Let’s say you have $100 to invest, where is the best place to put it to work for you? I know everyone else on Youtube has already made videos on how to invest your $1,000, but very few over what to do with $100 – an amount that just about everyone here in Youtube-land can get their hands on. – Legally, get their hands on that is. Don’t do anything stupid like rob a bank or something, remember cash destroyed with a dye pack cannot be used to buy stocks.
With your first $100 invested you can easily turn what you learn here into $1k, $10k, $100k, $1 million, or more. This video is geared for the beginning investor so I will take it step-by-step, but even more, experienced investors will still get a tip or two out of this video, so please watch to the very end of the video as YouTube grades content providers on how long you watch the video, and if you click like & subscribe, thanks.
A quick reminder: I am not a lawyer, CPA, etc., I have no licenses in finances or the law, everything in this video is my opinion and is for entertainment purposes only. So check with your CPA. Sorry for the annoying disclaimer, but the lawyer I have tied up in the basement reading these scripts made me say it.
Now, let’s get to it.
Even after two sold weeks of gain, the Dow is still down almost 7,000 points since late February, wiping out trillions of dollars in wealth as the world faces the biggest health crisis and economic shock in decades. And while there could be more pain ahead, history is a clear guide, that people who take advantage of big market crashes like this to buy are the ones who profit in the long term.
It’s understandable if your first thought was to start by taking your $100 and buying small amounts of stock. After all, there’s a lot of compelling evidence that investing in stocks is the best way for regular people to attain financial independence. But a lot of people don’t understand how important it is to also have a strong margin of safety with their finances. For most of us, the best way to get that margin of safety is by having cold, hard cash.
If you don’t already have three to six months’ worth of living expenses set aside — maybe even more if you have a family and a mortgage — then the best place for you to start with that $100 per month is putting it in a high yield savings account as an emergency fund.
I know this really isn’t what you were expecting, but it is solid advice.
Now, let’s presume you already have an emergency fund set aside. Then, in this case, where should you invest your money?
As you guys know, I love real estate investments, but $100 is not exactly going to get your very far purchasing a property. Of course, I did purchase an apartment building with $0 down out of my pocket well . . . actually I did pay $900 for a commercial building inspection, but aside from that, I put $0 down out of pocket. In fact, the $900 was on a credit card with 0% interest for 1-year and pays me 3% cashback. Should I make a video explaining how I did this? If so, leave a comment below telling me you want to see this.
Ok, now, back to what to do with your first $100.
To invest you first need a brokerage account. I highly recommend Webull (a link is in the description below) as they give you two free stocks to get you started, with one of those stocks being valued up to $1400 as long as you deposit $100. Which is perfect as today we will be investing our first $100 in Webull. If you use the link in the description below to open your Webull account, they will give me the same two free stocks they give you. It costs you nothing extra but helps support me and this channel and I really appreciate that.
Of course, right about now I am sure people are screaming at their monitors saying “Steven, you’re wrong, $100 invested in stocks will never make you rich.” Well, ok, those [donkey] are not completely wrong here.
Yes, if you ONLY invest a single $100, once, and do nothing else, you will not make it rich. I guess hypothetically you could have purchased Amazon in the summer of 1997 for around $1.50 a share. In that case, your original 66 shares, after multiple stock splits would be worth approximately $1,908,894.24, so yes, yea, I guess, for that one dude that was lucky enough, you could turn $100 into nearly $2 million.
But no, the goal here with your first $100 is to give you actual real-world experience buying, selling, and holding stocks. There is no better life lesson that buying a stock and watching it immediately loose value the next day and the discipline it takes for you to map out a strategy and invest in the long term.
Long term investments is where money is made, just ask Warren Buffett:
“You can’t produce a baby in one month by getting nine women pregnant.”
In other words, some things just take time and can’t be rushed. He followed that comment up with this: “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.”
Choosing your stocks can be the most difficult, or the easiest part of investing. It depends mostly on how well you are at making decisions? Do you agonize for hours or days on choosing “the perfect stock”? If so, honestly, get over yourself. I do not care who you are, no one is perfect in their investments. Some will go up, some will go down.
The best suggestion I can give here is to choose an Exchange Traded Fund (ETF) in a market you understand. What is an ETF, you are asking? Simply put, an ETF is a collection of stocks held and managed on your behalf. It is similar to a mutual fund, however, unlike a mutual fund, an ETF can be purchased or sold by you any time of the day, whereas a mutual fund typically you can only purchase in the evening. Also, the ETF usually holds its assets for long term investments. Honestly, the differences are so vast I really should make a video on ETFs vs Mutual Funds, but for today, just know that you can purchase 1 stock of ‘X, Y, Z ETF” and have your investment spread over dozens or hundreds of individual holdings the ETF invests in.
For example, as of today, you could purchase a single share of Global X Cloud Computing ETF for $16.70. You now own a very small percentage of Alibaba, Microsoft, Amazon, Box, Dropbox, Salesforce, Twillo, Paycom, Akamai, LogMeIn, Netflix, Shopify, and more.
The beauty of the ETF is if one company does poorly, for example, Alibaba is hurt due to the worldwide pandemic (currently down 3.65% YTD), Amazon does better (it is up 30.43% YTD) this all keeps your investment in the green.
Just remember, stocks go up and stocks go down – don’t get me started on how my 15 Boeing shares are doing after buying them at $320 a share, of course, I did snap up another 10 shares of Boeing when it dropped to $100, which helped take some of the sting off, but it still hurts.
Another benefit of an ETF is allowing you to purchase into a company that you cannot afford a whole stock of. EX: Amazon is currently at $2,408.10 to purchase a whole stock, but if you but the example I just gave you would have a small percentage of Amazon in your portfolio.
There are tons of ETFs out there, for multiple different markets. Choose the one you are interested in. Do you like gaming, choose an ETF that has holdings in gaming companies you like. There are ETFs in every industry you can think of from real estate, cell phones, computers, etc.
Choose whichever works best for you, remember the goal here is to not necessarily pick the “next Amazon” stock, no, instead you are learning a foundation that will serve you well for the rest of your investment life.
Without getting too far into the weeds here, there are a few things to think about regarding long-term tax ramifications. Of course, I cannot give you legal advice, remember, I’m just a dude on the internet, you should definitely check with your CPA.
You might be best served by opening a ROTH IRA, which in simple terms means you pay you to invest your after-tax money (the money you get in your paycheck after taxes are already taken out by your employer) into a special retirement account. All earnings made from this investment grow tax-free. I have a whole video on Roth IRA you should check out.
In quick simple terms if you put $100 in a ROTH IRA today and when you retire it is worth $1,000, you pay no taxes on that $900 worth of profit. Whereas, if you purchase the exact same stocks in a normal brokerage account, everything else being equal, you would owe taxes on your $900 when you cash out. And I don’t know about you, but I hate paying more in taxes than that I am required to pay. Like my old RDC said in Navy Bootcamp, “work smarter, not harder recruit!”
Luckily Webull allows you to open a ROTH IRA account, easily, without any extra fuss.
Thanks for watching, I really hope you enjoyed the video. Please make sure you like & subscribe. Let me know what free stocks you get from Webull by commenting down below.