I talked about how to start investing with just $100 and if you are a newbie, then I highly suggest reading that post first, but if you are looking to start with $1,000 then look no further and enjoy the read. If you outgrew the $100 to start with, then it is time for ways to invest your first $1000.
For my first 5 readers who sign-up for Acorns (get approved and make first investment) will get $25 gift card of your choice entertainment, restaurant, or simply cash! Sign up for Acorns right here.
(I will contact you by email in the next 14 days after I receive confirmation. Heads-up this is only for first 5 and will most likely be gone by end of the day)
This time, I would like to touch ways to invest your first $1,000 because it is actually the first major step into the investing world for many, it is rather a large sum I agree, but it is not enough to go to financial planner to help you start-up a portfolio.
Just to get you excited like I did in my previous post on this topic:
If you invested $1,000 in Apple in October of 2000 which is exactly 18 years ago from this post being published, you would have well-over $50,000 today! Even better if you invested $1,000 at the stock’s closing price after its December 12, 1980 IPO would be worth around $9 million today!!!
The point is: If you make smart investments, your reward will only be greater and wouldn’t you mind having extra $100,000, $200,000, $500,000, or even millions in Apple case in return?
I hope I got your attention at this point, let’s dive right into smartest ways to invest your first $1,000.
1. Traditional Savings Account
If you want to feel safe about your money and do not want to lose any of it, or you believe that you will need access to this money, then consider opening traditional savings account.
What do I mean? Well, the traditional ways is to invest with well-known banks like Bank of America, Charles Schwab, Chase, and Wells Fargo to name a few. Because they are FDIC insured, you can invest without worry and withdraw the money whenever you desire.
Unfortunately there are drawbacks and one of the major ones is that the less risk you take, the less return you will get. Investing with traditional banks will not earn you much interest. In other words, it will take a long time to start seeing something.
It is absolutely best to start with and be worry free, but if you want to see changes quick, then this is not a way to go. I would highly recommend to eventually once you have money is to have some money sitting in savings account just for security reasons.
One of the top banks that I highly recommend for you to try is CIT Bank with one of the top returns in the savings account industry today. All you need to start is $100 which is very rare with savings accounts. You can read my full review here.
As technology is booming, robo-investing has been something that has been getting a lot of attention lately. It used to be that the first thing that comes to mind when thinking about investing is your knowledge or asking a financial advisor for help.
Robo-Investing are robots that are programmed to follow best investing strategies, then anybody can simply choose a portfolio that they think best fits them and practically forget about it (which what I did in my post).
Why I think this is one of the best ways to invest your first $1000?
This is from my perspective is the easiest and best way to start with investing and learn how everything works and the best part of all is that it is most likely FREE or at a very low-cost.
M1 Finance is something you might be hearing for the first time, but it has been around for a while now and is one of the best Robo-Advisors for many reasons, mainly because it is FREE and Simple! Currently there are over 25,000 accounts and $100+ Million is Assets. My full review of M1 Finance is also available if you want to read more.
M1 Finance is not just focused on investments, but also one of the best places to borrow money at lowest possible interest.
You can start investing with M1 Finance right here or click below.
Acorns entering the game helped to change the investment industry. You don’t need experience or knowledge about investing. Acorns is revolutionizing how investment works. I wrote review about Acorns if you would like to check out more in details and my experience with it and how I forgot about it for months and returned to see that I have almost $500. See the Acorns review here.
Example: You go to chipotle and buy chicken burrito for $7.50, acorns automatically rounds it up to $8.00. That $.50 go into your acorns account and get invested. As you can see, this can add up pretty quick with your every day purchases.
I mentioned that 7 in 10 Americans don’t even have $1,000 in savings, that dream retirement is way out of our vision. In order to have a good retirement, we must plan it. You will be guided from step one with their simple to use application that is very user-friendly that guides you with easy steps to follow and portfolio options (from conservative to very aggressive) for you to choose from.
Wealthfront has been becoming very popular among Robo Investing. The best part of start of opening account with them is that there are no fees up to your first $10,000. You can worry free until you hit the $10,000. Then, you can refer to my next post in the near future on where to invest your first $10,000 and up.
Check out Wealthfront.
3. Do You Have Debt?
If you still carry balances on your credit cards or any debt you might have then you really need to look into getting rid of the debt. Don’t plan on investing if you still have a large debt, otherwise it is a losing game and your investment returns will most likely not be suffice to your debt ratio.
Why to pay debt? You are most likely paying interest on the debt balances and having investment account might only bring you 1% in return or even a loss at the end of the year. In the end it is an upside goal if you don’t pay down your debt first.
If its your first $1,000 you want to invest, invest it in your debt and get rid of some of it.
If you have a car, take advantage of it by paying down your debt faster and I have seen and met so many people that just put in extra few hours a week on their car doing side gigs. See the absolutely best ways to make money with your car. Especially that you can earn $1,000 just by completing minimum requirements.
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Another alternative to make money is by taking surveys, playing games, and reviewing sites that will pay you to do that and on top you earn money!
Prosper is a great alternative for you to pay off or refinance your credit card debt.
4. Peer to Peer Lending
Another advancement in technology investment world in the past decade is the peer-to-peer lending.
How does peer-to-peer lending process work? Simply put, it is the way to lend money to somebody and in return you earn interest. It is just like your bank earns interest on you if you keep your credit card balances month-to-month, but this time it is you earning interest on your lended money to people that are starting a business or just in need of money.
The best in industry for peer-to-peer lending is Lending Club primarily because you can make investments as small as $25 and choose whom you want to lend to by risk if the person has bad or good credit. The worse the credit, the more interest you will earn, but it is more likely the road might not be smooth if something were to go south.
See how important your credit is now? See my best credit posts on how you can improve you credit score by 100+ points in just six months and another great post on the TOP reasons why you need to care about your credit score.
This could really be a new way to invest your money and get returns. Click below and start lending money to people and earn back on interest!
5. Open Taxable Account
One of another great alternative ways to invest your first $1000 is opening taxable account. Choosing this way is definitely one of the safest ways to invest in your favorite stocks. This is great if you are looking at buying stocks from major companies that have been around for decades now.
I opened my taxable account 3 years ago and bought few shares of companies I was following and was a big fan of. Over the years, I have played around and bought more of the shares of others companies. Today, my return is at 57% which is absolutely great in finance world.
Ally Invest is one of the best taxable account to open mainly because there is not minimum balance to open account and the trades are only at $4.95 per trade – which is the lowest you can trade stocks today.
With it’s no minimum requirement and lowest trading cost at $4.95, it is the best in industry and if you are looking to best ways to invest your first $1000, then start with Ally Invest and buy some shares.
Investing is not difficult at all, but it is very important for any successful financial future. It is not the matter of how much you start with, but it is a matter of being consistent and have more than just a basic knowledge of how investing work.
The number one step will always be Getting Started! Once you start and consistently contribute to the accounts – you will be guaranteed a successful financial future. If you are looking to start with less than <$100, then read my post on best ways to invest with $100 or less.
I hope you find this post informing and if you like it, please share 🙂
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Richard Barnett is a student majoring in finance, entrepreneur, marketer, content writer, budget traveler, and financial blog “Student Money Adviser” owner. You can read more about me here.