell us the opposite. According to them, everything is based on methods and decisions. If you take the right ones, you will be a winner, even if you only invest a few hundred dollars. Now it is up to you to pick the right investment option that matches your preferences and needs.