Have some extra cash that you want to use to increase your wealth? We have 19 ways to invest $1,000 to get the most out of your money.
Investing is the best way to reach your financial goals quicker! There are several smart options for anyone with an extra $1,000 to invest and create a diversified portfolio.
You can start investing in bonds, CDs, savings accounts, real estate, commission-free trading, or even invest in yourself through education or a small business.
The important thing is to get started investing now rather than later. Check out our list to help you get started!
19 Savvy Ways To Invest $1,000
1. Retirement Investment
Set aside a certain amount of dollars to invest in your retirement accounts each month – $1,000 each month can make quite the difference in your investment options!
Some ways you can get started investing are with an Individual Retirement Account (IRA) or a 401 k.
Roth IRA
Why not start by investing $1,000 in a Roth IRA retirement account? This is an account that you can start on your own at any time, even if you already have other retirement accounts from your job.
With a Roth IRA, you pay taxes on the amount of money going into your fund, so when you withdraw from the account, the money is tax-free.
Both Webull and Betterment offer a Roth IRA account on top of other investments.
401(k)
A 401 k plan is offered by your employee, and when you contribute to it so may your employer! They’ll match your contribution, which is basically free money, so take advantage of starting a 401(k)
When you contribute money to your 401(k) account, it lowers your taxable income. Plus, even if you leave your job, you can roll over your 401(k) and keep your financial savings ready.
Any way you look at it, it’s the best way to save money and become an investor in your financial retirement future with some free funds!
2. Long-Term Investments
Decide the financial risk you are comfortable with before you become an investor and how long you want to make investments for. Typically, people invest $10,000 or more to grow long-term investments quicker, but you can start with whatever money you have!
If you invest it for a short period of time, you can get a higher return but it will not be as reliable. If you invest in a long-term investment, the return will be lower but more consistent and reliable.
Some people put $1000 in long-term investments to start building wealth slowly but surely so that they have consistent passive income they can depend on.
Long-term investments are any investments that are expected to last for more than five years or more. They are usually high-risk, high-return investments.
They also don’t always stay at a lower return rate over time, all of them have the potential to give more over time. Long-term investments usually increase in value over time, and you can research what projection you’d expect from your investments.
One example of this is investing in art– it can take a lot of research and has some higher risk, but the ROIs on good investments can be strong after holding onto art pieces for resale.
3. Invest In Local Businesses
Why not take your hard-earned $1,000 and make a financial investment in a local business or even a business located in another city?
How do investors give money to small businesses? Well, the answer is simple- by using Mainvest!
By opening an account with Mainvest and investing, with minimum investments starting at just $100, you can help out a local business get started in their market.
Over the life of the revenue sharing note, you earn back an investment multiple-meaning you can earn 1.5X or even 3X what you invest. This takes the place of interest rates.
It’s a great way to invest because the minimum amount is low plus it helps a business at the same time!
Learn how to start investing in local small businesses now with Mainvest.
4. Exchange-Traded Funds (ETFs)
Instead of having all of your money tied up in one company, why not get more bang for your buck by investing in multiple companies at the same time? One way to invest $1,000 wisely is exchange-traded funds (ETFs).
ETFs consist of a variety of stocks and bonds, not just one stock or one business. Owning shares in an ETF means you have a stake in every company that it invests in.
If you invest in an ETF, then it makes sense to have an online brokerage account so you can easily purchase new ETFs or sell some off when necessary!
With an advisor like Webull, who offers commission-free ETFs, online stocks, and options trades, and a $0 per options contract, you can start with ETFs for as little as $5!
5. Robo-Advisor Investment Platforms
The best way for new investors who are trying to start an investment portfolio is usually with Robo-advisors.
Robo-advisors can save you time and money, and take some of the hassles out of investing. This can be useful for novice investors because:
- anyone can use a robo-advisor
- robo-advisors do most of the work
- it takes less to begin investing
- it reduces the risk if you make a mistake
- they have a low minimum to open an investment account
Robo-advisors do most of the investment work for you and these platforms usually have a lower minimum amount to get started, so $1,000 can get you set up in no time.
They invest in stocks and bonds based on your risk tolerance and are typically done through an automated process- you decide the direction your investments should go, and your brokerage account just handles itself.
Some good options include the robo advisors M1 Finance, Betterment, Wealtfront, and Acorns.
M1 Finance and Acorns puts your dollars into fractional shares of stocks. Betterment and Wealthfront invest your dollars in low-cost ETFs based on your risk tolerance.
6. Prioritize Fractional Shares
Investors don’t have to buy full shares of stock anymore.
By using robo-advisors, you can purchase fractional shares or a partial share in company stocks at a cost less than a whole share. This prioritizes minimizing costs over short-term gains.
For example, a stock might cost $10 per share. Buying 1/5th of a share costs $2.50, saving you 50% on your initial investment. Plus, this way you can use all the money you have available in your account- it all gets a chance to earn more income for you!
7. Maximize Your Savings Account
Why not invest your $1,000 in a high-yield savings account that pays more interest than a traditional savings account?
High-yield savings accounts typically pay up to 20% more than a traditional savings account, which is only estimated at .09%!
If your savings account only earns .09%, your $1,000 is earning you only $0.90. A high-yield savings account with even 1% would be earning you $10!
The nice thing about a high yield savings account is you putting your cash in a savings account that is FDIC insured for up to $250 thousand dollars per depositor. You can invest $1,000 with little risk and make more on it over time!
8. Invest In Real Estate
You can buy already managed buildings, flip houses for a profit, become a landlord, and more to earn passive income in real estate.
Real estate isn’t going anywhere anytime soon and investing in it will help build a diversified portfolio and earn more.
A real estate crowdfunding platform may be what you are looking for if you want to diversify your portfolio with real estate.
Fundrise uses eREITs(electronic real estate investment trusts) and eFUNDS (electronic real estate funds) to invest your cash in already built buildings or in land for new buildings.
What’s better is you don’t have to be an accredited investor to jump on the real estate train and the initial investments are lower than other platforms.
With real estate investing there are endless opportunities and plenty of upside.
9. Check Out Farmland Investing
A new investment opportunity that focuses on farmland that is harvested or used to grow crops is FarmTogether.
FarmTogether is a crowdfunding platform that is similar to Fundrise but invests in farmland real estate!
With this real estate crowdfunding platform, there are two categories of farmland: row cropland and permanent cropland. You are not purchasing the entire farm (although you can if you have the cash!).
It’s an excellent way to make an investment to diversify your portfolio and build a passive income stream if you want to make more than a $1,000 investment.
10. Create An Emergency Fund
Everyone should make a $1,000 investment in their future by creating a fund for emergencies, so you don’t rely on a credit card and wind up increasing your debt.
It can help cover unexpected medical bills, car repairs, credit cards, or home repairs. The average family spends $400 for out-of-pocket medical expenses, $1,000 per year on childcare services, or up to $700 during a car repair.
Putting $1,000 in a savings account is a great way to get started and you will be prepared if any financial emergencies happen unexpectedly.
Low-Cost Index Funds
If you are looking for an easy and low-cost fund, then a low-cost index fund may be what you are looking for if you have an extra $1,000 to invest.
A low-cost index fund is a type of mutual fund account. They typically have lower expense fees or annual management fees- plus many financial experts recommend them for your investments!
When you invest in an index fund, your money is invested across different fund classes. Do your research before you get started investing in index funds. With index funds, you are diversifying investments instead of investing in one company which could cost you more if it fails.
11. Mutual Funds
Mutual funds are a great way to make some extra cash on a $1,000 investment because they are professionally managed, which makes it easier for the average person who does not have investing experience.
Mutual funds invest in a variety of different stocks, bonds, and other securities with the goal of achieving long-term growth. There are also tax-exempt mutual funds which simply means that your investments will grow tax-free interest.
We looked into Vanguard since they have so many options and are on a pedestal for best investments, so check out the best Vanguard funds to see their mutual funds and more.
12. Buy Individual Stocks
Try investing a little bit in individual stocks so that it does not hurt your financial situation too much if the stock market doesn’t do well. They should have a diversified portfolio with many different investments, so that if one fails they do not lose all their cash.
13. Invest in Cryptocurrencies
Cryptocurrencies exploded on the scene with popularity a couple of years ago. They are still around and there are tons of ways to invest in them.
The best way is to invest in cryptocurrencies (when you are starting out) is with small amounts of money which you can afford to lose if the cryptocurrency market drops.
Robinhood is a free stock trading app that allows you to invest in individual stocks, ETFs, options, and cryptocurrencies. It was the first commission-free online brokerage firm that allowed investors to start investing in cryptocurrencies.
Another popular brokerage account for cryptocurrency is Coinbase. Coinbase is another beginner-friendly option in the market especially compared to Binance and other crypto platforms, where you can buy and sell Bitcoin as well as Litecoin and Ethereum.
14. Invest In Your Skills
Besides investing in your retirement and in stocks and all those options, you can do things to make yourself a more marketable employee and get more cash in your account!
Use the extra $1,000 to invest in yourself! The more you can earn, the more you can save, and the more you focus on yourself, the better your life will be.
Make a minimum investment in yourself and improve your financial situation by continuing your education and professional development.
Opening your own business or investing in continuing education at local colleges or universities is a great way to invest in yourself. The best investment you can make is you!
You can take online courses to advance your skills, both for your career and for a side hustle. Sarah Titus has made millions from selling printables and more online, and her course Million Dollar Shop is the perfect example of broadening your earning potential.
15. Say Goodbye To Debts
A life-changing thing you can do is get rid of your debts!
Try using the $1,000 to help pay down your personal loans, pay off credit cards, or other debts so that you can free up some cash. Lower your monthly payments on your credit cards and save some extra cash flow for yourself!
The interest you pay on your debts is a waste of money because you could be investing it in an index fund or other investments that will grow your wealth.
16. Start A Business Or Side Hustle
If you have $1,000 to go around, use it to start a business or side hustle.
Freelance Writing & Proofreading
Freelance writing and proofreading are two great businesses to start today and make money fast.
Proofread Anywhere offers a course that can teach you how to become a professional proofreader! It is the best way to get started and learn all the necessary skills.
Learn how to start your own freelance writing business with the Freelance Write From Home eBook which includes lessons on how to build your freelance writing business and create content that people actually want to read.
Blogging
Another side hustle you could start is blogging (our favorite side hustle). Blogging has a relatively low starting cost, most of your investment is your own time and efforts.
You can monetize your blog with affiliate links and make extra cash- we were able to quit our jobs and follow this career path 100%!
17. Peer-to-Peer Lending
One of the smartest ways to invest $1,000 is by using peer-to-peer lending, meaning you can give loans directly to people in need of moolah without having to go through a bank.
This is certainly high risk depending on the investments you pick, as they can default on personal loans, but can also have great returns of 7% or higher.
Check out companies like Lending Club or Prosper. These companies match up investors with people looking for loans at reasonable rates.
18. Invest In More Passive Income Streams
Use your cash to create a passive income stream. These are ways of generating passive income that requires little-to-no effort on your part. A few examples include:
CD Ladders
CDs are certificates of deposit and can be purchased at your bank. You can’t withdraw your money from a CD Ladder until the length of time you purchased it has passed, but you can choose to be paid interest in increments.
Open an e-commerce site
If you have $1,000 to put into something, open an e-commerce store on Shopify or Etsy. A store can benefit you for years to come if you sell something that is worthwhile to customers- gotta keep ’em comin’ back for more!
Purchase an already existing blog
Use your extra cash and purchase an existing blog, from personal pages to business sites. The profit from this depends on how much traffic it gets and how you monetize it, but a relatively cheap investment can buy a website to make passive income over time or sell it quickly for a profit.
19. Think Of Your Family’s Future
When people put money into investments, they usually want to put it in something that will get a good return- you can also make sure those investments benefit your family!
A good place to put money is in your child’s future!
A 529 College Saving Plan is a tax-advantaged savings account in which one can invest money in order to save for college. You can put money in a 529 plan for any child, not just your own.
It works much like a 401(k) or Roth IRA plan. You start a tax-advantaged account and use those earnings to pay for the beneficiary’s education. This is smart because it allows you to save “tax-free” for college.
Smart Investing
Investing is one of the most effective ways to increase your cash flow, but you need to invest smartly if you want to make back more money than you put in. The way people invest can have a significant impact on how successful they are with increasing their wealth.
The key to being a smart investor is doing the research before you put any amount into stocks, index funds, ETFs, or any other interests.
How To Invest
If investing in the stock market makes you nervous, don’t worry, you can learn how to invest from us or even consult an investment advisor. But many methods don’t take much knowledge of the stock market- just a little research and some hope.
It is important to be able to track your portfolio, so it’s a good idea to invest in software that can manage all of your investments. Empower (formerly Personal Capital) is a tool that lets you track your investments and spending.
Your Investing Style-Low Or High-Risk Investments
You may invest $1000 in a different way than your friend invests it, and that’s perfectly fine!
We all invest differently. When you put money into something, the only thing that matters is making sure you make money out of it.
What will work for one person may not work for another! It all comes down to risk tolerance and what you’re willing to do.
You could lose money with any investment, you don’t know if stock values will rise or fall, or you could make millions off of your investment. Low-risk options tend to have less return on investment, but you’re less likely to lose some or all of your investments like high-risk options.
Some ways of investing $1000 are less risky than others. Investing $1000 in real estate or in U.S. Treasury Bond is generally more low-risk than investing $1000 in stocks like biotechnology or in peer lending.
Don’t Skip Emergency Funds
Most personal finance masters will tell you to prioritize having an emergency fund. You want to get rid of the debts you have and then prevent yourself from making more debt from emergencies!
Having six months of income saved in a savings account can provide peace of mind and keep you from having to sell stock holdings at a low point or skimping elsewhere in your life.
Get Free Stocks
Many companies, such as Webull and Robinhood, will give you free stocks just for opening up a new account with them!
Don’t skip out on the chance to earn free money in any form, but getting free stocks may help you decide what investing platform you want to use, at least at the start of your personal finance exploration.
Our Bottom Line
Investing is one of the most effective ways to grow your wealth. The key to being a smart investor is to develop an interest in investment options and do the research.
There are plenty of ways to invest $1,000 and what you pick is up to you! Every person will invest their money in different ways, and all you need to invest your money smartly if you want to make it back.
Investing your money can have a big impact on your future and even the future of other people – like investing with Mainvest, FarmTogether, or in your child’s college education.
It can help you create a better financial future for yourself and your family, and it’s never too early to start.
You can pay off credit card debt, plan for your retirement, start a side hustle, or become an investor in the stock market or fund ETF(s). All of these options will provide you with a solid return on investment!
Learn how to invest in your local business with Mainvest now.
