How to Invest Your First $100

 in Blog / Invest  tagged beginner investing
Woman drinking coconut water

When you are first starting out, there is only one thing that should be on your mind when it comes to money.

You want it to GROW.

The only way to grow your money is to invest. It is plain and simple. 

Sticking your money in a checking account or under a mattress will never allow your money to reach its full potential. 

But how do you know where to start?

How to Invest $100 

Woman investing on computer

If you are investing your first $100, then you are obviously just starting out.  

The way to think about investing $100 is simple.  Where can you park that money and repeat the same process month over month? 

Because growing your wealth is about fueling the fire. 

If you do not continue to plow money into your investment account, you will not achieve your investment goals. You have to pay rent to your investment account every month. 

You can not invest in index funds, because $100 is not enough. Nor would you want to park it in a savings account that pays 1% in interest to you. I definitely would not look at investing in cryptocurrencies or consider day trading as a beginner.  

So, here is what I would do as a beginner. 

Invest in Dividend Growth Stocks 

Dividend growth investing is one of the best ways to grow your wealth and cashflow. If you want to understand exactly what a dividend growth stock is, we first have to break down each part. Then I am going to show you how you can make that $100 begin to snowball all on its own!

What is a Dividend? 

Man Hiking

A dividend is a portion of a company’s earnings, paid to shareholders (the owners of a company’s stock). 

So think about that for a second. You can buy a share of stock for $100 or less, and that company will pay you part of its profits for the rest of your life (if you never sell). That is absolutely amazing!  

You become an actual owner of the company when you buy that share. And this is proven by the company actually paying you the profits! You can find out what percentage of dividends they pay you by looking at the “Yield” in your favorite investment app. 

What is a Dividend Growth Stock?

A stock chart on a tablet

A dividend growth stock is when a company increases those dividends on a semi-regular basis. This is typically done every year. 

So, to put that plainly. It is a stock that has a history of increasing the amount of cash it gives you every single year. 

Now, I would not invest my $100 in just any ol’ dividend growth stock. 

I would invest it in a dividend aristocrat. 

*Cue Angelic Music (Ahhhhhhhhhh)

This is where you have safety and dividend growth paired into one.    

What is a Dividend Aristocrat?  

A dividend aristocrat is a company that increases its dividends for at least 25 years. 

* Spits out coffee: 25 Years?!

You read that right, 25 years. Many of them for even longer. These are usually dependable companies that have been in business for a long time. Think of Johnson and Johnson, Lowes, or Target. 

Here are some other great dividend aristocrats below. 

TickerName
MMM3M Co.
AOSA. O. Smith Corp.
ABTAbbott Laboratories
ABBVAbbVie, Inc.
AFLAflac, Inc.
APDAir Products & Chemicals, Inc.
ALBAlbemarle Corp.
AMCRAmcor Plc
ADMArcher-Daniels-Midland Co.
TAT&T, Inc.
ATOAtmos Energy Corp.
ADPAutomatic Data Processing, Inc.
BDXBecton, Dickinson & Co.
BF.BBrown-Forman Corp.
CAHCardinal Health, Inc.
CATCaterpillar, Inc.
CVXChevron Corp.
CBChubb Ltd.
CINFCincinnati Financial Corp.
CTASCintas Corp.
CLColgate-Palmolive Co.
EDConsolidated Edison, Inc.
DOVDover Corp.
ECLEcolab, Inc.
EMREmerson Electric Co.
ESSEssex Property Trust, Inc.
EXPDExpeditors International of Washington, Inc.
XOMExxon Mobil Corp.
FRTFederal Realty Investment Trust
BENFranklin Resources, Inc.
GDGeneral Dynamics Corp.
GPCGenuine Parts Co.
HRLHormel Foods Corp.
ITWIllinois Tool Works, Inc.
JNJJohnson & Johnson
KMBKimberly-Clark Corp.
LEGLeggett & Platt, Inc.
LINLinde Plc
LOWLowe’s Cos., Inc.
MKCMcCormick & Co., Inc.
MCDMcDonald’s Corp.
MDTMedtronic Plc
NUENucor Corp.
PNRPentair Plc
PBCTPeople’s United Financial, Inc.
PEPPepsiCo, Inc.
PPGPPG Industries, Inc.
PGProcter & Gamble Co.
ORealty Income Corp.
ROPRoper Technologies, Inc.
ROSTRoss Stores, Inc.
SPGIS&P Global, Inc.
SWKStanley Black & Decker, Inc.
SYYSysco Corp.
TROWT. Rowe Price Group, Inc.
TGTTarget Corp.
CLXThe Clorox Co.
KOThe Coca-Cola Co.
SHWThe Sherwin-Williams Co.
UTXUnited Technologies Corp.
VFCVF Corp.
GWWW.W. Grainger, Inc.
WBAWalgreens Boots Alliance, Inc.
WMTWalmart, Inc.

How to Fuel the Fire 

The way to grow you $100 is simple. We are going to use a strategy called DRIP investing. 

What is Drip investing? 

Drip investing stands for dividend reinvestment plans. It simply means that you take the dividends that you are paid each quarter and reinvest them back into that company. This allows your money to snowball. 

For easy math, let’s say that you buy a dividend stock that pays a 10% dividend (this would be extremely high). If you re-invested that 10% dividend every year, you would have 1.10 shares at the end of year one. In 10 years you will have doubled your money. 

The beauty of this is when the dividend increases every year, with dividend aristocrats, you are buying more of that share accelerating the growth. You can see how fast this can compound! The more you can invest the bigger the snowball gets! 

Where Can I drip Invest? 

Before drip investing, you want to make sure your brokerage allows you to DRIP invest automatically. This way you can set it and forget it. 

 M1 Finance is a platform that I recommend for many investors. They have great data and allow you to invest with no brokerage fees. Best of all it is free!

You can track all of your accounts in Personal Capital. They have an amazing interface and many tools to help you keep track of your spending and investments. 

andrew
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