Ask GFC 026: How to Invest in Your 30’s With as Little as $100

How to invest in your 30s is actually a critical issue. That’s the time in life when you really need to dig in, and develop strategies that will benefit you in the long term.

A lot of people are busy getting their lives together when they’re in their 20s. But by the time you reach 30, most that should be sorted out, and you should be ready to begin making commitments to your future.

One of the obstacles for a lot of people is obviously money. Finding the money just to began investing can be a real hurdle. Part of the reason why that’s true is that a lot of people don’t think they can save and invest with very little money.

But in fact, that’s usually how it starts. Baby steps, then bigger steps, then before you know it, you become a serious investor.

But you’ve got to start somewhere, no matter where that is, and how little that you have. We got an Ask GFC question on that very topic recently:

“Hi, I’m 30 yrs. old and I want to start investing, this will be my first time
doing this and I feel like I’m lost in another world. I’m trying to start with a short term investment plan and then try to go for the long term, I’m not sure where to start , where to go, or what company is the best one, I hear a lot of good things about different brokerage firms but then again I’m not sure if they are the right company.

Also I want to invest about $100.00 dollars to start, can it be possible can my money really grow with only investing $100.00? or will I be wasting my time?

Should I buy stocks or bonds? I’m so confused, I’m sorry if I sound like I’m incompetent but I’m really lost when it comes to investing. I hope you could help, or at least guide me in the right direction.

Thank you so much,

Mimi

Thank you for asking this question MiMi, because a lot of people really don’t know how to invest in your 30s – and that’s the time when it needs to start.

You may only have $100 to start with, but that’s actually plenty. The basic idea is to get started with a small amount, and then to build momentum.

First Things First…

MiMi doesn’t provide all of the specifics about her overall financial situation, but this is a good time to review some of the basics.

Before she begins investing, we have to assume that she has some money set aside in an emergency fund. At age 30, she should have an absolute minimum of 30 days of living expenses (3 months worth would be better) sitting in a savings account or a money market fund.

This will provide her with ready cash for a short-term disaster, like a major car repair, an uncovered medical expense, or even the loss of her job.

Why is this so important?

It will do little good to begin investing money, but then have to liquidate those investments to pay for a short-term emergency. That might even force you to sell those investments at a loss. That’s why an emergency fund is so important.

You Should Also Have a Plan in Place on How to Pay Off Your Debts.

That doesn’t mean you should wait to invest until all of your debts are paid in full. But rather it’s about having a plan, and having that plan already set in motion. Like investing, getting out of debt is a long-term process.

Still another important factor is that you have to have extra room in your budget. That extra will enable you to save and invest money, and to grow your portfolio over the long-term. That usually requires some combination of increasing earnings and lowering expenses.

Okay, let’s get back to the business of how invest in your 30s with as little as $100.

Where Can You Invest With “Just” $100

I recently wrote an entire article dedicated to ways to invest with as little as $100, but this article is more specifically dedicated to how to invest in your 30s. That alters the choices, at least a little bit. So I’ll keep this list short, and focus on actual financial investments.

There’s actually nothing exotic here, but perhaps you weren’t aware that you can get in any of these investments with as little as $100. But you can, and I’ll make specific recommendations in each section (other than the first, since it’s related to your employer).

Your Employer 401(k), 403(b), 457 or TSP Plan.

If you want to learn how to invest in your 30s, it really starts with retirement planning. If your company has an employer-sponsored retirement plan, you should absolutely be participating in it.

By upping your contributions as you receive pay increases or change to a higher-paying job, you could be throwing in $5,000 in investments per year in no time.

Employers usually have you enroll in retirement plan contributions based on a percentage of your income, rather than a flat dollar amount. Your contribution options can run from one percent of your pay, and up to 100% with certain plans.

Some employers also offer a matching contribution. For example, they may provide a 50% match up to your contribution of 6% of your pay.

That will give you a total contribution of 9% – your 6%, plus the employer’s 3% match. If you can’t contribute enough to get the maximum employer match, then contribute as much as you can. $100 per paycheck is a good beginning.

A Traditional or Roth IRA.

Whether or not you have an employer-sponsored retirement plan (and especially if you don’t), you should consider having your own IRA. It can be either traditional or Roth, each offers its own unique benefits. You can save as much as $7,000 per year with an IRA, or up to $8,000 if you are 50 or older.

You can start an IRA as little as $100. For example, investment broker TD Ameritrade will allow you to open an IRA – traditional or Roth – for as little as $100. Some firms even allow you to start an IRA by making regular monthly deposits – you don’t even need any money upfront to open up the account.

Open a Robo Advisor Account.

Betterment is a fully automated investment service that you can open for as little as $100. They will build a diversified investment portfolio for you, and handle all of the management of the account. All you need to do is fund the account.

Peer-to-peer (P2P) Lending Platforms.

If you’d prefer to invest in a high yield, but relatively safe investment, you can consider P2P lending. They will enable you to invest in loans that can pay interest rates as high as double digits. There is some risk of loss from defaulted loans, but you can minimize that risk by investing in several loans at a time, and at different risk grades.

The two most popular P2P lending platforms are Lending Club and Prosper. Either platform will allow you to invest in loan notes with as little as $25. With $100, you could spread your investment across four separate loan notes.

That’s just a short list sample of the investments that are available to you if you have as little as $100 to invest.

What NOT to Invest In

This is a good time to pause and consider the types of investments that you might want to avoid. With some, there might be a natural tendency to give them a shot under the mistaken notion that they provide an opportunity to turn $100 into $10,000.

But more likely, you’ll lose your investment completely, and that’s why they’re best avoided.

Here’s a partial list of the possibilities:

• Individual Stocks: You don’t have enough money to buy more than one or two shares of known companies, and you want to avoid penny stocks altogether.
• Lottery Tickets: If you spend $10 per week on lottery tickets, that’s $520 per year that’s not going into any type of long-term investing. And you’ll probably never win anyway.
• Collectibles: This can include everything from numismatic coins to rare knickknacks. Every one of them is a blatant speculation and has nothing to do with investing.
• Exotic Investments: This category pretty much takes in any investment that you don’t understand. And if you don’t understand it, you’ve got no business being in it.
• Get-Rich-Quick Schemes: Nearly everyone is tempted by these in a moment of desperation. But they are not investments, and they only work for the people who promote them, and never for the participants.

The first rule of investing is to not lose money, and if you avoid these investments, you’ll be taking a big step in observing that rule!

How to Invest in Your 30s – Investing Beyond $100

You want to know a little secret?

That means that after you invest your first $100, your strategy needs to be to keep it going. That means adding another $100 next month, or next week, or soon as you are able. And to keep that pattern going from now on. That’s momentum.

But momentum doesn’t just happen, especially when it comes to investing. If you want to know how to invest in your 30s, know that it’s all about creating and maintaining momentum. Once you get going, you can’t fail!

The Bottom Line – Ask GFC 026: How to Invest in Your 30s With as Little as $100

Investing in your 30s is crucial for long-term financial security. Despite limited funds, starting with as little as $100 is feasible and can build momentum.

Before investing, ensure an emergency fund covers at least three months of living expenses to avoid tapping into investments prematurely. Manage debts and create room in your budget to save and invest consistently.

Consider employer-sponsored retirement plans like a 401(k) if available, maximizing contributions over time. Individual Retirement Accounts (IRAs) are accessible with as little as $100, offering tax benefits.

Robo advisors, peer-to-peer lending platforms, and diversified investments like index funds are suitable choices. Avoid risky ventures and prioritize maintaining momentum in your investment journey.