"Even a 1,000 mile journey starts with a single step".  Lao Tzu

The journey to becoming a millionaire doesn’t start with a million dollar paycheck, it starts with your first investment of $100. The process is gradual and time consuming, but it doesn’t have to be difficult. So how should you invest $100 for maximum return and minimal effort?

Invest in the Stock market

The stock market has consistently returned 9% over the past 75 years, compared to 4.9% in bonds and 3.7% in money market accounts or savings accounts. There have been years when the market has lost over 50%, for example, during the Great Depression and the Great Recession of 2008, but over the long run, investing in stocks has been a consistent way to accumulate long term wealth.

With $100 you should not buy individual stocks because you can not get appropriate diversification, but you can invest in an index fund. An index fund (like the S&P 500) is a single investment that gives you partial ownership in 500 of the biggest companies traded on the stock exchange. As your portfolio grows, it is important to diversify into individual stocks and mutual funds, but with an investment from $100 to $1000 the best way to start building an investment portfolio is an index.

Consider using a company like, Sharebuilder, Scottrade, or Etrade to open your first investment account.

Buy a Bond

When you invest in a bond, you are loaning your money to an institution such as a private company, or a government that promises to pay you a fixed annual rate for borrowing your money, plus return the principal at the end of an agreed upon time period.

There is a certain amount of risk in this investment, as the company or government could go bankrupt and would be unable to pay back the the money you’ve invested. Historically, bonds sold to companies (corporate bonds) have returned 4.9% and bonds sold to the US Government have returned slightly less.

The safest type of bond is a US Treasury, which you can purchase directly from the US government via their website http://www.treasurydirect.gov/.

To diversify your investment in corporate bonds, consider investing in a bond fund or a bond index, which pools your money with other investors. There are many available bond funds, two of the most common are Vanguard Total Bond Market Index or the Barclays Capital Aggregate Bond Index.

Whether you choose to invest in stocks or bonds with your first $100, you have taken the first step on a long journey to becoming a millionaire. It won’t happen overnight, but if you stick with a consistent investment plan, you will eventually accomplish your goal.