How to Invest $1,000: 10 Ideas for Beginning Investors

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7 months ago

How to Invest $1,000: 10 Ideas for Beginning Investors

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7 months ago
How to Invest $1,000, Ideas for Beginning Investors

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Money: we all rely on it to help us cover our bills and purchase goods that we want or need. However, when it comes to money, many of us focus more on earning than we do on growth? Why? The average person may not believe that investing is for them. To some, investing is an activity that only those with hundreds of thousands of dollars do in order to cultivate the wealth that they want. 

The truth? Anyone can get started in investing, and this guide will show you 10 ways how you can start your own journey with as little as $1,000. If you’re ready to pave your way to a better financial future, let’s get started!

Table of Contents: Shortcuts

Investing: The Prerequisites

Investing is just one step on the journey to improving your finances. However, in order to get the most out of your efforts, it’s crucial that you seek to ensure there are no potential roadblocks to your success before you get started. But what exactly are the good financial practices that should be observed in order to prevent your investments from causing you problems rather than providing you with benefits?

Never invest more than you’re comfortable losing

In regards to some of the investment ideas offered in this list, you’ll find that there are many relatively safe investment opportunities that will help you grow your wealth with limited risk.

However, for those who are focused on doubling their initial investment in a short amount of time, the likelihood of risk increases when you begin seeking out such opportunities.

The most important thing to remember whenever you invest your money is that you should never allocate more funds to various vehicles than you are comfortable losing. Additionally, you should never use funds that you will likely need in the future. (Remember, there is a major difference between investing and gambling, and trying to increase the money that you rely on for your day-to-day needs is risky behavior that can be very detrimental to your life.)

Create a budget for investing, only use that amount, and be as safe as possible. If you are going to take risks, know the potential consequences of your decision and be prepared to face them should they arise.

Always do your research before you invest your money into any financial vehicle

There are quite a few seemingly lucrative opportunities out there that can be very appealing to prospective investors. In fact, you may feel compelled to put your money into these opportunities.

In the investment community, there is a term for this: fear of missing out, or FOMO. No matter how promising something may seem, it is of the utmost importance that you do your research to fully understand how something functions, where the potential to make money lies, and what the risks and benefits are of your chosen investment. You should also set aside time to do research beyond just the investment at hand, like how engaging in investment activity will affect your taxes in the future.

When you invest your money blindly, you may end up losing it all, which can be a major setback if you’re just starting out.

Before you invest, do these things

A lot of adults feel like they should be investing. While investing is certainly something that everyone should do, the issue is that there may be more important items to address before you begin seeking out ways to grow your wealth. What are these? Some areas to focus on include:

  • Paying off all of your debt: It’s impossible to grow your wealth with lingering debt hanging over your head, especially if said debt is accumulating interest or negatively impacting your financial life or day-to-day existence. Before you begin putting money into various accounts and tools, make sure that you’re actively working towards your debt until you’re no longer in the red. Once you’re debt-free, it becomes much easier to see the results that you’re looking for from your investment activity.
  • Building an emergency fund (and actively saving): Most investments bring steady income, albeit rather slowly. This is because they’re designed to offer you the stability that you want over the long-term. The problem? This means that any short-term needs, such as surprise expenses, can’t be covered by investments. This is why it’s important to save, especially in an emergency fund that you can dip into when the need arises. However much you feel comfortable putting away, make sure that’s done first before you begin directing some of your funds towards your growth goals.
  • Developing a strict budget: Seeing returns can be exciting, and in your excitement, you may get overzealous and invest more than you can afford. Set aside some time to sit down, figure out your budget, and decide how much you can use for your investment activities. This way, you’re only investing what you can afford to rather than dipping too much into your accounts and risking money that you need.

Investing is only beneficial when you’ve taken the steps necessary to be as financially secure as possible. If you’ve met the prerequisites above, you should be ready to grow your money!

10 Ways to Invest $1,000

So, you’re ready to invest, but you don’t know exactly where you should be putting your money. To make sure that you know your options and get off to a good start, use the 10 ways to invest $1,000 listed below!

1. Put Your Money Into an App That Does the Hard Work for You

Taking the time to comprehensively research and understand the various investment opportunities at your disposal can be quite stressful and time-consuming. Fortunately, there are modern solutions that can make it easier for you as a consumer to reap the benefits of investing without dealing with all of the stress.

The solution? Investment apps.

Two of the best apps currently dominating the market for these needs are Acorns and Stash.

Acorns

4.5
4.5/5

DollarFlow rating

MINIMUM INVESTMENT REQUIREMENTS

$0

INVESTMENT TYPES

Stocks & funds, gold, crypto, options

FEES

$1 per month for accounts under $5,000; 0.25% of account balance yearly for accounts over $5,000

Acorns is an application that allows you to make regular investments into your account either through recurring deposits or through round-ups, which, as the name suggests, takes any of your purchases, rounds up to the nearest dollar, and invests the remaining amount into your portfolio.

Upon signing up, the platform will ask you a few questions to place you into one of their five portfolio categories: conservative, moderately conservative, moderate, moderately aggressive, and aggressive. You can see a full breakdown of how your money will be invested once you begin investing with the platform.

They’ve also added multiple services that can help you make the most of the platform, such as retirement investment opportunities, savings accounts for kids, and even your own debit card that you can use to save passively and take advantage of the cashback opportunities that they offer.

If you have $1,000 to save and you want a knowledgeable platform to take care of your money for you as you continue to grow your investment, Acorns is certainly one great place to start.

Stash

4.5
4.5/5

DollarFlow rating

MINIMUM INVESTMENT REQUIREMENTS

$0

INVESTMENT TYPES

Fractional shares of stocks & funds, EFTs, bonds

FEES

Stash Beginner; $1/month, Stash Growth; $3/month, Stash+; $9/month

Stash is another investment platform that is similar in nature to Acorns but offers a few key differences that will help you choose between the two if you do find yourself wanting to use an investment app.

Stash boasts a simple sign-up process, allowing you to invest as little as $5 to get started. Rather than different investment portfolio options, you can select from three different subscription plans: Stash Beginner, Stash Growth (everything in beginner plus retirement investing), and Stash+ (everything from the previous accounts along with investments for children and greater incentives).

You can add investments into your account manually or by setting up a recurring deposit. With Stash, you may also be able to receive your paycheck up to two days earlier. However, one of the most unique things about Stash is that it offers a Stock-Back card. This card provides you with cashback in the form of fractional stocks at the places you shop at. This can be a great way to build your portfolio without having to spend too much time trying to figure out which stocks you should be investing in.

The best thing about apps like Stash and Acorns is that they require very small fees in order to manage your portfolio, making it accessible to absolutely anyone. Although investment apps may not be the right choice for all investors, it’s definitely worth looking into, especially if you’re starting out with a small amount like $1,000.

2. Consider Real Estate Investing Through REITs

Real estate is generally something that most investors consider to be out of their league. However, real estate investing is possible when you only have $1,000, especially if you know where to look.

One of the options that are currently available to you is real estate investment trusts or REITs. REITs operate in a similar way to mutual funds, with the exception that the money that you invest into REITs are then invested into properties. The advantage? Rather than having to directly pour thousands or millions of money into owning a property and managing it, you invest to receive a small stake while others take care of the property.

Of course, REITs come with their fair share of disadvantages. One of the biggest being that, when you invest in a REIT, you don’t have control over which properties your money is being spent on. However, when you’re just starting, this limited amount of control may not be a very big deal to many investors.

If you want to invest in a REIT, one of the best places to get started is Fundrise.

3. Use Your Money to Start Your Own Side Hustle or Small Business

We all invest with the intent to grow money. However, few of us think about the ways that this can be done without having to rely on traditional investment vehicles. One way to take your $1,000 and see a profit is to direct it towards a side hustle or a small business that you’ve always wanted to launch.

The thing about side hustles or small business ideas is that there’s always going to be some type of investment that has to be made in the short-term or in the long-term. However, there are businesses that only require little capital to start and there are those that will take thousands upon thousands to successfully establish your idea and make it profitable.

So, which options do you have at your disposal if you’re only looking for the former? Some great, affordable side hustle and small business ideas worth pursuing include: 

  • Launching your own blog: Blogging can be a relatively easy way to earn money. With the only setup being required including hosting and domain registration fees, finding the right theme and plugins, and a minor investment of your time to get your blog started, you can make money through advertising, selling your own digital products, or even through affiliate marketing. If you have a good eye for crafting attractive content and engaging others, this may be one side hustle worth pursuing.
  • Selling digital products: An extension of the previous suggestion, digital products are great because they can offer you passive income, requiring you to work on the product for a limited amount of time then reaping the rewards over time. If you’re new to the idea of digital products, using your money to invest in private label rights content that are done for you and can be resold can be the best place to start. You can see more of what this entails at companies like PLR.me.
  • Recording a podcast: Podcasts are still quite popular. Much like audiobooks offer a simpler way to process information, podcasts offer us entertainment and knowledge on the go. If you’re a specialist in any area, you can start your own podcast and monetize it through developing your own membership community or finding companies who will sponsor your show. You will have to invest in recording equipment, but this type of equipment is quite affordable in this day and age!
  • Offering your services as a freelancer: Do you have valuable professional skills that are not being put to use? If so, one of the best side hustles to consider is becoming a freelancer. Whether you’re a programmer, a project manager, or a social media marketer, all you need to get started is a website or portfolio, a laptop or desktop computer, and the desire to grow. The rest of the work is simply a matter of finding the right channels to land your ideal clients!
  • Starting a dropshipping business: Dropshipping continues to be an excellent business model because it’s easy to establish and convenient for all potential business owners. Through dropshipping, you partner with manufacturers who are responsible for fulfilling orders and making sure that they get to their destination. For you, this means that you just have to worry about setting up your website and marketing your company to the world. If you’ve always been interested in e-commerce but didn’t want the responsibility and risk that comes with dealing with your inventory and shipping it out, a dropshipping business model may be perfect for you.

These are just a few ideas to help you get started. If a business is in the cards for you, set aside some time to do your research, assess your skills, and figure out what may be the best way for you to make some extra money with just a small initial investment.

4. Improve Yourself to Improve Your Finances

Investing is a way to develop passive income. Passive income is essential because it allows us to make money without the level of involvement that is required by active income, i.e. your 9-to-5 job. However, with active income comes the greater potential to invest, and investing in yourself to boost your salary can be beneficial to your investment strategy as well.

However, this suggestion may prompt readers to ask, exactly how am I supposed to boost my earning potential with just $1,000? The truth is that there are plenty of ways to make yourself more appealing to current or prospective employers with just a 1k investment.

Online courses that offer certifications provide one of the easiest ways to upskill and improve your online or offline resume to get an edge on the competition. If you’re looking to gain access to certifications but don’t know where to start, a few great online learning platforms we recommend taking a look at include:

There are a few considerations that you’ll need to make when taking online courses. Firstly, you need to ask yourself, will I be able to apply this knowledge somewhere in my professional life? Although learning for the sake of learning can be helpful, employers or clients that you work with want to see that you can apply the knowledge that you have acquired through taking online courses. If you attest that you’ve taken online courses but have no proof to back up your efforts, it can be difficult to leverage your education successfully.

Secondly, you’ll want to ensure that your certifications will be respected by those who you approach for work. Say, for example, that you get a certification through Stackskills. This can be a great way to show that you have certain skills, but it doesn’t necessarily hold the weight you may want if that certification is not backed by a name that your prospective employer or client recognizes. If you’re adding certifications to your resume, you’re going to fair much better when you decide to go for certifications offered by prestigious universities or companies such as Oracle and Adobe. Keep this in mind if you plan on showing off your certifications later.

Upskilling and taking the opportunity to grow your professional skillset is always a great personal investment to make so that you can earn more and excel in your chosen career path. To help you get started, use the list of online learning platforms offering paid certifications above!

5. Look to the Future

If you’re someone who is actively saving, has a great salary that allows them to live comfortably, and is making good financial decisions like living below their means, then maybe you’re not looking to make major money moves just yet. The good news? This is absolutely okay, and while investing in opportunities with a greater potential for growth, you also want to focus on finding the right opportunities to help you develop greater security.

Two items that you’ll want to turn your attention to if you’re looking to invest in the future include 401(k)s and IRAs. Both of these are designed to help you invest with retirement in mind, with the former allowing you to benefit off of employer contributions and the latter providing you with tax incentives when you begin withdrawing your money during retirement (namely, Roth IRAs).

Of course, you don’t have to stop here. You may also want to begin investing in your child’s future by investing in savings accounts or college funds. In a similar vein, you could open up a life insurance policy in the event that something happens to you so that your family is taken care of financially.

It’s best to be optimistic about the future, but it’s also crucial that we prepare. If you want to develop greater stability in the future for yourself or for those around you, these ideas can help you get started more successfully!

6. Turn to a Robo-Advisor for Support in Your Investment Journey

Arguably one of the biggest problems that beginning investors encounter is understanding the stock market. Although there are plenty of great educational sources out there that will make your journey easier, this is something that is done over time. To get investing now, you may want to turn to the support of a Robo-advisor until you feel more comfortable managing your portfolio on your own.

A Robo-advisor is a service or platform that helps you throughout the investment journey by providing you with advice and support without having to interact with human financial advisors. Why is this a benefit? Robo-advisors often cost less than hiring a human being to manage your finances, making it better for those who are just starting out with a small investment like $1,000.

Of course, which service you choose to invest in is going to play a major role in your overall growth and success as well. A few great services to look at if you’re interested in using a Robo-advisor includes SoFi (this one is actually free to use, so it can be one of the best to approach and consider first), Betterment, Wealthfront, Ellevest, Ally, Axos Invest, Wealthsimple, and Blooom. All of these offer you the ability to begin investing with less than $1,000.

The only thing to keep in mind if you plan on using a Robo-advisor is how much you’ll be paying in fees, management or otherwise. Many of these platforms offer greater incentives to invest with them when you put more money into your account, making it more affordable for you to continue using your account if you have thousands and thousands of dollars stored away.

As long as you take your time to review the options available, pay close attention to their terms of service and product or portfolio breakdowns, and select the option that makes the most sense for you now as well as down the road once you start accumulating more funds in your portfolio, you should be find using a Robo-advisor service for your initial investment!

7. Invest in Your Favorite Stocks (Especially Dividend-Paying Stocks)

If you’re interested in investing to make money, the first recommendation you likely came across was investing in stocks. This is because it is the most popular form of investing, and likely what you’ll be doing when you’re engaging in retirement investment activities. What you’ll soon find out, however, is that many of these investment accounts don’t allow you to pick your stocks for yourself. Rather, your money is invested into a wide variety of options to hedge against risks and diversify your portfolio.

For some, this seems like the safest and most reasonable method to get started. For others, they may want more control over where their money goes or may prefer to play the market themselves. In this case, you’re going to want to invest your money into individual stocks, with a focus on getting stocks that pay out regularly.

If you’re just learning about the stock market, getting started tends to be the most difficult part of the journey. Fortunately, it’s as simple as following these steps.

Step 1: In order to begin investing in stocks, you’re going to need to open a brokerage account. Some popular brokers that you can use to help you get up and running include Merrill, E-Trade, Robinhood, Ameritrade, and Interactive Brokers. Each of them come with their own advantages and disadvantages regarding fees and terms of service, so it’s important that you take the time to do your due diligence and figure out which one is best for your long-term investing goal. Find the right one for you and sign up to get your account set up.

Step 2: Once your account has been made, you can begin investing in individual stocks. Investing in stocks comes with some pros and cons. The biggest downside is that there is a greater risk on your end should the overall value decline or the company fail. However, the advantage that they have over collective funds is that you can often experience more profit when their value rises, making it easier to achieve short-term profitability. No matter which company you plan on investing in or how well-established they may be, always do your research to understand the stock market, the history of your chosen stocks, what factors affect their value, and how you can mitigate risks to avoid losing your investment.

Step 3: Continuing your education and regularly managing your portfolio is of the utmost importance. Investing in the stock market is not something that you can set and forget. As an investor, it is your responsibility to learn more about your assets, how you can experience growth over time, and what you need to do in order to ensure that you thrive. Although this can seem like a lot of work, the payout is often worth it!

An Additional Note: What About Cryptocurrency?

Every investor has likely heard of the meteoric rise in Bitcoin over the course of the past years. Of course, it’s only reasonable to become interested in an asset that has risen hundreds of percentage points, but as any level-headed investor knows, it’s never a good thing to buy into FOMO.

For many cryptocurrency has become a way to greatly increase their wealth in a relatively short amount of time. For others, however, tales of losing everything to these digital assets are just as prominent. Why? Although cryptocurrency does have the word “currency” in its name, what few may not realize is that it does not function in the same manner as currency, which is why the price is so volatile and experiences massive price swings in both directions.

We’ll definitely touch upon this in future guides regarding how to invest your money, but for now, it’s best to take the time to learn about it if you’re interested and invest your extra $1,000 into something that carries less risk on this guide.

8. Can’t Decide Which Stocks You Like? Invest in an ETF instead

Figuring out which stocks are right for you can be difficult, especially if you’re not looking to risk too much when you invest your first $1,000 in the stock market. The good news? There are other investments you can make that carry far less risk. One of these solutions is known as an ETF or exchange-traded fund.

Exchange-traded funds are essentially a collection of securities that closely follow a specific index, like the S&P 500, for example. ETFs are traded much like stocks are (hence the term, exchange-traded), but stocks are not the only securities that you may be able to find in an ETF. In fact, ETFs can also be comprised of investments like bonds, commodities, and foreign currencies.

There are a few inherent advantages that make ETFs a great option for beginning investors. Besides offering a basket of securities that serve to diversify your portfolio and guard you against risk, ETFs are often more affordable than investing in individual stocks, especially if you’re using a physical advisor to help you manage your portfolio. Additionally, many ETFs help you invest in a bundle of securities focused on one industry, making it easier to target certain areas that you’re especially interested in.

Of course, ETFs don’t come without risks. ETFs that are being actively managed by others can still cost you a great deal in fees. Because they are a basket of securities, this can also make your investments less liquid (although you’ll want to pay close attention to which types of ETFs you’re investing in so that you experience as little resistance as possible). With focused ETFs, the biggest issue is that you lack the diversification you may be looking for in your investment.

So, is an ETF right for you? It truly depends on your long-term investment goals and how well this type of investment stacks up against other recommendations that you have been given. Take your time to look around at various ETFs and the brokers that provide them so you can ensure you’re getting the best deal when you do find the perfect option for your needs.

9. Grow Your Money Over the Long-Term With One of These Low-Risk Options

If you’ve been doing your homework, chances are that you’ve noticed the sheer volume of great investment opportunities for beginning investors. Many of these low-risk opportunities are perfect for breaking into the market, but they may not be as great as, say, individual stocks or ETFs. But which ones should you be looking at when you want to grow your wealth? Some low-risk investments to pay attention to include:

  • Bonds: Bonds are excellent low-risk investments because you’re able to earn money over time until the bond matures (although in the case of some Treasury investments, some items may have negative yields, which is something that you need to pay very close attention to when you begin investing). Some ideas to help you get started include savings bonds, corporate bonds, and similar investment opportunities like Treasury bonds, notes, bills, and TIPS, all of which allow you to invest your money in the hopes of seeing gains over a certain period of time.
  • CDs: Certificates of deposit, or CDs, act in a similar manner to bonds, paying you a steady interest rate over the predetermined CD term until it comes time to pull your money out. CDs may not always be seen as the right investment tool because some savings accounts can pay you more, but the issue is that similar investment tools may also require greater deposits in order for you to get started. No matter which CD you choose, remember that pulling your money out early will often result in a loss of interest and principal that stunts your overall profitability.
  • Money Market Funds: If you can’t decide on some of the low-risk investment opportunities listed here, you may want to consider investing in a money market fund. Money market funds are baskets of low-risk investments like short-term bonds and CDs that help you gain the liquidity you wouldn’t receive with other items on this list. Additionally, most money market funds will allow you to take out your money without having to deal with fees or loss of interest as a result. However, because of the nature of these funds, you can’t expect to see massive gains as the investment vehicles are still rather tame.
  • Preferred Stocks: Preferred stocks are very similar to regular stocks, with the exception being that they act more like bonds yet still give you access to regular dividends when you invest in the company. The problem? Although these are considered to be the best of both worlds, owners of preferred stock may still see their dividends cease if the company is no longer profitable or may not make any money if the company they invest in shuts down entirely. If you’re looking into preferred stocks, be very careful about which companies you invest in. Although you can’t predict the future, you may be able to avoid bad investments with the right amount of research.
  • Mutual Funds: There are a ton of assets out there with the term “fund” in it, which can get quite confusing for beginner investors. Index funds, like ETFs, provide you with a collection of securities that follow an index. Mutual funds, on the other hand, allow you to pool your money together with other investors to buy shares of the fund (hence the term, mutual fund) and are professionally managed by the fund managers. While this one carries a somewhat higher risk than the previous vehicles (depending on which fund you choose), it can still be a great way to get your foot in the door of your investment journey.

Put simply, there’s no shortage of investment opportunities at your disposal. Consider one of these low-risk assets if you’re looking to dip your toes into the water while experiencing minimal risk along the way.

10. Invest in Yourself and Grow Your Wealth Indirectly

In the world of personal finance, spending smart is the key to maintaining your wealth. The problem? Some people see any expense as a problem, which can be quite limiting. The truth is that not all purchases are necessarily bad for you or your budget.

For example, let’s imagine that you’ve owned the same desktop computer for the past decade. Although it still works, it runs relatively slowly and isn’t as up-to-date as what you need to get work done from home. Making the decision to invest in a new laptop so that you can get your work done more efficiently is not a useless purchase. Instead, it’s allowing you to streamline your efforts, making it possible to grow your wealth indirectly.

Whether it’s a major purchase or a minor tool, consider what you may have been denying yourself in your day-to-day life and take a moment to ask, would this purchase benefit me and make it so that my financial life is better? If so, it’s not a bad investment to make!

Make Your $1,000 Work for You!

It’s more than reasonable to be nervous about investing. Especially if the money you have set aside for this particular purchase is something that you’d rather not lose. Fortunately, making the most out of your money begins with figuring out exactly which opportunities would mitigate risk and offer you the best potential in growing your $1,000. If you’re ready to take the first steps in your journey, use the 10 recommendations listed above to help you learn more about which investment vehicles are right for you!

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