This guest post comes from Michael, a contributing editor of the Dough Roller, a personal finance and investing blog.
Investing your money is never an easy task. Those that have a lot of money will tell you that more money equals more problems and those without a lot of money will tell you that’s a problem they would love to have. No matter your wealth, at one point or another an extra couple of bucks presents itself and knowing the best way to invest it can give you great experience in investing which will help you figure out what to do with larger amounts in the future.
The safe way isn’t always the best way and the biggest possible return usually means the biggest risk. The beauty about investing only $100 is that if you make a mistake, it’s not detrimental to your finances, like it could be, had you invested more. Taking a look at 10 ways to invest your money, let’s see the pro’s and con’s and just how long it would take to double your money.
10 Options for Investing your $100
- Savings Accounts ““ Putting your money into an FDIC insured high yield savings account is the absolute safest way to have your money work for you. Unfortunately, it’s also the slowest. The current average savings account rate is 1.50% APY so if you choose to invest $100 this way, it would take you 47 years before you double your money. If you live long enough to see that, inflation probably made your money a lot less valuable then it was to start with, so for investing purposes, savings accounts aren’t the best option.
- Certificates of Deposit (CD’s) ““ Not being able to withdraw money for certain periods of time is difficult for a lot of people, especially if you don’t have a proper emergency fund. CD’s are another risk-free opportunity to grow your money and $100 invested in a 5 year CD, which has an average return of 3.00% APY will double your money in 25 years (It’s actually between 23 and 24 years but because it’s a five year CD, you can only withdraw in 5 year intervals). Certainly better than savings accounts, but still pretty slow.
- Investing in Stocks or Mutual Funds ““ Finally getting away from the safe and slow, stocks and mutual funds are a great way not only to make money but also to learn how to invest. The immediate problem is that if you invest only $100, you will have to pay at least 5% in fees just for the trade. The possible return on your investment is exponential, especially if you gamble in penny stocks, however only having a $100 means you probably won’t earn much.
- Commodities ““ If you were smart enough to know that the economy was going to tank and decided to buy things like gold, then your $100 would have tripled by now. Commodities are things like water, oil and gold and generally when things go bad, these things go good because they are in high demand. For precious metals, you can actually buy them rather than invest in them and people always love to look at shiny things!
- Forex ““ Billions of dollars is invested every day in currency trading and forex gives investors the opportunity to pit money against each other. $100 can buy a lot of other countries currency but deciding to play the foreign exchange market should only be decided on after thousands of research hours have been put in. Time zones allow you to trade around the clock.
- Government Savings Bonds ““ My oh my how this once great way to earn money has fallen. The current savings bond return rate is a whopping 0.30% meaning that if this rate remained steady, you would not live long enough to see your money double. In fact, your kids probably wouldn’t live to see it either. Perhaps when things stabilize the interest/inflation rate on bonds will increase but for now, STAY AWAY.
- Buying Coins ““ A coin collection can be one of the more fun and exciting ways to invest money and the good news is that if you stick with domestic currency, your investment will never drop below face value of the coin. Buying pennies won’t be much of a consolation however coins have shown excellent returns over the last 100 years. Numismatics is popular all around the United States so you should find plenty of establishments that can help you invest.
- Baseball Cards ““ Like coins, baseball cards are a fun way to invest. Growing up, my father would tell me how many Mickey Mantle and Jim Brown rookie cards he had, only to see his mother throw them all away because they cluttered the house. Now-a-days, those same cards would be worth thousands of dollars a piece. While it’s rare, if you find the diamond in the rough athlete and invest in him, you can make thousands.
- Real Estate ““ You’re probably not going to be able to buy any kind of property for just a $100 but if you already own a property, investing another $100 is an excellent idea. Maybe you need to do some patchwork in that fixer-upper or a little yard work to spruce the place up. The return won’t be immediate but small fixes can brighten up the big picture.
- Pay Down Debt ““ If you are given the opportunity to make an extra $100 payment on your credit card, loan, or mortgage, do it. $100 paid now can save hundreds of dollars in interest later. Of all the opportunities on this list, getting out of debt is the most boring of all but you won’t find a better return.