If you want to start building wealth, then there’s nothing better than saving and investing money regularly. Just like putting an airplane on autopilot, it allows you to reach your goal without thinking too much (after setting the correct parameters initially).
In this article, we’ll show you the 5 best ways to invest 100 Euros per month, a sum that should be doable by most. Let’s get started!
Investing in yourself
Probably the vehicle that will drive the most returns is… yourself! By investing 100 EUR monthly into yourself, there are many areas in which you can improve:
- Acquire new skills which allow you to earn more money or build a business
- Take investing courses, allowing you to avoid costly mistakes and make more sound investing decisions
- Read books that increase your knowledge in a plethora of areas
- Get a financial consultant, that will help with goal-setting and teach you finances
Investing in yourself is often overlooked because it’s not like a traditional investment, where you put your money to work for you, and you can watch it grow. Instead, you’re growing yourself, which in turn allows you to make decisions and take actions with a greater impact.
Investing in P2P lending
P2P lending can be done with low capital requirements; on Lendermarket as low as 10 EUR. This makes it a very attainable asset for most investors, even if you’re just starting out and are looking to get your feet wet.
In essence, P2P lending (short for peer to peer lending) allows you to invest in loans issued to other individuals or companies, real-estate backed or without collateral. An added layer of security is that you don’t give the money directly to the borrower but instead to the loan originators, who already funded the loans.
If a loan enters default status for a certain period, you can make use of your Buyback Guarantee, and the loan originators on Lendermarket will pay you back your principal + outstanding interest.
With P2P loans, the interest rates vary greatly, from 8% to upwards of 18%. The average annual return of loans offered on Lendermarket is currently at 15.2%. So even with 100 EUR a month you’ll be able to generate some solid returns after a year.
To better diversify, it makes sense to split up your investment over different loans, from different loan originators and countries. You don’t have to do that manually, though. By using the handy Auto Invest feature, the AI handles all of that for you, you just have to set it up.
Investing in Mutual Funds
Mutual funds are usually investment products with a set minimum investment. These can be quite high, so that not all mutual funds even qualify for when you want to invest 100 EUR a month.
Mutual funds can be actively managed or passively set up to follow a specific index, although the former option is way more common. The money in the fund can be invested in a variety of assets, such as stocks, bonds, fixed income securities, and more.
In essence, if you have other options available to invest your money, then they are often a better choice because you can either diversify broader or the investment is structured more transparently. Mutual funds tend to be a bit opaque in terms of fees.
Investing in ETFs
ETFs are exchange-traded funds. So, they have a bit in common with mutual funds as they are both funds, however, ETFs can be freely traded at an exchange, even during the trading day, whereas mutual fund orders are only processed once a day.
You’ll typically see ETFs mentioned in the same breath as passive investing because ETFs are usually used when you want to invest in accordance to an index, say the S&P 500 or the MSCI World.
These indices show the performance of an assortment of companies (top 500 US for S&P 500, 1500 worldwide companies in the MSCI World). Simply said, the index ETF buys stocks in proportion to the value of each of these companies to mirror the index, and does regular rebalancing, to trace the index as close as possible.
ETFs are often a low-fee way of investing and, depending on your country, there might be brokers available, where you can set up investment plans starting at 25 EUR per month.
It’s generally a way of investing that doesn’t require a lot of investing, once you pick the ETF / index you want to invest in. Just set it and forget it. The returns depend greatly on the ETF / index you’ve chosen, but the S&P 500 had an average return of 10.4% over the last 50 years.
Investing in cryptocurrencies
To put it in the words of Forrest Gump’s mother: “Crypto is like a box of chocolate, you’ll never know what you will get.” Cryptocurrencies are a relatively new and small market (compared to stocks or real estate), where the oldest coin is Bitcoin.
Cryptocurrencies tend to be very volatile, meaning that high jumps in prices are a common characteristic of this asset class. Sure, the volatility differs, and smaller, less known coins tend to carry more of it.
Nevertheless, even Bitcoin, the “gold of cryptocurrency”, dipped from its almost 60,000 EUR peak in November 2011 down to nearly 15,000 EUR and is now at roughly 25,000 EUR.
What makes crypto so appealing is that returns of 100% or more are no rarity. You can also easily buy it via crypto exchanges, where there’s usually no minimum investment amount.
If you want to invest 100 EUR a month, then some assets are better suited for that than others.
Looking for high returns while balancing risk? → P2P might be what you’re looking for.
Good returns and a proven asset class in mind? → Consider ETFs.
Don’t mind an emotional rollercoaster and want to score big? → Crypto might be your thing.
All in all, always keep in mind that every investment carries the risk of you losing (all your) money. So be considerate and only invest what you’re willing to lose.