Does It Pay to Open a Brokerage Account if I Only Have $100?

by Maurie Backman | Published on Oct. 18, 2021

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Should you bother investing if you only have limited funds to work with? Here's what you need to know.

You'll often hear that opening a brokerage account and investing in it is a great way to turn your money into, well, a lot more money. This especially holds true if you hang onto your investments for a long time and give them ample opportunity to grow.

But what if you don't have a lot of money to start investing with? Between bills, loans, and other expenses, you may only have somewhere in the ballpark of $100 to initially fund a brokerage account. In that case, you may be wondering if it pays to get started immediately. And the answer is a resounding "yes."

The best time to start investing is now

It's easy to put off investing on the basis of not having much money to work with. But the good thing is that many brokerage accounts today don't impose a minimum balance requirement. This means that even if you only have $100 to put into your brokerage account, you can begin buying stocks or other assets, like cryptocurrency. (Not every brokerage lets you buy digital coins, but many do.)

In fact, when it comes to investing, the sooner you get started, the better. The reason? One thing that helps investors do well is time. If you give yourself more years to let your investments generate returns, you stand to earn more money.

Imagine you begin investing with $100 today, and that your portfolio generates an average return of 7% a year (which is a little bit below the stock market's average). If you were to do nothing and leave your portfolio alone for 40 years, you'd end up with about $1,500.

Now, ideally, your goal should be to keep pumping money into your brokerage account through the years so you can invest even more. But if you're limited to $100 for now, there's no reason not to get started.

How to invest your first $100

Since many companies have share prices above $100, you may want to favor a brokerage account that lets you buy fractional shares. With fractional shares, you buy a portion of a share of stock -- instead of a full share. Then, as those shares gain value, you profit on a proportionate basis. Fractional shares allow you to own more stocks when money is tight.

Another option to look at if you only have $100 right now is buying exchange-traded funds, or ETFs. ETFs let you own a bunch of different stocks with a single purchase, and they're a great way to get more diversity in your portfolio when you don't have much cash to invest with.

Get started today

There's no reason to put off investing because you're limited in funds. If you have $100 available, research several brokerage accounts to see what benefits they offer and find one that suits your needs. The sooner you get started, the sooner you can begin building a portfolio that lets you grow your money.

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