How to start investing with €100 a month: a guide for young people (20-30 years)

Before taking your first step into the world of investing, make sure you have a solid financial foundation. This means having an emergency fund that covers between 3 and 6 months of essential expenses, kept in a savings account or easily accessible deposit. This cushion will protect you from unforeseen events without having to sell your investments at unfavorable times.

It is also important to eliminate high-interest debts, especially credit cards or personal loans that exceed 8-10% annually. Paying off those debts is mathematically more profitable than investing, as the interest savings equate to a guaranteed investment.

A broker is the platform that allows you to buy and sell investments. To start with €100 a month, look for one with low or zero commissions for periodic purchases, no monthly custody fees, and access to index funds or ETFs. In Spain, popular options include MyInvestor, Indexa Capital, Finizens, or Interactive Brokers.

Index funds and ETFs are perfect for beginners. An index fund replicates a market index (such as the S&P 500 or the Euro Stoxx 50) by buying all the companies that compose it. This gives you instant diversification among hundreds of companies without having to choose which ones to buy yourself.

Let's see the power of compound interest with real figures. If you invest €100 monthly for 40 years (from age 25 to 65) with an average annual return of 7%, you will accumulate approximately €265,000. Of that amount, you will have only contributed €48,000 from your pocket; the remaining €217,000 will be profits generated by compound interest.

The last step is to automate your monthly contribution. Set up a recurring transfer from your bank account to the broker on the same day you receive your salary. This way, you will invest before the temptation to spend appears. The DCA strategy protects you from volatility because you buy more shares when prices fall and fewer when they rise.