Personal Finance 

Invest With Only $100 Experiences & Some Thoughts On Life

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Faithful reader, Matt, recently emailed me about his experience with my article, How To Invest $100, and we got to talking about the things he had done and his thoughts on life, the universe, and everything. Matt tried to get a group of friends to pitch in $100 each with the thought that they’d try to make it grow into $20,000 and then invest in something big. You’d think $100 was a small enough investment, especially for such a learning experience, but all of his friends balked so he forged ahead. I believe that’s when he saw my article and saw how he could get his bankroll increased faster. After talking about his experience, Matt gives some observations about his friends who don’t seem to understand the value of money because of credit cards and our “instant gratification” life.

Even though a few of them showed a bit of interest, none of my friends ultimately followed through, so I forged ahead and made the $100 investment myself. I first tried to start three Sharebuilder accounts simultaneously (using three different promotional codes), but they would only honor one code. So, I put in $100, made three trades at $6 each, and was awarded my $50 bonus. This turned my $100 into $132.

I was able to repeat this process using a fourth code for a $50 promotion, and executed only 1 trade to earn it, so my take on this code was $44. This brought my total to $176.

Matt is referring to my advice of signing up for Sharebuilder accounts and using the Sharebuilder promotional codes for some free money. So far, in a short while, he increased his $100 to $176 with no risk, a return of 76%.

Technically, you only need a small amount of money to qualify for the Sharebuilder promotion, so while I was shooting for it the second time, I followed your link to the bank promotion website and chose the one that looked the most promising: Bank of America has a $100 bonus just for opening a checking account with them. I opened the account with $50 of my Sharebuilder money, and was pleasantly surprised to see that they give you the $100 after only a week or so of having your account opened. I still have to keep the account open for 60 days, but I already have that $100 in my pocket to continue working for me. This brought my total to $276 (plus I have about $8 worth of stock shares).

This is the second step in the How To Invest With Only $100 post where you apply for a Bank of America account for the free bonus money. Using some of the proceeds, Matt was able to increase his funds to $276+, though he would not be able to close that BoA account for 60 days.

Overall, it’s taken me only 8 weeks to go from $100 to $276, and I plan to continue to increase this bankroll. One thing that’s impressed me as I’ve gone through this process is how easy everything is. With only a few minutes of my time, I can set up an online account. Now that I’m comfortable doing it, I can see how I can turn that $100 into a side income of about $1200 per year with no more than 15 minutes of at-home work every week.

The promotions are a sure thing, and so I don’t mind putting all of my “investment capital” into one basket. But I’d like to explore other types of investments as soon as my bankroll gets big enough to spread around. I’m only risking $100, after all.

To me, this is a great way to learn about making money as well. I’m keeping this $100 (now $276) separate from the rest of my money, but after seeing how quickly it grew, I jumped on the chance to put some of my emergency fund into a local bank that was offering $105 in promotions. So, I not only made $176 from my $100, but I also learned how to make an additional $105 from money that was sitting in a savings account anyhow.

Here is where the discussion moves to life, the universe, and everything…

In talking with my friends about all of this, I hit on an interesting phenomenon (if you’ll indulge my digression from an already-rambling email). I was right there, telling them that they could put up $100, spend very little time, and make hundreds of dollars in a couple of months. I’m not a salesman, I’m a trusted friend of theirs. But they were universally uninterested in doing it. Why were they ignoring free money? The answer is both depressing and simple. Their money problems are not caused by the fact that they don’t earn enough money. Their money problems are caused by the fact that they spend too much. I realized that all of my friends have “elastic spending habits” that expand to match the money in their pockets. The idea of having a hundred extra dollars in their pocket wasn’t exciting to them, because they would just blow the hundred dollars on crap anyhow. They literally don’t see the value of $100. And my friends aren’t rich, Jim. They all have steady jobs, but live with credit card debt.

People who aren’t on budgets have little-to-no incentive to save up a little extra money. Their lives have taught them that if they don’t spend the extra money on a DVD today, they’re going to spend it on pizza night tomorrow. So they might as well go ahead and buy the DVD.

For those of you who made it this far, what do you think?

{ 13 comments, please add your thoughts now! }

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13 Responses to “Invest With Only $100 Experiences & Some Thoughts On Life”

  1. MoneyFwd says:

    I think people are starting to think of money amounts around $100 as being nothing. For many it buys a dinner out, a video game and some extra crap, or a pair of jeans. To put any effort into making an extra $100 or so doesn’t seem worth it because it’s not that much. Many people have been molded by instant gratification and the idea of a flashy lifestyle so that putting time into making an extra $100 isn’t worth it. They don’t see much benefit in saving or trying to grow how much extra money you have.

    I think people also still believe deep down that it’s hard to get this extra money since for so long we’ve lived with the idea that there’s always a catch.

  2. Chris says:

    Excellent Article….!!!!!

  3. Randy says:

    I agree that most people don’t understand the value of $100 or even $1. However, I disagree with this game of taking advantage of loopholes in these promotions.
    I believe that any profit should represent a contribution to society. The creation of value. I am not the inventor of this idea. It comes from such luminaries as Ben Franklin, Andrew Carnegie, David Packard (HP founder), Ben Graham, Warren Buffett, and yes, Bill Gates.
    Finding legal loopholes to make outsized returns strikes me as behavior exhibited by (and I’ll avoid people’s names, just the companies they worked for), Long Term Capital Management, Tyco, Enron, and Worldcom.
    I know I’m being a bit extreme. There is nothing illegal about it. But it is also not personal finance.

  4. IRA says:

    I agree with Matt. If you don’t really have a long term goal in mind (e.g., wanting to buy a home or helping your kids through college), you’re not going to have any incentive to save or earn $100 here or there. There will always be more folks in the general population who focus on the here and now. That’s why visionary leaders are in short supply. And let’s be honest. Fear is a huge motivator as well. Even the poorest person in the U.S. has infinitely more wealth than the average person in a third world country. If you’ve never known true hardship, you’re not going to have that compulsion to do everything in your power to make that extra buck to ensure that you never go hungry. In a pinch, you can always charge it on a credit card or go on welfare. The fact that people are comfortable (and it sounds as if Matt’s friends are comfortable) prevents them from seeing the need for change.

  5. I am really getting into this idea. The question I have is regarding credit ratings. How does it affect your credit to open these accounts? Do the institutions do credit checks? I just don’t want to tarnish my credit for such a small gain.

  6. Steve says:

    What I like about the article is the focus on returns and value. No one is offering those sort of deals in Australia, but the creativity is great.

    You are right, it is very easy to spend $100. Really, it is very easy to spend a $1000, so you dont really think too much about getting the returns on smalled amounts of money.

  7. Martha says:

    This reminds me of Amy Tan’s “The Joy Luck Club.”

  8. Miller says:

    I really like this post. Both the insights Matt has about his friends, and the comments about the worth of $100. Jim, you and I have a number of friends in common, and we both know if we said “hey, let’s invest $100 each” most would walk away without even looking. Why? Something to do with psychology. I don’t claim to know myself, but reading this I have lots of “maybe’s” in my mind. Your next blog post is about how “what’s the catch?” being the wrong question these days. Well, I think we’ve all grown accustomed to being taken advantage of and not trusting others with money. Personally, I think this is healthy! But, as you mention in that next blog post, the mentality does seem to be changing. I’ve signed up for $100 bonus credit cards. I do 0% BTs. And there haven’t been any catches… But I’d be lying if I didn’t admit I had to warm up to the idea (and you would be too, atleast with respect to BTs!). So what’s my point? I have no idea… still sifting the information. But this is great thought provoking piece!

  9. Matt (different one) says:

    The thing is, it’s all in how one approaches the analysis. Some people implicitly ask themselves “am I better off focusing my attention on THIS, or on something else?”. A one-time opportunity for $100 really _isn’t_ that big a deal. It’s cool that they’re giving it out, but a person electing not to take advantage of it doesn’t necessarily reflect a deep-rooted psychological issue with money.

  10. Ryan says:

    What are the tax considerations for the gains on these promotional bonuses. Say I receive a $100 bonus from a Bank of america account, and repeat this process 4 times in 2007, for a net gain of $400.

    Am I taxed differently on this gain than my marginal income tax rate? I know that tax rates are typically very high on my annual bonus from my company. Just wanted to see if anyone knew how these bonus were taxed.


  11. jim says:

    Sometimes they’re included on a 1099-INT and considered interest income to you, which you pay at your marginal tax rate. Sometimes they don’t include it at all.

  12. Ryan says:

    Thanks Jim. I’ll keep my fingers crossed that my meager INT earnings are over looked 🙂

    I’ve been on this site all morning and there is some very valuable information here. I’ve done alot of research and have just completed signing up for a sharebuilder account as well as a Bank of America $100 promo.

    So I have joined the ranks of all the smart people at this site tkaing advantage of free money out there!

    Thanks again

  13. jim says:

    Glad to hear it Ryan, I think that empowering regular folks like us with information that can get them FREE money from the big corporation is always a good thing. Personally, I really enjoy keeping my list of credit cards that offer free gift cards and statement credits with your first purchase up to date because those gimme’s are tax free.

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