You might not hesitate to drop $100 on dinner and drinks for a special occasion, but you’d probably think twice before investing that money in the stock market. Although stocks have been on a roll for most of the last decade, fears of a crash are mounting, making it especially scary for first-time investors looking to get in on the bull market.
But if you limit your investments to just $100, you don’t have to fret about taking a big financial hit when things head south, and you’ll be more motivated to educate yourself about how buying and selling stocks works since you have some skin in the game.
“I really believe the way to make stocks less scary is to buy companies that you think are interesting,” said Amber Jamieson, a journalist with an investing newsletter, who started investing in stocks after she found out her friends in Australia were making bank on weed stocks. “I didn’t realize that stocks could be fun. I bet there are other people who don’t know yet.”
New investing apps that have cropped up in recent years for first-time investors can help. Unlike most brokerage accounts, which require a $1,000 initial deposit, these let you get in for as little as $5. Some offer electronically-traded funds (ETFs), which let you invest in dozens or stocks, or buy fractional shares of individual stocks so you can own a stake in more than one company even if you don't have much money to invest.
Understand the risks of buying stocks
Remember that investing in individual stocks is extremely risky, and you’re more likely to lose money than make it. So before you start, “have all the infrastructure in place,” certified financial planner Roger Ma said. That means paying off any high-interest debt and making sure you have money set aside for emergencies. It’s also smart to start saving for retirement as soon as you can.
It’s also wise to evaluate how much money you are willing to risk losing and to research the companies before you buy anything. A variety of sources are out there, including Kiplinger, Money, and Investopedia. And here’s a primer on investing and personal finance basics.
Investing apps can be a fun way to learn about the stock market, but Ma doesn’t recommend using them long term because they are run by small, privately funded companies that may not last—which means you’d likely have to cash out if they go out of business. Opening an investment account with an established firm, like eTrade, Fidelity, or Schwab, might be a smarter long-term bet once you are ready to invest more funds.
With that in mind, here are three apps that help make investing in stocks easy:
Investment options: More than 5,000 investments, including most stocks listed on US exchanges and nearly 500 ETFs. You can also trade options and invest in crypocurrencies, including bitcoin, ethereum, and litecoin, in some states.
Minimum to invest: No minimum balance to open an account but you need to purchase at least one share of a stock or ETF.
Fees: Free with free trading for domestic stocks, up to $50 for foreign securities. ETFs also have fees of around 0.5 percent or less built into their price
This minimalistic app, which claims nearly four million users, works best if you already know what you want to buy, as it does not provide much research on your investment options. To get started, you’ll need to link your bank account and deposit money into the app. Next add investments you are interested in to your watchlist to see how their price changes each day. On the downside, Jamieson said she found Robinhood’s simple approach frustrating. For example, it doesn’t list expense ratios for ETFs or give any details on their holdings, so you’ll want to do some outside research first before you buy.
Investment options: Stash offers over 100 ETFs and well-known stocks, including Home Depot, Snap, and Starbucks, among others.
Minimum to invest: $5
Fees: $1 a month for accounts under $5,000; 0.25 percent per year for balances over $5,000
Stash, which claims to have more than a millions customers, starts out by asking your investment style—conservative, moderate or aggressive—then recommends investments for you. It also lets you buy fractional shares of its selection of stocks and funds in increments as small as $5. While it has much fewer investment choices than Robinhood, it helps you understand your choices better by giving them names like “social media mania” and “roll with Buffett” and then explaining what that means. You can also open a Roth or traditional IRA through the app.
Investment options: More than 1,500 stocks and ETFs
Minimum to invest: $5
Fees: Three dollars for your first purchase then a dollar for subsequent ones. If you uses a credit or debit card, you pay an extra three percent. ETFs have management fees built into their price.
Like Stash, Stockpile lets you buy fractions of stocks, which can come in handy if you can’t afford a single share of, say, Apple, which currently costs about $200. The app also helps you pick investments based on your interests, such as the environment, tech stocks or companies with a strong track record on LGBTQ issues. Unlike Stash, Stockpile offers a wider range of investments, lets kids under 18 trade with a parent’s oversight via a custodial account, and sells gift cards for investing in everything from Facebook to bitcoin.