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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!
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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.
How to Invest $1,000
While investing $1,000 is not going to make you wealthy overnight, it’s a great start to building a nest egg and helping you reach financial goals.
Additionally, the financial world has changed and more companies have started to create investing options for people with all sorts of income levels.
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Now, everyone has a chance to learn and put their money to work.
There is no exact way you should invest $1,000 as it really depends on your personal finances and goals.
But, you should know what options you have so you can make more informed decisions with your cash.
Below are some of the best ways to invest $1,000.
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.
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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 But with these banks, they are FDIC insured so you can’t lose it all and your money can be withdrawn at any time.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.
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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.
Now, with those options are some rules and things to know, but they are very easy to open with any financial institution.
I prefer a Roth IRA because it offers tax-free growth and tax-free withdrawals in retirement. When I first opened mine a few years ago, I only had $500 to start with.
And since then, I’ve maxed it out the last three years.
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. I’m talking $3,000+.
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But there are other options.
Sure, you can buy some individual company stocks, but this is not ideal and puts you at a lot of risk.
Personally, I only recommend that option when you have more money invested and can risk a small amount to play around with.
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.
So when you are ready to invest $1,000 in the market, you have more options to diversify. You can learn more about ETFs here.
4. Invest $1,000 in Real Estate
Many people would love to invest in real estate, but get scared off by the thought. For one it can be very expensive, quite a bit of work, and you really have to understand how real estate works.
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Yet, 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.
These platforms allow you to invest in commercial properties, single-family homes, and apartment properties with as little as $500.
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