10 Ways to Get Started Investing With $100 or Less

Investing isn't just for the wealthy. While you should have an emergency fund in place before you start investing, you don't need a big pile of cash that's earmarked for stocks. In reality, you could probably raise your starter investing budget by skipping coffeehouse drinks for two weeks, packing your lunch, or forgoing a night out with friends.

Intrigued? Read on for 10 ways to start investing with $100 or less.

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We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Brokers that support fractional investing allow you to buy stock shares in units of less than one. Instead of buying a whole share of 3M for $200, for example, you can buy a hundredth of a 3M share for $2. Your 0.01 of a share has the potential to appreciate just as a whole share would. That fractional position will also earn a hundredth of 3M's regular dividend.

Not all brokers support fractional investing, and those that do set their own rules. Before you invest, take care to review how fractional transactions work. Pay attention to the minimum buy amount, how long it takes to settle orders, and whether you get voting rights as a fractional shareholder.

Generally, you can't transfer fractional shares from one broker to another. You'd have to sell your fractions and transfer them as cash.

ALSO READ: 3 Top Stocks Under $10

Dollar-cost averaging, or DCA, involves investing a set amount of money at regular intervals, such as monthly or weekly. Say your investing budget is $600 annually. Investing $50 monthly versus $600 all at once can keep your cost basis lower and reduce the chance you'll buy at the wrong time. It isn't the end of the world if the market crashes right after you invest, but it's better to avoid that stress if you can.

You can combine DCA with fractional investing, too. Sticking with the $50 monthly budget, you could invest that amount into a handful of stock fractions. Spreading out your exposure across different stocks is always a good idea, so you're not wholly dependent on any one of them.

A mutual fund is a portfolio of securities that's sold to investors in shares. When you buy one share of a mutual fund, you get exposure to all the securities in that fund. This is more cost-efficient than buying each of the stocks individually on your own.

When you buy and sell mutual fund shares, you engage directly with the fund company. The share prices do not fluctuate throughout the day like a stock would. Instead, the fund is repriced once at the end of each day.

Mutual funds come in many varieties. Before you invest, you'll want to understand and agree with the fund's investment approach. Also, keep your research limited to mutual funds with no minimum purchase thresholds and low expense ratios. The expense ratio represents the fund's operating expenses, which are passed on to you as a shareholder. Expenses do reduce the fund's investment returns, so the ratio can be an indicator of fund performance.

Exchange-traded funds, or ETFs, are investment funds that trade on an exchange, like a stock. ETF prices do fluctuate throughout the day based on investor demand.

ETFs, like mutual funds, allow you to invest in a basket of securities at a low cost. You can get an entire portfolio for the cost of a single share of an ETF -- or less if your broker supports fractional ETF shares.

Even better, ETFs, more so than mutual funds, typically have ultralow expense ratios. Several fund families have funds with expense ratios at 0.03% or less, including Vanguard, iShares, Schwab, and SPDR.

ALSO READ: 2 of the Best Growth Stocks You Can Buy for Less Than $10

Index funds are a type of mutual fund or ETF. Index funds invest in a group of securities that mimic the performance of an index. An index is a collection of securities that represents a segment of the financial markets. The Dow Jones Industrial Average and the S&P 500 are two of the best-known indexes, but there are many more -- including indexes for small companies, international companies, corporate bonds, and more.

S&P 500 index funds are popular with new investors, in part because the index has a long history of strong performance. The long-term average of the S&P 500 after inflation is about 7%, which is several times more what you can earn in a savings account.

The SPDR Portfolio S&P 500 ETF is a budget-friendly index fund, currently trading at about $53 per share with an expense ratio of 0.03%.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

If you prefer whole stock shares over mutual funds or ETFs, you can find investable companies priced below $100 per share. This is a riskier strategy, though, so proceed with caution.

First, a few things you should avoid: penny stocks, stocks with very low trading volume, and stocks that trade through a broker versus on an exchange. Take care to diversify, too. Ideally, you should strive to hold at least 20 different stocks at a time. That way, each position accounts for only 5% of your portfolio.

Second, set rules for yourself so you can be consistent with your investing approach. It will help to learn more about value investing, which focuses on stocks that look to be trading for less than they're worth.

Robo-advisors are automated investment platforms that function as lower-cost alternatives to professional portfolio managers. Usually, a robo-advisor matches you with an investment portfolio based on your responses to a questionnaire. The platform then keeps your investment balanced across different asset types. The goal is to keep your risk aligned with your financial goals, age, and risk tolerance.

The robo-advisor approach is a good fit if you want hands-free investing with some professional oversight. You won't have a human investment manager at your disposal, but experts work behind the scenes to set and implement the rules for your portfolio.

Acorns, Fidelity Go, and SoFi are three robo-advisors with low minimum balance requirements.

ALSO READ: 2 Dirt Cheap Stocks That Could Skyrocket

Investment apps like Robinhood, Betterment, and Wealthfront also have low or no minimum balance thresholds. Most of these apps also support fractional investing and/or have robo-advisor services.

Some investing apps also have programs designed to help you invest your "spare change." As an example, Acorns rounds up everyday purchases made with your debit card to the nearest dollar and invests the difference. Wealthfront invests leftover cash in your checking account after you've paid bills and funded your savings goals.

The only downside to easier investing is you could be more likely to overlook the risks. Remember that any stock or fund shares you buy can lose value. For that reason, you shouldn't invest funds you might need right away.

Your 401(k) might be the smartest way to invest $100 or less, especially if your company has employer matching contributions -- which are basically free money.

Even if you don't have employer match, investing in your 401(k) is cost-efficient because the contributions are pre-tax. Your 401(k) contribution lowers your taxable pay, which also lowers your income taxes. In other words, if you set up a $100 contribution to your 401(k), your net pay will go down by something less than $100. The exact difference will depend on where you live, your tax exemptions, and how much you make.

Set up your investment selections and those 401(k) contributions get invested for you automatically, at every paycheck.

If you don't have a 401(k), you should qualify for similar tax perks in an IRA. Since the IRA isn't connected to your paycheck, you don't get the immediate benefit of lower income taxes on each check. You'll claim a tax deduction for a year's worth of IRA contributions, up to the annual limit, on your next tax return.

Many IRAs allow you to invest in the full range of exchange-traded securities. That includes mutual funds, ETFs, index funds, and cheaper stocks. Some IRAs even support fractional shares, which give you many more budget-friendly investment options.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

You can start investing with just a few bucks. You won't get rich off a single $5 stock purchase -- but you could get rich by doubling your weekly investment amount every six months until you're up to a few hundred dollars monthly. Then, give yourself 10 years to stick with the investing habit and see where you stand.

You're likely to be far wealthier than you are today. The fun part will be looking back and remembering that it all started with less than $100.

Catherine Brock has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends SoFi Technologies, Inc. The Motley Fool recommends 3M. The Motley Fool has a disclosure policy.