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MONEY DECISIONS IN YOUR 20's FOR EARLY RETIREMENT IN YOUR 40's.
3 Ways to Start Investing With Less Than $100
Posted on: 2 / 09 / 2017
Are you looking for ways to invest without a lot of money? One of the greatest hurdles to investing is that it is difficult to get started with a small amount of money. Between minimum investment amounts, brokerage fees, stamp duty, and paying upfront deposits, it can be difficult to enter any asset without losing a fair chunk of money along the way.

Despite this, there are ways to get around it. Here are three ways to invest with less than $100:

Acorns lowers the barriers to entry when it comes to investing in shares. Any money you invest will be invested into a diversified portfolio of domestic and global shares with low account keeping fees. One of the barriers to investing in individual shares and even index funds is that you can’t invest small amounts of money or if you do, the brokerage fee will take a huge chunk out of what you invested. 

With Acorns, you link your bank account to your Acorns account. The system then keeps track of your purchases and transactions. Whenever there is a transaction, the system ‘rounds up’ the amount of money you spend to the nearest dollar and invests the difference. For example, if you buy a coffee for $4.60, the system will take an additional 40c out of your bank account to ‘round up’ the purchase to $5.00. This extra 40c will then be deposited into your Acorns account and invested.
As you are investing in shares, the value of your Acorns account can fluctuate just like the stock market. Just like the stock market though, the long-term returns are competitive. When you open your account, you can choose from a pre-set portfolio which varies from ‘conservative’ up to ‘aggressive’. If you want to start investing now but can only spare a small amount of money then this is an excellent vehicle. 

Personally, I have used Acorns since it came out in early 2016; so about 18 months. Over that time my round ups alone have been $860 which translates to about $1.60 a day just from everyday transactions, bill payments and bank transfers. This genuinely shocked me, as I didn’t actually expect that much to have been invested from ‘round ups’ alone.

The overall return on my account since inception is 6.05% p.a. This was using the ‘balanced’ and more recently, the ‘moderately aggressive’ portfolios. Remembering that past performance isn’t indicative of future returns, and that Acorns has only been around for a short time so this value is likely to vary in future years.

While the ‘round up’ money alone is a nice way to invest, I think the true value from Acorns comes from the fact that you can add small amounts to your account at any time without having to pay brokerage. Amounts as low as $5 can be added anytime to your account so it becomes easy to drop an extra few dollars into Acorns each payday without getting slugged with fees or brokerage.

In summary, Acorns is a great way to get investing in shares if you don’t have much money. The round ups feature will invest a surprisingly respectable amount of money over time, and the fact that you can invest small amounts without getting slugged with brokerage or fees is attractive. As your account value increases, it may be more competitive to transfer your money out of Acorns to a different investment, but the fact that you can build wealth and habits on a small scale makes Acorns a solid choice for people new to investing.
This is an investment platform that allows you to buy into property in a similar way of buying shares. The Brickx platform displays a number of potential properties to invest in. To invest, you buy ‘Brickx’. This is kind of like buying a ‘share’ of the property. The benefit of this is that you can invest in property with a low barrier to entry, typically around $100.

You do get more of a choice when choosing what to invest in. Brickx shows you a variety of properties and potential rental income and projected capital gains. This is where a bit of research into the area and property will come in handy.
Once you have bought into a property you can start earning rental income or even sell your bricks to other investors for capital returns. It is vital to understand that the value of your brickx can fluctuate since other investors are allowed to re-sell their brickx back to other buyers and this could potentially be more volatile than directly buying property. 

It should be noted that there are several fees and hidden costs associated with this investment platform, including transaction fees and management fees (which come out of your rental income).
Personally, I have not invested in Brickx. While the concept is a good idea, the way the returns are calculated have caused me to be cautious. The projected returns appear heavily weighted towards the future projected capital gains. Many of the properties I’ve observed only have relatively low rental yields of around 2%. Relying on the projected returns can cloud your judgement when deciding which property to invest in so it pays to be err on the side of caution if a projected return appears too good to be true.

However, if real estate is something you want to get into and you don’t the minimum needed to invest directly in a property or through a trust, then this could be a good entry level investment.
Ratesetter is what is known as a ‘peer to peer’ lending service. It is a platform which connects borrowers who are seeking personal loans, with investors. It is similar to how a bank operates when it issues loans, except it is the investors who put their money up directly. Taking the bank out of the equation allows borrowers to get better rates and allows investors to access better returns. For as little as $10, you can be one of those investors.

When you decide to loan out your money, you choose one of the lending durations which range from as little as 1 month, up to 7 years. The return you get will depend on the period you choose, with the current best rate being the 5 years term at around 9.0%.
This is an alternative investment, and like all investments, there is risk involved. While the loan business has been around for a long time, there is always risk of borrower defaults. One thing to note is that you do not get to choose who you loan your money out to. Instead, Ratesetter screens all borrowers for creditworthiness matches them to the investors. 

As an added contingency, there is a provision fund which is used to help protect investors to a small degree if borrowers default. If there is a significant increase in borrower defaults, then the provision fund may not be able to cover your losses and you can lose some or all of your invested money.
Personally, I have been using Ratesetter since it was available to retail investors in Australia in late 2015 and I haven’t had issues with borrowers not repaying.
Final Words
These three ways of investing are some of ways to invest when you do not have a lot of money. 

On the risk spectrum, these three investments sit towards the higher end of the scale. It is essential to know that there is always a chance that you may never see your money again. The tradeoff, however, is that these investments can potentially deliver very competitive returns.

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