Here's the lie that kept me from investing for years: "You need a lot of money to start." I believed it. I waited. And every year I waited, I lost tens of thousands in compound growth that I'll never get back. You don't need thousands. You need $100 and 15 minutes.

Fractional shares changed everything. Today you can buy $10 of any stock or ETF — including shares that cost $500+ each — through any major brokerage. There is no longer a financial barrier to starting. The only barrier is deciding to start.

This guide is for people who haven't started yet. By the end, you'll know exactly where to open an account, what to buy first, how to automate it, and what mistakes will slow you down.

The Best Brokerages for Small Investors

Ten years ago, many brokerages had $1,000+ minimums. That's gone. The three best options for beginners — all free, all no-minimum — are Fidelity, Schwab, and Robinhood. Here's how they compare:

I personally use Fidelity. The app is clean, the funds are excellent, and fractional share investing starts at just $1. Schwab is equally solid. Robinhood works fine for basic investing but skip the "Gold" subscription — you don't need it.

All three offer commission-free trades on stocks and ETFs. There is no reason to use a brokerage that charges per-trade fees anymore.

What Are Fractional Shares?

Fractional shares let you buy a dollar amount of any stock or ETF, rather than a whole share. This sounds technical, but the implication is huge for beginners.

VOO (Vanguard's S&P 500 ETF) currently trades around $520 per share. With a traditional brokerage, you'd need $520 to own even one share. With fractional shares, you can put in $10 — and you own $10 worth of VOO. You get the same percentage gains and dividends as anyone who bought full shares.

This means no investment is out of reach. Amazon at $190? You can buy $25 of it. Berkshire Hathaway at $750,000 per share? You can buy $50 of it. The price of the underlying shares is no longer a barrier.

The Best Investments for $100

With $100, you have three great options. Here's how to think about each:

1. S&P 500 Index Fund (Best First Investment)

An S&P 500 index fund holds tiny pieces of the 500 largest US companies — Apple, Microsoft, Amazon, Nvidia, Berkshire Hathaway, and 495 more. It gives you instant diversification across the entire US economy with one purchase. The three best options:

• VOO — Vanguard S&P 500 ETF · Expense ratio: 0.03%
• VTI — Vanguard Total Stock Market ETF · Expense ratio: 0.03%
• FXAIX — Fidelity 500 Index Fund · Expense ratio: 0.015%

The expense ratios are nearly zero — you're paying 3 cents per year per $100 invested. These are the same funds used by pension funds managing billions of dollars. There is nothing "beginner" about these picks — they're just sensibly priced and diversified.

2. Target-Date Fund (Best If You Want Zero Decisions)

A target-date fund automatically adjusts its stock/bond mix as you approach retirement. You pick the fund closest to your retirement year (e.g., Fidelity Freedom 2055 Fund if you're retiring around 2055), and it does everything else. Expense ratios are higher — around 0.10–0.15% — but the hands-off simplicity is worth it for investors who don't want to think about rebalancing.

3. Individual Stocks via Fractional Shares (After the Above)

Once you have a foundation in index funds, fractional shares let you add individual companies you believe in. This is fine — as long as it supplements your index fund core, not replaces it. Picking individual stocks means you're betting on one company. Index funds spread that bet across 500.

The $25/Week Strategy: Dollar-Cost Averaging in Practice

Dollar-cost averaging means investing a fixed amount on a regular schedule, regardless of what the market is doing. You don't try to time it. You just keep buying.

Here's what $25 per week — $1,300 per year — looks like at a 10% average annual return (the S&P 500's historical average):

At 30 years, you put in $39,000 of your own money and the market added $256,682. That's the compound interest math behind "invest early, invest consistently." The amount you start with matters less than starting.

The genius of dollar-cost averaging is psychological: you don't panic-sell when markets drop, because you've already committed to buying every week. When prices drop, your fixed $25 buys more shares. When prices rise, you participate in the gains. You stop trying to be clever and let time do the work.

The 5 Beginner Mistakes That Kill Returns

1. Timing the Market

You cannot predict when the market will go up or down. Neither can professional fund managers — and they spend 60 hours a week trying. The investors who try to "buy the dip" usually buy too late or miss the recovery entirely. The research is overwhelming: time in the market beats timing the market. Set up automatic investments and stop watching the news.

2. Buying Penny Stocks

Penny stocks (companies trading under $5) look attractive to beginners because they seem affordable and the potential for a "10x" return sounds exciting. In reality, most penny stocks are companies in financial trouble or outright scams. They have low liquidity, wide bid-ask spreads, and minimal regulatory oversight. The "cheap" price reflects a cheap company. Index funds, not lottery tickets.

3. Not Diversifying

Putting your first $100 into one company's stock means your entire portfolio depends on that one company's performance. If they have a bad quarter, miss earnings, face a lawsuit, or lose a key customer — your investment drops. An S&P 500 index fund spreads that risk across 500 companies. No single company failure can significantly hurt you.

4. Selling When the Market Drops

Market corrections (drops of 10–20%) happen roughly every 1–2 years. Bear markets (drops of 20%+) happen roughly every 3–5 years. They feel catastrophic in the moment and are completely normal in the long run. Every bear market in history has eventually recovered to new highs. The investors who panic-sell lock in their losses. The investors who hold (or keep buying) get it all back and more.

5. Waiting for "More Money" to Start

This is the most expensive mistake. Every month you wait is a month of compound growth you can never recover. $100 invested at 25 is worth more than $1,000 invested at 45 — the math of compounding makes early small investments more powerful than late large ones. The best time to start was 10 years ago. The second-best time is today.

How to Open an Account and Buy Your First Investment

1. Go to Fidelity.com, Schwab.com, or Robinhood.com and open an Individual Brokerage Account (or a Roth IRA if you have earned income — Roth is almost always better for beginners under 40).
2. Link your bank account and transfer $100. This takes 1–3 business days.
3. Search for VOO or VTI (or FXAIX if you're on Fidelity) and click Buy.
4. Choose "Dollar amount" instead of "Shares" and enter $100. This purchases fractional shares automatically.
5. Set up automatic investing: schedule $25/week or $100/month to auto-invest in the same fund. This is the single most important step.

That's it. The whole process takes 15 minutes. You can do it on your phone.

The Bottom Line

Frequently Asked Questions

Related: Index Funds vs. Individual Stocks: Which Is Right for You? | Compound Interest Explained: The Math Behind Building Wealth | Budgeting for Beginners: Where Your Money Goes