When I was in college, investing wasn’t exactly on the top of my to-do list. I was too worried about exams, completing my French homework, and waiting tables at the local IHOP to think about building my wealth or becoming a personal finance guru.
I didn’t know what a brokerage account was, I was completely unaware of what the term “diversification” meant, and I was totally fine being the proud owner of one simple checking account with Wells Fargo, which used to be Wachovia. (I feel undeniably old writing this.)
Nowadays, however, college students have a plethora of resources to help them get started investing. It’s ridiculous how many resources are out there, to be honest. If you’re like college-aged me, though, you may be oblivious to what’s out there. To help you out, here are six ways you can begin investing with $100 or less.
#1 Open a high-yield savings account
Opening a high-yield savings account may not seem like an investment, but it is. It’s also the safest (and smartest) investment you can make as a young adult. A high-yield savings account is a specific type of savings account that’ll help you save even more thanks to its high savings rates, hence the name.
Unlike a CD (or certificate of deposit), most high-yield savings accounts are accessible 24/7 via a mobile app. This means, if you need to snag a few bucks for books or food, you can do so without paying a penalty.
Before you decide on a bank, however, I’d advise shopping around first. There are a number of online banks out there that offer high APYs and zero fees, you just need to know where to look. A few good places to start include Ally Bank, Axos Bank, and Varo.
#2 Download an investing app
Investing apps like Acorns, Webull, and Robinhood, are a great way to dip your toes into the pool of investing sans risk. With an investing app, you can invest in stocks via fractional shares, purchase exchange-traded funds (ETFs), track your spending, and learn how to budget, save, and invest (depending on the specific app, of course).
What’s cooler? Most investment apps give users the chance to get started with as little as $5. This way, you can see how things work without losing too much of your hard-earned cash. Some apps even offer referral and sign-up bonuses. Stash gives new users who deposit $5 an additional $5 to start investing.
#3 Invest in yourself
Sure, stocks, bonds, and mutual funds are cool, but investing in yourself is one of the most important investments you can make. It may seem unconventional (and, I guess it is, to a certain extent), but $100 can go a long way depending on your personal and professional goals. Plus, investing in yourself ensures a return. It’s like Warren Buffet says, if you improve your creative abilities or learn new leadership skills, no one can tax or take that away from you.
Investing in yourself could be as simple as buying healthier food, purchasing a couple of sessions with a professional masseuse, or paying for an intense new fitness class. You could also take the summer to travel and explore new cultures or take some time to reconnect with yourself mentally and emotionally via a group therapy session.
#4 Become a peer-to-peer lender
Peer-to-peer lending (P2P lending) allows investors to fund a portion of one or more loans as an individual. In other words, instead of going to a traditional bank, borrowers can apply for a loan through a web-based P2P lending platform (examples include: Kiva, Prosper, and Peerform) in which investors, like yourself, can lend them money. Then, the investor receives whatever interest accrues.
P2P lending can be a win-win for both the borrower and the lender. For example, borrowers who were previously denied a loan from a traditional bank may be able to secure one with a P2P lender whereas investors may get a higher return through a P2P platform than with a traditional savings account.
With that being said, P2P lending can be risky if you’re not careful. Rule of thumb: never loan more than you can afford to lose. You should also keep in mind that there’s a slight possibility that the borrower will stop making payments, which means you may not get your money back.
#5 Consider using a robo-advisor
If you’re comfortable handing your money over to a lending platform, you may want to consider using a robo-advisor like Betterment or Wealthfront. Robo-advisors offer a quick and low-cost way to start investing by giving newbie investors automated “advice” using an algorithm that’s based on your financial goals.
Robo-advisors are usually app-based and easy to set up. Just download the app, fill out some info (this may include your age, annual income, and future goals), fund your account (some apps require an account minimum), and start investing. Some robo-advisors offer additional services such as checking and cash reserve accounts.
#6 Invest your spare change
Speaking of Acorns, investing your spare change is a great way to start saving. The Acorns app lets users invest their change via round-ups. Here’s how it works: you make a purchase using your connected debit or credit card and the app rounds the total to the nearest dollar and transfers that amount into a separate account. Once your round-up account has reached $5, you can begin investing!
If you’re running low on funds, you can turn the round-up feature off. Just choose your risk tolerance (conservative or aggressive) and the app will do the rest. In addition to Acorn’s investment account, Acorns also offers additional features such as a Spend account (checking account), Later account (retirement account), and Early account (investment account for children).
The bottom line
Being a college student shouldn’t prevent you or scare you from investing. There are tons of opportunities out there for you, no matter your age, grade level, or income. You’ve just gotta get out there and find them. If you ask me, this shortlist is a great place to start. Tabitha Britt is a writer for the personal finance website, Joy Wallet, which provides readers with useful information, resources, and tools to help maximize their financial fitness.
