1000 USD investment

8 Best Ways To Invest $1,000

You will be better off investing that extra $1000 you have lying around rather than spending it lavishly on some unnecessary expenses. The question probably on the tip of your tongue now is, is it realistic to make more money with an investment of just $1000?

Without an iota of doubt, the answer is an emphatic, “Yes.” Trying to invest such an amount is challenging and not without its risks. With the right tutelage provided in this article, you can invest and make the most of your $1000.

Investing is often thought to be something that can only be done with very large funds. In reality, even the mightiest of waters are made up of little droplets of water. With the best investments, little amounts can add up and help you reach your financial goals.

Why Does Investing Matter?

Besides securing your capital and providing you with your funds, investing plays several other roles when you need them. Keeping your money in most savings accounts offers you substantial interest rates that can add to your savings from time to time.

 On the other hand, trying out other forms of investments allows you access to compound interest. With this type of interest, you earn interest in your investment based on your earned interest. This can have a far-reaching effect over some time.

Noteworthy, however, is the fact that no investment is risk-free. As beneficial as investing can be, certain drawbacks may be encountered. Interestingly, the riskier the investment you choose, the higher the potential return on your investment.

Hence, make sure you carefully consider the risk involved with each investment before proceeding with it to determine if the risk is a ‘necessary evil’ and are in accord with your needs at the moment.

Now that you know why it is important to invest, you are ready. Let us now delve into the nitty-gritty of the best eight ways to invest $1000 with little risk involved and a higher return.

TIP! Use the free, powerful financial planning tools from Personal Capital to take control of your financial life and get objective advice from their fiduciary financial advisors.

1. Invest In Mutual Funds

Are you wondering what mutual funds are? They are funds that provide multiple investors to combine their funds and together invest in bonds, stocks, shares, or other securities. Usually, these securities are companies in themselves.

They are adequately managed by investment professionals adhering to a particular investment strategy with the goal of actively or passively managing the securities to diversify a portfolio in the confines of set parameters.

Due to a lack of overall extensive management, index mutual funds may be seen to be relatively cheaper compared to funds that employ more active management. With a no-load fund, you do not need to pay a sort of commission fee when you want to sell your securities or holdings.

Before investing in mutual funds, endeavor to do some basic research to know which will have high minimums and better yields. With a startup fund of $1000 or less, you can invest in mutual funds and receive a great return.

2. Invest In Exchange-Traded Funds (ETFs)

Just like stocks and bonds, ETFs trade on public exchanges. However, if you want to invest in them, you only need to buy a single share. Interestingly, you do not need to have $1000 saved up to do this.

The amount you need to pay will vary depending on several factors; your strategy of investing, the ETF’s index, and your choice of broker.

Due to ETFs trade’s nature, investors are typically not taxed as heavily on their per capital gains. Hence, in comparison to mutual funds, ETFs have a much lower expense ratio.

In more precise terms, while you may have to pay a commission fee while investing in a mutual fund, you get to skip out on paying any administrative or management fee that can break the bank.

On the other hand, though, as ETFs provide a presumably inexpensive form of investment, it is best to account for additional expense or broker trading commissions, you may need to pay for.

Additionally, a few ETFs have proved to be very risky, mainly if they track indexes with volatile market prices and fluctuate consistently within a 24-hour window.

3. Flip Real Estate Contracts

Admittedly, many tend to assume that investing and making money with real estate is a long-term prospect, but it is not. You can take $1000 or less, invest it in flipping real estate and make more money.

To do this, it is vital you first understand how the market works. A system like Kent Clothier’s REWW can help achieve this feat. Once you get started with the system, you will be provided access to data and tools to identify available homes, distressed sellers, and cash buyers.

As opposed to the majority opinion, which is that real estate is won by flipping traditional homes and personally doing renovations, the real deal is flipping the contract itself. Determine the motivated sellers and cash buyers, bring them together, then broker the deal effectively.

You may not get it right at your first go, but you will get the hang of it with time. When you finally do, you become a big-shot in the real estate industry with that single strategy and earn as much as possible.  

TIP! DiversyFund makes it easy to buy shares in a portfolio of fully vetted, multifamily real estate — a low-risk type of real estate. You can own a piece of the SEC-qualified Real Estate Investment Trust (REIT) they manage. Historic returns vary from 11% to 18%.

4. Trade Cryptocurrencies

The world continues to make strides at becoming digital. With the advent of cryptocurrencies is the end of a cash utilized era. Today, cryptocurrencies are on the rise and will keep rising.

Admittedly, trading cryptocurrencies is not for the faint-hearted as it comes with a high-end risk. However, when your bets are properly hedged at the best timing, you can reduce the level of risk you are exposed to.

Platforms for trading cryptocurrency keeps increasing by the day. However, it is best to carefully study the market and research each particular cryptocurrency before deciding to trade on any platform.

In a bid to educate yourself on cryptocurrencies before resuming trading, checkout courses on platforms like Udemy, Teachable, or Kajabi to learn the intricacies of trading currencies like Bitcoin, Litecoin, Etherium, and lots more.

Remember, of about 3,000 cryptocurrencies in existence, only a few actually matter today. Find a trading platform, an exchange, and understand trading patterns then, get busy trading. Be on the lookout for scammers disguised as traders as you trade; trade safely and only use verified exchanges like Coinbase, Cex.io, and Kraken to make your trades.

TIP! If you’re a beginner in trading, sign up to eToro. They offer an easy-to-use copy-trading platform where traders can copy the trades of pro investors across over 1,900 instruments. It has often been voted as the best Forex platform for beginners and has over 10 million users worldwide.

5. Trade Commodities

Trading commodities such as silver and gold present a golden opportunity mainly when commodities are traded at the latter part of their five-year range. With such metrics, a strong indication is perceived as to where the commodities are headed.

These two commodities are tangible assets that people can hold on to.

In trading commodities, the rudiments of economics, namely; supply and demand, drive the prices. As supply reduces, demand increases and the costs of commodities rise. Noteworthy is that any slight disruption to the supply chain of commodities will severely impact prices.

Other types of commodities that can be invested in are metals, agriculture, and energy. To start investing in commodities, you can use an exchange like the Chicago Mercantile Exchange or the London Metal Exchange or other trusted exchange.

A note of caution while trading commodities; investing in them inadvertently means investing in future contracts. That is, accepting a pre-arranged agreement to purchase a specific quantity of the commodity at a particular price in the future.

This agreement is like a two-faced coin, providing both a significant upside and a potential downside.

6. Invest In Target-Date Funds

Target-date funds are mutual funds that allow you as an investor to meet a specific asset-allocation aim utilizing a preset future deadline. This type of investment is worth trying for individuals and investors who prefer a passive investing strategy, which allows a continuous review of your portfolio all year long.

You will need to employ the services of a portfolio manager who will always make needed adjustments to your target-date funds over time. As the days roll by, investors do not need to do any work until the preset deadline arrives.

If you can not deal with the hassle of figuring how to rebalance your investment until a fixed period, a target-date fund is a perfect investment for you. Note, however, that you can not switch your portfolio once you feel your risk tolerance changes. Also, if you have a high expense ratio, management fees required for your target-date funds can accumulate. Hence, since you are investing the lump sum of $1000, you should find a target-date fund that charges low fees like management fees.

7. Trade Forex and Stocks

Playing the stock and foreign exchange market is a serious business. It should not be ventured if you tend to hypertensive. It requires excellent understanding, determination, and grit to be successful.

You must have done thorough research and studies of the market for a considerable period before venturing here not to suffer severe losses. However, when expertise is reached in the stock and foreign exchange market, you can make remarkable profits in hours with a relatively small investment; say $1000.

Trading stocks and forex allows you to set target gains such that when your target is achieved in a given timeframe, your earnings are secured even if the market hits the downside moments after that.

You can also set stop-loss limits to cut back on any significant losses while still having your initial investment intact. As you make significant earnings in the market, be careful not to allow greed to get the better of you as that may be the harbinger of your complete loss of investment.

Understand and be sure of what you are doing to analyze market forces and signals carefully. Do that while paying close attention to moving averages and having significant returns in the forex and stocks market. 

TIP! M1 Finance is an excellent robo-advising service, a great way to start investing. They offer commission-free trades on 6,000 stocks & funds, free checking accounts and charge no investment management fees. You can invest, borrow and spend your money in one account. For UK readers, we recommend Wealthsimple as the leading robo advisor.

8. Make Use of Peer-To-Peer Lending

Yet another fast-growing and lucrative investment is peer-to-peer lending. Peer-to-peer lending is an initiative to provide substantial sums as capital to businesses or individuals who might be in dire need of it while collecting a fair interest rate on return after a specified period.

Interestingly, with peer-to-peer lending, you run a limited risk possibility compared to keeping your money in a savings account or other investments and even earn more as you have algorithms doing the work for you.

While you may not necessarily get rich investing your $1000 in a peer-to-peer lending program, you can make a considerable sum from the investment. You may wonder what lending platform to use? There is an exhaustive list to choose from, but the most popular include Prosper, Lending Club, and Peer Form. 

Before deciding to lend on any platform, be sure to make diligent research on the platform to help you determine if you can deal on the platform or not. Read the terms and conditions of the platform to fish out hidden clauses that may cause future hindrances.

Since an algorithm controls the system, you will have your risk evaluated using data collected from parameters such as active employment, credit history, and others to help you make an informed lending decision.

TIP! LendingClub is the leading peer-to-peer lending platform that has been around for more than 10 years. You can diversify your overall investment portfolio with consumer credit exposure, and spread risk across multiple borrower loans. Plus, you get paid every month.

Conclusion

Are you due for a vacation with your family to ease the stress of an accumulated everyday routine or trying to save up for a bigger apartment or office space? Or perhaps you are planning for an upcoming wedding with the love of your life? Investing $1000 can be a significant first step towards achieving your goals.

You will find the suggestions provided in this article to be of great help in helping you attain your financial goals. Before deciding to go with any of the tips above, ensure to make your findings and get your facts straight to broaden your knowledge and give you the needed insight to succeed. If you are still having difficulty making headway or confused as to which kind of investment would best fit your needs, contact a professional financial advisor with experience in the investment market. A financial advisor can point you in the right direction and narrow down the best investment program that suits your needs and meet your goals.

We explain how you can make money, save money and grow money.

Make money: learn how to build wealth and how to earn money from the internet.

Save money: learn how to save money and how to make budget plans.

Grow money: learn how to invest and trade.

Please note that under no circumstances should any information from this blog be used as replacement for professional financial advice.

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