If You Only Have $100, Here’s How To Start Investing in Crypto
Written by
Jordan Rosenfeld
Edited by
Levi Leidy
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Cryptocurrency is digital money that operates on decentralized blockchain technology, meaning it isn’t issued or controlled by a bank or government. If the crypto hype has you interested in trying your hand at investing in the digital currency space, you might be excited to learn that you don’t need a lot of money to get started.Just $100 is enough to dip your toe in the water.
Understand These Basics First
Before you get started, you need to know that crypto is still considered a high-risk asset, and you should ensure you’re only investing money that you can spare. It’s also important to make sure your financial foundation is already strong and that you have an emergency fund and debt under control.
When you do start investing, allocate only a small percentage of your total investable assets to crypto. While every investor has a different risk tolerance, experts recommend you don’t invest more than 5% of your portfolio into crypto.
Also, set realistic expectations: with $100 you’re gaining experience more than generating huge profits.
Choose Your Platform and Asset Wisely
The crypto exchange platform you choose is as important as the type of coin. When you’re ready to buy, choose a reputable exchange known for strong security, low fees and a user-friendly interface, like Coinbase, Kraken or Gemini.
You don’t need thousands of dollars to get started: with fractional ownership, your $100 can buy part of a token. Stick to established coins like Bitcoin or Ethereum first and watch trading fees, which can quickly eat away at small investments.
Adopt a Smart Buying Strategy
A smart way to invest even a small amount in crypto is through dollar-cost averaging, in whichyou buy smaller amounts over time instead of all at once, reducing your exposure to market swings. Even with $100, you could invest $50 now and $50 next month, tracking your results after a year to build discipline and minimize timing risk.
It’s best if you automate this and check in with your goals at certain intervals, possibly quarterly or annually.
Manage Risk and Know the Downsides
While investing small amounts of crypto means you’ll be less affected if the value drops, it’s really important to remember that cryptocurrencies are considered high-risk, volatile assets, no matter how little you put in. Never invest money in crypto that you’re earmarking for something else such as an emergency fund or retirement funds.
You’ll also need to choose how to securely store crypto, in one of several kinds of digital “crypto wallets” that keep your digital currency safe. Cold wallets (offline) offer stronger security, while hot wallets (connected to the internet) are easier for beginners but leave you more vulnerable. Unfortunately, crypto scams and fraud abound and you need to do your research before you use a digital tool that isn’t secure.
Remember that profits or crypto-to-cash conversions may also trigger taxes, and small trades can be eroded by exchange fees. It never hurts to consult with a financial advisor before you start investing in crypto.
Build the Habit and Think Long-Term
If you treat your $100 as seed money for a larger journey, not a shortcut to wealth, you can enjoy your crypto journey, watch the market and learn how to invest more strategically. Most experts recommend adding to your crypto investments gradually and slowly, while also building savings, retirement funds and meeting all your other financial goals. No one should ever be solely invested in crypto — it’s not a wise investment.
Investing $100 won’t make you a crypto millionaire, but it can kick off a valuable habit.
More From GOBankingRates
