Your First $100: The One Investment Every Beginner Should Start With

Never Invested Before? Start Here.

You keep hearing you should invest, but every time you try to figure it out, it feels overwhelming.

Stocks, bonds, mutual funds, ETFs, Roth IRAs: it's a lot of jargon, and nobody's explaining it in plain English.

Sergio again, with this week’s newsletter. I remember standing exactly where you are when someone told me to start investing. I didn't know where to start. I didn't want to lose money. I felt like everyone else had some secret knowledge I was missing.

Here's what I wish someone had told me back then: there's one investment that's perfect for beginners, and it's called an index fund (or ETF).

Let me show you why.

What Index Funds and ETFs Actually Are (In Normal Words)

An index fund is like buying a greatest hits album curated by an expert DJ instead of individual songs picked by you. You get a collection of the top companies all in one purchase, usually selected by a reputable investment firm. Instead of picking individual companies, you’re buying a tiny piece of hundreds of them at once.

The most common one tracks the S&P 500, which is just the 500 biggest companies in America. When you buy an S&P 500 index fund, you instantly own a piece of Apple, Microsoft, Amazon, Coca-Cola, Disney, and 495 other companies.

ETFs do the exact same thing, but they trade like individual stocks. You can buy and sell them anytime during the day. That's the only major difference.

One click. Instant ownership in hundreds of companies. That's it.

Why This Is The Perfect Place For Beginners

When I started, I thought I needed to pick the "right" stocks. Research companies. Read financial news. Time the market perfectly.

Turns out, that's not how most successful investors actually build wealth. Here's what makes index funds perfect for first-timers:

You Don't Need To Know Anything About Individual Companies

Seriously. You don't need to understand tech stocks, read earnings reports, or know what P/E ratios are. The index already includes the best-performing companies, and it automatically adjusts as companies rise and fall.

You're not betting on one company. You're betting that the American economy will keep growing. And historically, it has.

Your Risk Is Automatically Spread Out

This is huge for beginners. When you own one stock and that company fails, you lose everything. But when you own 500 companies? If one fails, it barely affects you.

If Tesla crashes, maybe Microsoft is up. If tech drops, maybe healthcare rises. Your money is diversified across the entire market, which protects you from any single company imploding.

It's Ridiculously Affordable

You might think investing requires thousands of dollars. It doesn't. Many brokerages let you buy fractional shares of ETFs, meaning you can start with as little as $10-$50.

And the fees? Index funds often charge less than 0.10% annually. Some charge nothing. Compare that to actively managed funds that charge 1-2%, those fees compound into huge losses over decades.

You Literally Set It and Forget It

Once you buy an index fund, you don't need to do anything else. You don't rebalance. You don't trade. You don't watch the market daily.

You just let it grow. Check in once or twice a year if you want. That's it.

Index Funds vs. ETFs: Which One Should You Choose?

Both are great for beginners. The differences are small:

ETFs:

Trade anytime during the day (like buying a stock)

No minimum investment, buy one share if you like

Better if you like having control

Index Funds:

Trade once per day after market closes

Some have minimums (like $1,000), but many don't anymore

Easier to set up automatic monthly investments

My advice? If you're brand new, go with ETFs because there's usually no minimum and you can start with whatever you have. Popular options: VOO (Vanguard S&P 500), SPY (S&P 500), or VTI (Total U.S. Market).

If you want to automate monthly contributions and never think about it, go with index funds like VFIAX (Vanguard S&P 500) or FXAIX (Fidelity S&P 500).

Neither choice is wrong. Just pick one and start.

How To Actually Get Started (Step-by-Step)

This is simpler than you think:

Step 1: Open a Brokerage Account

I recommend Fidelity, Vanguard, or Charles Schwab. They're reputable, have low fees, and are beginner-friendly. Robinhood works too if you want a simpler app experience.

Opening an account takes about 10 minutes. You'll need your Social Security number, bank info, and ID. That's it.

Step 2: Deposit Money

Transfer however much you want to invest. Could be $50. Could be $500. Could be $5,000. Start with whatever you're comfortable losing while you learn (though historically, the S&P 500 grows over time).

Step 3: Buy an Index Fund or ETF

Search for "S&P 500 ETF" in your brokerage app. You'll see options like:

VOO (Vanguard)

SPY (State Street)

IVV (iShares)

They all do the same thing: track the S&P 500. Pick one and buy shares.

Step 4: Set Up Automatic Contributions (Optional But Powerful)

This is where the magic happens. Set up automatic monthly transfers from your bank account to your brokerage, then automatically invest that money into your chosen fund.

This is called Dollar Cost Averaging. When markets are high, you buy fewer shares. When markets dip, you buy more. Over time, this smooths out your average purchase price and removes emotion from investing.

Step 5: Leave It Alone

Seriously. Don't check it every day. Don't panic when it drops. Don't sell when the market crashes.

Index investing is designed for decades, not days. The longer you stay invested, the more compound growth works in your favor.

What You Can Actually Expect

Let's talk real numbers. If you invest $300/month into an S&P 500 index fund averaging 10% annually (the historical average):

After 10 years: about $61,000

After 20 years: roughly $230,000

After 30 years: over $680,000

That's not from being a genius or timing the market. That's just from buying the same fund every month and never stopping.

Most millionaires didn't get rich picking stocks. They got rich investing consistently in index funds over decades.

The Questions I Had When I Started

"What if I invest and the market crashes?"

It will. Markets crash. It's normal. But they also recover and historically, they reach new highs. If you're investing for 20-30 years, short-term crashes don't matter. They're actually opportunities to buy more shares at lower prices.

"Should I wait for the market to drop before investing?"

No. Trying to time the market is how people lose money. Just start investing consistently. Time in the market beats timing the market.

"What if I'm doing this wrong?"

You can't really do index fund investing "wrong." You're buying the entire market. As long as you stay invested long-term, you're doing it right.

"Do I need a financial advisor?"

Not for this. Index fund investing is simple enough to do yourself. Save the advisor fees and just invest directly.

Here's What I Want You To Remember

You don't need to be an expert to start building wealth. You don't need thousands of dollars. You don't need to understand complicated financial concepts.

You just need to start.

Index funds and ETFs are designed for people exactly like you: First-time investors who want to build wealth without spending years learning the stock market.

Open an account. Buy an S&P 500 ETF. Set up automatic monthly contributions. Then go live your life while your money grows in the background.

That's it. That's how you start.

The hardest part isn't picking the right investment, it's taking that first step. And now you know exactly what that step is.