For many new investors, the idea of turning a small amount of money into something meaningful is the ultimate goal.
And while it is possible, the reality is that a single $100 investment will take a long time to turn into $1,000. Even with strong compounding, it could take decades for a one-off $100 to grow into a ten-bagger.
But there is a smarter way to grow wealth. By consistently investing $100 every month, you could smash through the $1,000 milestone and begin building real wealth over time.
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The power of regular investing
If you invest $100 each month into the share market and earn an average annual return of 10% (in line with historical share market averages, but not guaranteed), you would grow your portfolio to just over $20,000 in 10 years.
That's a massive leap on the original target, with compounding doing the heavy lifting as your returns generate more returns. In other words, the $1,000 target becomes a stepping stone, not the finish line.
How to get started with $100
The good news is you don't need to be wealthy to start. Low-cost micro investing apps, like Pocket from Commonwealth Bank of Australia (ASX: CBA), make it possible to begin with as little as $50 per trade. That means everyday Australians can start building an investment portfolio straight from their smartphone.
And when it comes to what to buy, simple, diversified exchange-traded funds (ETFs) are often the best option for beginners.
One option is the Betashares Nasdaq 100 ETF (ASX: NDQ), which gives you exposure to global tech leaders such as Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Nvidia (NASDAQ: NVDA).
For broader global coverage, the iShares Global 100 ETF (ASX: IOO) holds blue-chip companies across multiple industries, including Tencent Holdings (SEHK: 700), LVMH Moet Hennessy Louis Vuitton (FRA: MOH), and McDonalds (NYSE: MCD).
And for those wanting exposure to the Australian market, the iShares Core S&P/ASX 200 ETF (ASX: IOZ) is a low-cost way to invest in the country's 200 largest companies, such as BHP Group Ltd (ASX: BHP), Telstra Group Ltd (ASX: TLS), and Westpac Banking Corp (ASX: WBC).
Foolish takeaway
Turning $100 into $1,000 won't happen overnight. But by consistently investing $100 a month into high-quality ETFs, you could achieve that milestone quickly and keep going far beyond it.
With micro investing apps lowering the barriers to entry, there has never been an easier time for everyday Australians to start their investing journey. The key is to start small, stay consistent, and let compounding work its magic.
