Small investing for spending money?
First thing to know about investing is that you make money by taking risks. That means the possibility of losing money as well as making it.  There are low risk investments that pretty much always pay out but they don't earn much. Making $200 a month on $10,000 is about 26% per year.  That's vastly more than you are going to earn on low risk assets. If you want that kind of return, you can invest in a diversified portfolio of equities through an equity index fund.  Some years you may make 26% or more.  Other years you may make nothing or lose that much or more.  On average you may earn maybe 7%-10% hopefully. Overall, investing is a game of making money over long horizons.  It's very useful for putting away your $10k now and having hopefully more than that when it comes time to buy a house or retire or something some years into the future.  You have to accept that you might also end up with less than $10K in the end, but you are more likely to make money than to use it. What you describe doesn't seem like a possible situation.  In developed markets, you can't reliably expect anything close to the return you desire from assets that are unlikely to lose you money.  It might be time to re-evaluate your financial goals.  Do you want spending money now, or do you want to invest for use down the road? "Congrats on saving the money but unfortunately, you're looking for a 24% annual rate of return and that's not ""reasonable"" to expect.  $200 per month, is $2,400 per year.  $2,400/$10,000 is 24%. In a 1% savings account with spending of $200 per month spending you'll have about $7,882 at the end of the year.  You'll earn about $90 of interest over the course of the year.  I'm sure other people will have more specific opinions about the best way to deploy that money.  I'd open a brokerage account (not an IRA, just a regular plain vanilla brokerage account), break off $5,000 and put it in to a low fee no commission S&P index fund; which CAN lose value.  Put the rest in a savings account/checking account and just spend wisely." "The existing answers are good, I justed wanted to provide a simpler answer to your question: Would I be able to invest this in a reasonable way that it would provide me with say $200 spending money per month over the school year? No. There is no way to invest $10,000 to reliably get $200 every month.  Any way that you invest it that has even the possibility of getting that much will have a significant possibility of losing a lot of money.  If you want to get ""free"" spending money out without risk of losing money, you're unlikely to be able to find an investment that will give you more than a couple dollars per month." Just to offer another alternative, consider Certificates of Deposit (CDs) at an FDIC insured bank or credit union for small or short-term investments. If you don't need access to the money, as stated, and are not willing to take much risk, you could put money into a number of CDs instead of investing it in stocks, or just letting it sit in a regular savings/checking account. You are essentially lending money to the bank for a guaranteed length of time (anywhere from 3 to 60 months), and therefore they can give you a better rate of return than a savings account (which is basically lending it to them with the condition that you could ask for it all back at any time). Your rate of return in CDs is lower a typical stock investment, but carries no risk at all. CD rates typically increase with the length of the CD. For example, my credit union currently offers a 2.3% APY on a 5-year CD, but only 0.75% for 12 month CDs, and a mere 0.1% APY on regular savings/checking accounts. Putting your full $10K deposit into one or more CDs would yield $230 a year instead of a mere $10 in their savings account. If you go this route with some or all of your principal, note that withdrawing the money from a CD before the end of the deposit term will mean forfeiting the interest earned. Some banks may let you withdraw just a portion of a CD, but typically not. Work around this by splitting your funds into multiple CDs, and possibly different term lengths as well, to give you more flexibility in accessing the funds. Personally, I have a rolling emergency fund (~6 months living expenses, separate from all investments and day-to-day income/expenses) split evenly among 5 CDs, each with a 5-year deposit term (for the highest rate) with evenly staggered maturity dates. In any given year, I could close one of these CDs to cover an emergency and lose only a few months of interest on just 20% of my emergency fund, instead of several years interest on all of it. If I needed more funds, I could withdraw more of the CDs as needed, in order of youngest deposit age to minimize the interest loss - although that loss would probably be the least of my worries by then, if I'm dipping deeply into these funds I'll be needing them pretty badly.  Initially I created the CDs with a very small amount and differing term lengths (1 year increments from 1-5 years) and then as each matured, I rolled it back into a 5 year CD. Now every year when one matures, I add a little more principal (to account for increased living expenses), and roll everything back in for another 5 years. Minimal thought and effort, no risk, much higher return than savings, fairly liquid (accessible) in an emergency, and great peace of mind. Plus it ensures I don't blow the money on something else, and that I have something to fall back on if all my other investments completely tanked, or I had massive medical bills, or lost my job, etc.
I think it's great idea.  Many large brokerages give customers access to a pretty sizable list of zero commission, zero load funds.  In this list of funds will certainly be an S&P 500 index.  So you can open your account for free, deposit your $1,000 for free and invest it in an S&P index for no cost.  You'll pay a very negligible amount in annual expense fees and you'll owe taxes on your gain if you have to use the money.  I don't follow the school of thought that all investment money should be in retirement account jail. But I think if you have your spending under control, you have your other finances in order and just want to place money somewhere, you're on the right track with this idea. "Yes, definitely. Many municipalities and local governments issue bonds to fund various projects (schools, hospitals, infrastructure, etc). You can buy these bonds and in that way invest in these things. In the US these kinds of bonds are tax-free, i.e.: the income they provide is not taxed (by the US government, may be taxed by your State, check local tax laws). There are also dedicated mutual funds that that is all they invest in, if you don't want to deal with picking individual bonds. As to mom-and-pop stores - that would not be as easy, as mom-and-pop stores are by definition family owned and you can invest in them only if you are personally acquainted with them. Instead, you can invest in small regional/local chains, that while not being mom-and-pop, still small enough to be considered ""local"", but are publicly traded so that you can easily invest in them. You'll have to look for these. You can also use social lending platforms, like Lending Club, which I reviewed on my blog, or others, where you can participate in a lending pool to other people. You can invest in a credit union by opening an account there. Credit unions are owned by their account holders." A questoin that I deal with almost every day.  Like most investments it comes down to.....What is the purpose for this money?  If it is truly a rainy day savings account that you may need in the short term, then fixed income investments like savings accounts, GIC's, Bonds, Bond funds and Fixed Income ETF's are ideal as they are taxed very inefficiently outside of any registered plan (therefore tax free in here).  However if you have a plan in place that has all your short term needs covered elsewhere, I believe this is the place that you should be the most aggressive in your overall portfolio.  If that mining stock goes up by 1000% wouldn't it be nice to put all of that gain in your pocket? I think small sums invested regularly over long-term can do good for you, things to consider:  I would go with an index fund and contribute there there regularly. I recommend you two things: I like these investments because they are not high risk. I hope this helps. "You're talking about money in a savings account, and avoiding the risks posed by an ongoing crisis, and avoiding risk. If you are risk-averse, and likely to need your money in the short term, you should not put your money in the stock market, even in ""safe"" stocks like P&G/Coca-Cola/etc. Even these safe stocks are at risk of wild price swings in the short- to intermediate-term, especially in the event of international crises such as major European debt defaults and the like. These stocks are suitable for long-term growth objectives, but they are not as a replacement for a savings account. Coca-Cola lost a third of its value between 2007 and 2009. (It's recovered, and is currently doing better than ever.) P&G went from $74/share to $46/share. (It's partially recovered and back at $63). On the other hand, these stocks may indeed be suitable as long-term investments to protect you against local currency inflation. And yes, they even pay dividends. If you're after this investment, a good option is probably a sector-specific exchange-traded fund, such as a consumer-staples ETF. It will likely be more diversified and safer than anything you could come up with using a list of individual stocks. You can also investigate recommendations that show up when you search for a ""defensive ETF"". If you do not wish to buy the ETF directly, you can also look at listings of the ETF's holdings. Read the prospectus for an idea of the risks associated with these funds. You can buy these funds with any brokerage that gives you access to US stock exchanges." Not really reasonable because you can't hold a gift card in your IRA, but clever idea none the less. I'm sure a few smaller investors would take advantage of that in a taxable account if it was remotely possible. Peer to peer lending such as Kiva, Lending Club, Funding Circle(small business), SoFi(student loans), Prosper, and various other services provide you with access to the 'basic form' of investing you described in your question.  Other funds: You may find the documentary '97% Owned' fascinating as it provides an overview of the monetary system of England, with parallels to US, showing only 3% of money supply is used in exchange of goods and services, 97% is engaged in some form of speculation.   If speculative activities are of concern, you may need to denounce many forms of currency. Lastly, be careful of taking the term addiction too lightly and deeming something unethical too quickly.  You may be surprised to learn there are many people like yourself working at 'unethical' companies changing them within. Compound interest. Next time you buy a 100$ toy realize that if you save it - in x years that 100$ you saved and invested could potentially be more than 100$ where as most likely whatever you're buying will be worth much less. What is your investing goal? And what do you mean by investing? Do you necessarily mean investing in the stock market or are you just looking to grow your money? Also, will you be able to add to that amount on a regular basis going forward? If you are just looking for a way to get $100 into the stock market, your best option may be DRIP investing. (DRIP stands for Dividend Re-Investment Plan.) The idea is that you buy shares in a company (typically directly from the company) and then the money from the dividends are automatically used to buy additional fractional shares. Most DRIP plans also allow you to invest additional on a monthly basis (even fractional shares). The advantages of this approach for you is that many DRIP plans have small upfront requirements. I just looked up Coca-cola's and they have a $500 minimum, but they will reduce the requirement to $50 if you continue investing $50/month. The fees for DRIP plans also generally fairly small which is going to be important to you as if you take a traditional broker approach too large a percentage of your money will be going to commissions. Other stock DRIP plans may have lower monthly requirements, but don't make your decision on which stock to buy based on who has the lowest minimum: you only want a stock that is going to grow in value. They primary disadvantages of this approach is that you will be investing in a only a single stock (I don't believe that can get started with a mutual fund or ETF with $100), you will be fairly committed to that stock, and you will be taking a long term investing approach. The Motley Fool investing website also has some information on DRIP plans : http://www.fool.com/DRIPPort/HowToInvestDRIPs.htm . It's a fairly old article, but I imagine that many of the links still work and the principles still apply If you are looking for a more medium term or balanced investment, I would advise just opening an online savings account. If you can grow that to $500 or $1,000 you will have more options available to you. Even though savings accounts don't pay significant interest right now, they can still help you grow your money by helping you segregate your money and make regular deposits into savings. Investing in the stock market early is a good thing.  However, it does have a learning curve, and that curve can, and eventually will, cost you. One basic rule in investing is that risk and reward are proportional.  The greater the reward, the higher the risk that you either (a) won't get the reward, or (b) lose your money instead.  Given that, don't invest money you can't afford to lose (you mentioned you're on a student budget). If you want to start with short but sercure investments, try finding a high-interest savings account or CD.  For example, the bank I use has an offer where the first $500 in your account gets ~6% interest - certainly not bad if you only put $500 in the account.  Unfortunately, most banks are offering a pittance for savings rates or CDs. If you're willing to take more risk, you could certainly put money into the stock market.  Before you do, I would recommend spending some time learning about how the stock market works, it's flows and ebbs, and how stock valuations work.  Don't buy a stock because you hear about it a lot; understand why that stock is being valued as such.  Also consider buying index funds (such as SPY) which is like a stock but tracks an entire index.  That way if a specific company suddenly drops, you won't be nearly as affected.  On the flip side, if only 1 company goes up, but the market goes down, you'll miss out.  But consider the odds of having picked that 1 company. Aside from what everyone else has said about your money (saving, investing, etc.), I'd like to comment on what else you could spend it on: Spend it all on small/stupid things   that, while stupid, would make me   happier. For example take taxis more   often, eat often in nice restaurants,   buy designer clothes, etc. I'll be   young only one time. You could also put the money towards something more... productive?  Like a home project.  Convert a room in your living space into an office or a theater-like room.  Install hardwood floors yourself.  Renovate a bathroom.  Plant a garden of things you would enjoy eating later.  Something that you would enjoy having or doing and can look back at and be proud of putting your money towards something that you accomplished. Try something like this: http://www.halifax.co.uk/sharedealing/our-accounts/fantasy-trader/ Virtual or fantasy trading is a great way to immerse yourself in that world and not lose your money whilst you make basic mistakes. Once real money is involved, there are some online platforms that are cheaper for lower amount investing than others. This article is a good, recent starting point for you:  http://www.thisismoney.co.uk/money/diyinvesting/article-1718291/Pick-best-cheapest-investment-Isa-platform.html Best of luck in the investment casino! (And only risk money you can afford to lose - as with any form of investment, gambling, etc) You can't both enforce saving and have access to the money -- from what you say, it's clear that if you can access the money you will spend it. Can you find an account that allows one withdrawal every six months but no more, which should help to cut down on the impulse buys but still let you get at your money in an emergency? "I worked for a company a few years back that insisted all of us were ""non-supervised exempt technical workers,"" and they wanted 45 hours out of each person.  No matter to them that that was a 12.5% cut in hourly pay.  Unfortunately, they did no research and didn't bother to actually apply for any exemptions.  One of the analysts got sick of it, found another job, then turned over his timecards to the labor department.  Said company had to write him a check for $10k, as well as write smaller checks for every other person working there."