For most people, figuring out how to invest $1,000 will be one of the first steps to making better financial choices. It’s a decent amount of money to accumulate, but at the same time, it’s also not a huge sum for investing.
But that does not mean you can’t find investing options for you. If anything, you should feel good that you saved $1,000 and that you are looking to invest, instead of spending. Kudos!
So if you are starting to ask questions to yourself like, “What to do with $1,000?” or wondering things like, “I have $1,000 to invest, but I don’t know what to do next,” then this post will be for you.
1. Invest in a High-Yield Savings Account
While not a traditional investment you might be thinking about, a high-yield savings account can be the perfect investment choice, especially if you are saving money monthly. And if you want to play it a bit safer for now with your $1,000 then a savings account with interest might be a your preferred choice.
There are plenty of online bank accounts that accrue great interest, but have other options for your money as well. Other investment vehicles will have a much higher rate of return as most banks offer 1-3% interest. But with these banks, they are FDIC insured so you can’t lose it all and your money can be withdrawn at any time.
2. Invest for Retirement
Investing in your company 401k is always a great choice. And it’s even better if your company offers a company match. It’s an easy way to get your cash stacking.
Most employers with a 401k will match half or all of your contributions, typically up to 3% to 6% of your salary. And if you don’t have a company 401k, you can open an IRA. There are two types you could choose from: Traditional IRA or Roth IRA.
3. Consider Purchasing ETFs
When it comes to your 401k or IRA, you also have a massive amount of choices of funds to invest in. The challenge is many mutual funds or index funds have minimum investment costs. Some might be at $1,000 but many will be over that.
However, this is where exchange traded funds or “ETFs” can be great options. ETFs trade on an exchange like stocks. And there are all types of investments like various stock sectors, commodities, or bonds. What makes ETFs great is they offer low expense ratios and fewer broker commissions than buying the stocks individually.
4. Invest $1,000 in Real Estate
Real estate is a great option to build wealth and diversify your money. And I’m not saying you shouldn’t learn or try, but $1,000 typically won’t get you too far. However, that has changed thanks to real estate crowdfunding sites.
Another option you have is with a REIT, which there are ETFs and Index Fund versions in most investing institutions like Vanguard. However, those typically follow the fluctuations of the stock market.
5. Use Rob-Advisors To Your Advantage
Just like digital companies have appeared for real estate, the age of robo-investing is also here. Essentially, instead of worrying how to invest or trying to learn the best options, you let an algorithm handle that for you. Robo-advisors use advanced artificial intelligence based on a series of questions you answer and help you invest based on those answers. This means you can get many of the benefits of a financial planner for a much lower cost and less headaches managing your investments.
6. Invest in Your Own Business
If you have ever wanted to start your own online business or side hustle, investing $1,000 in your project might be a great choice. Many side hustles and online businesses do not require a lot of start-up costs, so this money can go to great use in getting you started.
Before you jump in, make sure you do some research and brainstorming about your business. What are you passionate about? Is there a market for what your business might do or sell? Even think about what you enjoy doing, many hobbies can make you money.
7. Invest in Your Kids
This only applies if you currently have any children or maybe are planning on having some soon. But a good way to invest $1,000 it start planning for your kids’ education. This is to say that you have plenty of time to start investing. If your child or children are close to high level education now, you may need to ramp up your saving and investing.
But if you are just getting started with your family, taking that $1,000 and opening a 529 plan can be a great idea. The money invested in a 529 is after taxes and your investment grows interest free. And when the money comes out of the account and is used for education expenses, there are no taxes to worry about.