How to start investing with just $100.

After speaking with Paridhi Jain on our podcast Things You Didn’t Learn in School I started investing. While my humble portfolio is not quite paying Wolf of Wall Street level dividends, I had broken a belief that investing isn’t for people like me. 

We’ve all heard of the gender pay gap but did you know there’s a gender investment gap too? Sorry I know you’re busy, I didn’t mean to drop another gap on you. The investment gap exists because a higher percentage of women hold a higher percentage of their savings in cash. I’ve added this to my list of things to fret about and now you can too!

Before our chat with Paridhi I thought about saving cash as risk neutral. But deciding not to invest carries its own risks. I know what you’re thinking, we’re being encouraged to invest? In this economy!? Yes, especially in this economy because when interest rates are lower than inflation, our savings lose value.

At the moment my savings account earns 4.5 per cent interest while inflation is at 7 per cent. Factor in the various gender related gaps and structural inequalities that not only reduce the amount of money coming in but also my chances of growing that money and in economic terms, I’m cooked.

Listen: Think Investing Is Just For Finance Bros? Think Again. Post continues after podcast.

I wanted to start investing but I had no idea how. I was waiting to have a hefty chunk of cash but Paridhi said we can start with as little as $100. So I took what I learned from our conversation and I did. A hundred bucks might not seem like much but it’s not just about the money. It’s the friends* you make along the way.

*Empowering yourself with the skills and tools to build a better financial future. 

1. Save, save, save.

Before you can get started, Paridhi says you need to have an honest understanding of how much money comes in and how much goes out. Your income and expenses. I’m trying to avoid using the word “budget” because it makes my entire body wince. Before you invest, you’ll need to have some cash to spare and know that your day-to-day expenses will be covered without needing to draw on your investment. You’ll need an emergency fund for the unexpected stuff too. If this doesn’t sound like you just yet, don’t sweat (listen back to our money episodes!) and holy NASDAQ I am so proud of you for voluntarily reading an article about investing!

2. Learn, learn, learn… ugh when’s the fun part?

Understanding the basics of investing is so important and trust me, it’s not as boring as I expected. Paridhi has her own course SkilledSmart which will help you get around the basics and there are plenty of podcasts and books to build your knowledge and confidence. If you’re like me and prefer not to read instructions and instead build flat pack furniture purely on instinct and vibes, there’s practical learning options too. But start small, in case you find there’ are a few loose screws.

When it comes to investing, your learning isn’t just about acronyms and numbers. You have some emosh learning and self reflection to do too. Sorry. Real hard work alert! You need to think about your own financial goals, your personal values and your risk appetite. Are you happy with a steady long-term return or do you want to ride the crypto rollercoaster? I’m not going to explain the volatility of crypto. If you want to know more about crypto just head down to your local pub and find a man in boat shoes and no socks. You’ll probably learn how to smoke meat as well. Bonus!

3. Before you go big, go micro

If you’re not ready to part with $100, you can start even smaller, micro in fact. There’s a range of micro investing apps that can help you learn the ropes with loose change. You can turn your everyday transactions into investments, set up auto contributions, explore your options and take advantage of educational resources. Some apps even help you save by rounding up your purchases to the nearest dollar and investing the difference. Once you’ve got a chunk of change, you can select your investments and watch them grow… or not… who knows! This is all about experimenting and learning how to manage your portfolio. Just make sure you don’t get hit with fees that eat into your precious returns.

4. Get DTF with ETFs… (WTF is an ETF?!)

If you’re not ready to pick a single stock, why not pick a whole bunch?! Exchange traded funds (ETFs) are like backing a team. One player might have sustained a calf injury but another player might step up and score an epic penalty kick against France in extra time, for example. Because you’ve got multiple players on the field, these funds reduce your risk compared to investing in an individual stock. You can start with as little as $100 and choose an ETF with a cute theme like healthcare or sustainability or ‘billionaires who can afford to go to space’. Yay capitalism! ETFs also bring the investors together to purchase these collections of stocks, commodities or bonds. It’s basically the Uber Pool of the investment world. Buckle up, the girlies are going to space, together! 

5. Be patient. Yeah, I know more boring advice.

After I made my first investment, I was so nervous and excited I checked it every few minutes. It went up. It went down. I went up. I went down. This is not a sustainable investment, emotionally! Paridhi talked about the difference between day trading - the high stress buy, buy, buy, sell, sell, sell vibe - and investing. Investing is a long-term game. It requires patience and perseverance. It’s about harnessing the power of compound interest over time. In our conversation Paridhi mentioned that one of the most important variables is the amount of time you’re in the market. Staying calm and steady during those inevitable ups and downs? That takes resilience. Ugh. More emotional skills? Yucky. If staying calm seems too difficult right now, you can do what I did and just delete the app. You might not be able to get a financial quick fix but I found an emotional one!

To a beginner like me, the world of investing seems complex, intimidating and pretty exclusive. I was thrilled to discover you don’t have to play golf and smoke meats to be a successful investor. So when you’re ready, start small. With the right approach, you’ll learn along the way. Talk to a trusted financial advisor, set your goals and get involved. Starting now is your best investment. Oh, we’ll wait.

Image: Supplied