According to the findings of new research conducted by the Pew Research Center, more than half of American people have some money invested in the stock market. Even while the median holdings (amounts invested) vary depending on age, income, and other demographic criteria, it is evident that Americans recognize the benefits of investing, even if their exposure to the financial markets is restricted to a 401(k) at their place of employment (k). If you have a completely filled emergency fund and an additional $1,000 that you do not immediately need, you have a variety of alternatives available to you. Unfortunately, the sheer quantity of investing choices available may be overpowering and even perplexing. For this reason, I thought I’d share some of the best methods I’ve found for investing $1,000. You should be pleased with yourself regardless of your choice since you have taken the time to deliberate about how you spend your money.
1. Investing in Fractional Shares Can Help You Build a More Diversified PortfolioRisk level: Medium Fragmentary share investment lets you own just part of the company’s equity instead of the whole company. There is always the opportunity to buy individual stocks. Additionally, you will be able to acquire well-known stocks that might typically be out of your financial reach using this investing strategy. One share of Amazon (AMZN) might be worth more than $3,000 when writing this article. With fractional share investing, you may invest your $1,000 in a piece of one Amazon stock rather than settle for a single share, which would be impossible with a single share investment. This method of purchasing stock is ideal if you want to start investing with as little as $100, but it also works very well for those who have $1,000 or $5,000 to spend. How It Operates: Investing in fractional shares is as simple as investing in common equities or exchange-traded funds (ETFs). The only thing you need to do is choose a brokerage business that will let you invest in fractional shares. You will then be able to research the available possibilities and invest in the fractional share market at your own leisure. The Best Place to Get Started: Investing in fractional shares may be done real-time via Robinhood, which does not charge fees. Because a fractional share may be as little as one- millionth of a whole claim, you can divide an initial investment of one thousand dollars across many different businesses. Discover more about Robinhood here. You can obtain a free stock from Robinhood valued at up to $225 if you sign up for a new account with the brokerage. Who It’s Best Suited For: Anyone who wishes to increase their portfolio’s level of diversification by investing in a variety of businesses may find success with fractional share investment. PROS
- Make sure that your money is spread out across a variety of equities and exchange- traded funds.
- Invest in significant firms that shareware values that are more than $1,000
- Investing in fractional shares may not incur any commission fees, depending on thebrokerage firm that you choose.
- Investing in fractional shares is available from a subset of brokerage providers.
- When dealing with brokerages that need commission payments for transactions, costshave the potential to accumulate very fast.
2. Build a Micro Real Estate PortfolioRisk level: Medium Investment in real estate is possible via any number of means, but Fundrise is the most straightforward alternative. Just half of your available funds may be invested in an initial $500 commitment. You have the option of using their beginning portfolio, which instantly provides you with rapid diversification by investing your money in a variety of real estate investment trusts (REITs). You could also have a look at Realty Mogul since it’s a good alternative. The way it works is that Fundrise REITs provide you the opportunity to invest whatever money you have (in this example, $1,000) into real estate without having to take on the role of a landlord. Simply establish an account, move some money into it to get things rolling, and then choose a portfolio choice that corresponds to your level of comfort with risk as well as your long- term objectives. Fundrise alleviates the burden of tedious tasks associated with real estate administration and the search for new assets. As a side point, Fundrise investors received an average platform return of 22.99 percent in 2021. (3.49 percent in 2022 so far). You may see the four-year returns I’ve made on Fundrise by clicking here. The Best Place to Get Started: Fundrise is the best choice to make if you want to invest in real estate in a fast and simple fashion that does not need you to manage the buildings in which you have invested or cause the value of your investments to decrease due to fees. Fundrise is a great place to learn more about investing. Who It’s Best Suited For: Consumers who want to get exposure to real estate markets but don’t want the hassle of becoming landlords or managing individual properties will find Fundrise to be an excellent investment choice. PROS
- It just requires a low minimum balance of $500 to get started.
- Unparalleled profitability up to this point (average return of 22.99 percent in 2021)
- The yearly advising fees are just 0.15 percent.CONS
- This particular investment choice is illiquid, which means that withdrawing your funds might take many months.
- Past performance, just like that of other assets, is not always indicative of future returns.
3. Let the Dividends You Receive Pay Some of Your Monthly BillsRisk level: Low Is there anything you would do if you could persuade your cell phone service provider to pay your bill? What a great idea would it be? The answer is, “Hell yeah!” If you put your $1,000 into a stock of a telecommunications company that pays a healthy dividend, like Verizon or AT&T, then you have a good chance of seeing a return similar to what was described above. If you bought a sufficient number of shares, the dividend payment might cover your monthly charge; in this scenario, it would be the equivalent of having your mobile phone for free. Are you able to hear me now? You might use this strategy for your other recurring monthly costs, such as your power bill, internet service, petrol, entertainment, and grocery shopping. Here are some instances of businesses that undoubtedly charge you for their services but also have a stock that distributes dividends: Service Utilities Communications Groceries Gas Internet Fast Food Company Duke Energy AT&T Kroger Exxon Mobil Comcast McDonald’s M1 Finance is one of the systems that akees it most straightforward to construct a bespoke dividend portfolio.
4. Invest in a Roth IRARisk level: Varies One sort of investment account is known as a Roth IRA, and it enables individuals to make retirement investments using money that has already been subject to taxes. From that point on, your money will be able to grow tax-free, and whenever you reach the age at which you are eligible to retire, you will be able to take your earnings without being required to pay income taxes. The maximum amount that may be contributed to all IRA accounts combined in 2022 for the majority of persons is $6,000. On the other hand, those aged 50 and above are eligible to pay up to $7,000. How It Operates: Contributions to a Roth IRA may only be made by individuals with a certain income level, which is capped at a maximum of $144,000 for single filers and $214,000 for married couples filing jointly. Contributions are fully phased out for those who earn more than these thresholds. The Best Place to Get Started: Clients who meet the requirements may start a Roth IRA with any brokerage firm that provides this option for investors. Betterment, Stash, M1 Finance, and TD Ameritrade are just a few examples of the most well-known and widely used brokerage businesses that provide Roth IRAs. Whom It Is Most Suited To If you are putting money away for retirement or another purpose in the future, it makes perfect sense to put that money in a Roth IRA. This particular kind of account is also ideal for anyone who wishes to establish a tax-free income source for their golden years, as it enables them to do so in an easy and convenient way. PROS
- Your money will grow tax-free, and you will be able to withdraw cash without being subject to income tax when you reach retirement age.
- You are free to withdraw your donations (but not your profits) at any moment without incurring any fees.
- Opening a Roth IRA with the majority of brokerage companies is a simple process CONS
- Low contribution caps on a yearly basis
- Income thresholds determine who is eligible to utilize this account.
- Because you contribute with money that has already been taxed, you won’t be able totake a tax deduction for your contributions in the same year that you make the investment.
5. Build Up a High-Yield Emergency FundRisk level: Low If you want to put your $1,000 into an account that would offer you some interest, but you can’t afford to lose any of it, then you should look into high-yield savings accounts. These deposit accounts provide you with interest rates that are superior to those offered by your neighborhood bank with physical locations. How It Operates: These accounts won’t accumulate a lot of interest, but since they’re guaranteed by the FDIC, there’s no risk of losing any of your money. In the event that you need it, you may always access and withdraw your cash. The Best Place to Get Started: The rate on the CIT Bank Savings Builder Account is among the best yields currently offered by a savings account. You may even receive the most effective rate with only a minimum monthly deposit of $100; however, having a minimum balance of $25,000 will also offer you the best results. Who Would Benefit the Most: Everyone should put some money aside in case of unexpected expenses. Nevertheless, this account is a fantastic choice for someone who has $1,000 to invest but is concerned that they may need their money in the near future. PROS
- CIT Bank has no hidden costs
- You just need to put in a minimum of $100 every month in order to lock in their mostremarkable possible return.
- You are free to access your money at any momentCONS
- The returns are lower compared to what you may earn from alternative investing choices.
- In order to take advantage of CIT Bank’s most competitive interest rate, you mustmaintain a balance of $25,000 in your account or make a monthly deposit of $100.
6. Developing a Portfolio with Low-Cost ETFsRisk level: Varies Exchange-traded funds, often known as ETFs, have made it a lot simpler to diversify the holdings in your portfolio. This kind of investment is comparable to a mutual fund in the sense that you may buy shares of a variety of different companies via a single ETF. ETFs, or exchange-traded funds, provide investors the opportunity to buy a diverse range of stocks and other assets all at once. The majority of the big brokerage houses allow their clients to invest in exchange-traded funds (ETFs), and the costs associated with doing so are often relatively reasonable (or no fees). The Best Place to Get Started: When it comes to the purchase of exchange-traded funds (ETFs), M1 Finance is among the most reliable solutions. This trading platform gives you access to over 1300 different exchange-traded funds (ETFs), all of which may be traded for free. This is an incredible offer. Check out my comprehensive review of M1 Finance here. Who Should Consider It: Any investor might benefit from purchasing exchange-traded funds (ETFs). Because ETFs allow you to diversify more than you could with individual equities, it is even more advantageous for those who have a total investment capital of $1,000 to invest in them. ETFs often have low-cost ratios, and there is a possibility that you won’t be charged any fees to invest in or trade them. In most cases, the required starting balance for an account is relatively modest (or no account minimum) Make sure your money is spread out in several places. Carry the same level of danger as investments made in other stock markets. To figure out which exchange-traded funds (ETFs) to put your money into, you’ll have to conduct a lot of studies.
7. Use a robot advisorRisk level: Varies Investment decisions are made for you by digital platforms driven by cutting-edge scientific research and computational procedures known as Robo-advisors. By 2025, Deloitte predicts that the Robo-advisor industry will have $16 trillion in assets under management (AUM) as a consequence of increased demand. How It Operates: When you create an account with a Robo-advisor, you will often start the process by completing a variety of questions about your finances and your objectives. This will allow the Robo-advisor to better tailor their recommendations to meet your needs. Then, based on your risk tolerance and the amount of time you have available to spend, the Robo-advisor will utilize computer algorithms to determine the best investment possibilities for you. The Best Place to Get Started: Betterment is my go-to recommendation when people ask me about Robo-advisors because of their simple and straightforward user interface, the cheap fees they charge, and the variety of additional financial services they provide. You do not need to have any kind of minimum amount in your account in order to start one with Betterment. Read more about it in my review of Betterment. Who Should Use It: Robo-advisors are designed for investors who want assistance determining which assets will be most successful for their portfolios and who should use them. PROS
- You’ll pay a fee, but it’s not too expensive.
- 25 percent each year ($2.50 for $1,000 invested) added to your existing invested amount
- A beginner’s approach to investing that is simple and straightforward
- Investing decisions that are in your best interest are made by technology on your behalf.
- You will be obliged to pay fees, which may not be the case if you invest on your own.
- If you allow a third-party platform to make the majority of choices on your behalf, you maynot learn much about investing.
8. Pay off Your Current DebtsWhen most people think about investing their money, the last thing that often springs to mind is paying off their debt, but the statistics don’t lie. While the interest rate you pay on your house may be modest, and you may have had part of your school loans forgiven, the interest that you’re spending on your other debt is hurting your capacity to generate wealth. The debt burden of Americans continues to climb from one year to the next. Even while saving $1,000 won’t have a significant influence on the total amount of debt you have to pay off, it’s still an essential and necessary step toward being financially independent. When I finally paid off all of my student loans and credit cards, which I had irresponsibly racked up while I was in school, I felt an overwhelming sense of relief that I just couldn’t put into words. I am unable to place a monetary figure on how liberated I felt. Using the thousand dollars to make a dent in the amount you owe brings you one step closer to experiencing the elation that comes with being debt-free.
9. Put money into yourselfInvesting in yourself will eventually provide you with the most significant return on investment (ROI), as far as I’m aware. I realize this may seem like a cliche?. When I initially came across this idiom, I wasn’t entirely clear on the meaning it was trying to convey. When I first started along the route of conventional investing and surrounded myself with other successful business people who were knowledgeable about the business world, I finally started to comprehend what it actually meant to invest in myself. Getting started on a smaller scale might be as easy as purchasing a book or enrolling in a 20- dollar course on Udemy. A more significant investment can be going to that conference that you’ve been putting off every year, or it might be hiring a business coach after hearing so much praise for them from your colleagues. I can speak to the fact that each of them has contributed to both my personal and financial success and that each of them cost me less than $1,000. The business coaching programs and pricey courses were the most significant investments I’ve made in myself. In recent times, courses have been given a poor reputation, and the primary reason for this is greedy gurus who are just concerned with increasing their income. Put aside at least one thousand dollars in order to pay for classes that you consider to be well worth the effort. I’ve even developed a few courses on my own, which have garnered compliments and respect for the quality of the knowledge and the value that they offered to the students. You may be interested in taking a look at my two most recent courses, “10x Goals Accelerator” and “Passive Income Accelerator.” You may quickly begin generating $1,000 per month if you enroll in the appropriate training program or course.
10. Do Better Than Your Savings AccountRisk level: Medium If you are a cryptocurrency investor who buys and holds, you may utilize this option to earn more interest than you would in conventional savings account if you have $1,000 worth of bitcoin in your account. You may make a deposit of your cryptocurrency into a BlockFi Interest Account, where it will earn a rate of interest that will accumulate daily and will be paid out monthly. How It Operates: Your crypto deposits may earn you an annual percentage yield (APY) of up to 7.25 percent with a BlockFi Interest Account, but the amount of interest you get is contingent on the cryptocurrency you hold. For instance, the annual percentage yield (APY) for Bitcoin is now sitting at 4%, but the APY for the Gemini Dollar (GUSD) is a whopping 7.25%. Please be aware that there is not a needed minimum deposit amount in order to earn interest and that there are no hidden costs associated with your account. To Get Started: If you want to get started, you may go to BlockFi, which is a cryptocurrency platform that provides an account called the BlockFi Interest Account. After creating a new account and depositing your cryptocurrency, you will quickly be on your way to earning excellent rates of return. It is important to keep in mind that although the best interest is credited to your accoeverydaydayl only be paid out once a month. Acquaint yourself with the BlockFi platform. Who Should Have One: Cryptocurrency investors who have already made the decision to purchase and hold should have this sort of account. PROS
- No hidden fees
- There is no minimum deposit required to start an account or to earn interest.
- Get a greater return on your money than you would with a conventional savings accountCONS
- In general, cryptocurrency markets are quite volatile.
- The interest is only distributed once every month.
- You might be subject to extra costs, such as charges for making withdrawals from youraccount.
Your Particular Method of InvestingSpend some time reflecting on the way you want to invest your money before you put $1,000—or any other sum—into a new investment. Your approach to investing is going to be shaped mostly by the following factors:
- Timeline to invest
- Whether you need quick access to your money because of an emergency or not,
- Appetite for risk