- Beginners can start by investing small amounts of money regularly.
- Investing C$ 100 using the right approach can get you to significant sums due to a higher return on investment (ROI).
- Fractional investing can help you build a diversified base portfolio without breaking your budget.
People often make think that investments can only be made with huge amounts of money. In reality, though, investors can start by investing small amounts of money, say C$100. In some cases, regular investment of C$ 100 can be better that investing large amounts infrequently.
Investing C$ 100 using the right approach can get you to significant sums with higher return on investment (ROI). Here are three simple ways where Canadians can invest C$ 100 smartly.
1. Fractional shares
If you want to explore a particular stock but its costlier than C$ 100, you can buy fractions of that share instead of buying one full share. This way, the money invested can appreciate with a return per cent as it would on full share.
Also, fractional investing can help you build a diversified base portfolio without breaking your budget and denting returns and investment plans. Plus, you can grow your position in those stocks later in the future.
2. Exchange-Traded Funds (ETFs)
With Exchange-Traded Funds (ETFs), you can dip your toe in a group of companies within the underlying index.
ETFs generally spread your risk across different markets and sectors depending on your choice of the underlying index. For instance, Canada has many big and small players in the energy sector, so it might become a cumbersome process for new investors to pick suitable stocks for themselves. That’s when energy ETFs come in, providing you exposure to many of energy companies in one go.
Also read: How to handle a bearish phase in the market?
3. 401 (k) or Individual Retirement Account (IRA)
Funds contributed to 401 (k) or Individual Retirement Account (IRA) benefits from tax deferral and tax-free growth by stock investing until you start taking distributions. These are funded from your pay check, hence decreasing your taxable income.
Also, a point to note here is that 401 (k) and traditional IRA are flexible, and you can change the contribution amount according to your budget.
Got $100? Here are 3 simple ways to put your money to work
Amateur and new investors can begin their investment journey in these three affordable ways. However, if you are still not comfortable investing in stocks, ETFs, 401 (k) or IRA but still want your money to grow, then then you can explore high yield accounts. Although, keeping money in these accounts could deliver higher interest than normal savings accounts.