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Perhaps you ended up with a $1,000 windfall, or somehow managed to save it – regardless of its origin (we won’t judge), it may be wiser to find a way to put it to work rather than cashing it away.
Save or Invest?
Before delving into different ways of investing $1,000, it may make sense to ask yourself whether you should invest. $1,000 is not a small amount by any means – you can also use it to boost your savings. While deciding whether to invest or save is a personal preference, here are some points to consider that may help put things into perspective.
The point of comparing saving and investing is to answer questions like the following:
Will you need your $1,000 anytime soon?
What are your return expectations?
Are you willing to risk your $1,000 for potentially higher returns?
Access | Earnings | Risk | |
|---|---|---|---|
Saving | Saving gives you immediate access to your funds. | By putting your funds into a savings account, you can earn interest on your funds – but they typically come at a lower rate than investments. | Saving comes with minimal risk – all accounts are covered for up to $250,000 by the FDIC, and you can be entirely sure of the returns you will get. |
Investing | Even if you are set on opting out of an investment, depending on liquidity and platform, it may take at least a couple of days to access your funds. | Investments typically yield a higher potential return than savings. | Investments are much riskier – no return is guaranteed, and your funds can diminish over time following a series of unfortunate events. |
If you think you're not ready to invest, we list other alternatives to make use of $1,000.
If you decide to invest, you've got loads of options to explore with $1,000.
Different Ways to Invest $1,000
1. Try Out the Stock Market
With many online stock brokers waiving minimum deposit requirements, a thousand bucks is more than enough to begin investing in stocks.
Yet, the catch is that it's usually easier said than done – to make a profit off the stock market, investors must time their entry and exit positions right, acquaint themselves with the market behavior, and most importantly, make informed decisions when choosing stocks. Selecting the right stocks mainly depends on the preferred investment strategy; value, growth, day trading, long-term investing, and so on.
Value investors play the long game by identifying a company’s intrinsic value by studying a company’s financial performance with the help of indicators such as price-to-earnings ratio or free cash flow. Growth investors also consider investing for more prolonged periods but prioritize newer and smaller companies that are expected to grow beyond-average rates and potentially yield gigantic returns.
Those who seek quicker turnarounds opt for day trading, which involves taking advantage of short-term price swings by placing frequent trades in a bid to turn a profit within a small window. Day trading is not for the faint of heart: it requires higher risk tolerance, market acumen, and commitment. Investment is not limited to stocks and bonds, as it can also involve placing money in a high yield savings account, which can provide a safe and convenient way to earn interest while keeping funds readily accessible. With diversified investment portfolio with both high yield savings accounts and other investment options, individuals can potentially increase their overall returns and better manage risk. This way by liminating debt can be viewed as a form of investment that positively impacts one's financial future.
In any case, stock investors would want a broker with an intuitive platform that is ideally free of commission and offers exposure to a good collection of stocks. For a deeper look into the best platforms available for US investorsand how to choose one, check our guide.
eToro - Best Platform for Buying Stocks with $1,000
For those who’d like to stick to stocks and shares as investing products, eToro is an excellent choice. The platform holds an impressive collection of 3,000 stocks, which are categorized by daily movers, analyst picks, and popular picks. Social trading is fairly prevalent across the platform: at a glance, it’s possible to see top stock investors and filter out the search by followers, risk level, number of trades, returns, and more for a deeper look. eToro’s trademark CopyTrade functionality allows users to automatically copy their preferred investor’s portfolio, for which there isn’t a minimum limit.
| Name | Score | Visit | Disclaimer | |
|---|---|---|---|---|
 | 8.7 | Visitetoro.com | Don't invest unless you're prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more. |
2. Diversify with Exchange-Traded Funds
Exchange-traded funds, or ETFs, offer an excellent way to gain exposure to various assets and gain instant diversification and are the best way to invest $1,000 sensibly. Among the cheapest funds to invest in, ETFs track a particular share market: much like mutual funds, they still hold underlying assets, but they aim to track a given asset price, like commodities such as gold or oil or indices like Nasdaq 100.
ETFs offer similar benefits to investors who wish to fill their portfolios with stocks and shares. Yet, instead of holding the shares directly and being responsible for their management, the fund itself holds the shares. This also allows investors to gain exposure to numerous stocks they cannot possibly hold with a $1,000 investment.
It's also possible to branch out among ETFs with as little as $1,000: to illustrate, you can divide your initial investment between growth-oriented, high-risk, high-reward ETFs, dividend-yielding ETFs for regular repayments, and put the remaining into select sector fund like sustainable ETFs.
Most brokers offer ETF trading, but ideally, investors would require a solid screener for research purposes and a far-reaching catalog.
Interest rates play a crucial role in wealth management and investment accounts. Investment accounts such as savings accounts, certificates of deposit, and money market accounts all offer varying interest rates. These rates can have a significant impact on the growth of an individual's wealth over time. It is essential to shop around and compare interest rates between different accounts to find the best option for your financial goals. By choosing an account with a higher interest rate, investors can potentially earn more on their money and grow their wealth faster. Additionally, regularly monitoring rates and reevaluating your investment accounts can help ensure that your money is working hard for you. Overall, understanding and taking advantage of interest rates is a critical component of successful wealth management and investment strategy.
Vanguard - Best Platform for Investing $1,000 in ETFs
Vanguard is an great choice for investors who seek an ETF-driven portfolio. The company maintains a unique management structure: it is owned by its funds, and the funds are owned by the shareholders – so the shareholders effectively own the company itself. This not only eliminates the risk of principal-agent dilemma occurring, or any conflict of interest between the asset owners and people delegated to manage it but also allows Vanguard funds to be traded at an incredibly low cost. This is fantastic news as Vanguard funds, most notably Vanguard S&P 500 ETF and Vanguard Value Index Fund ETF, routinely top the lists of best-performing ETFs and typically have a long-stretching track record of success and low expense ratios.
3. Trust in the Mutual Funds
Much like ETFs, mutual funds also pool investments from shareholders and put the funds into securities like stocks, bonds, commodities, and other assets. Most mutual funds are part of larger investment companies like Vanguard and are actively managed by financial experts who allocate the fund’s assets in a bid to produce capital gains.
There are several types of mutual funds based on their underlying assets, including stock funds, bond funds, index funds, and money market funds. Regardless of the type, all mutual funds include a mix of assets and therefore, a diversified portfolio, considered a less risky investment vehicle when compared to stocks and shares. Funds as such are also the best way to invest $1,000 for individual investors who wish to gain exposure to professionally managed portfolios for a relatively low cost.
Minimum deposit requirements for mutual funds are higher than other securities and tend to range between $500 and $1500. So it is possible to start with mutual funds with an initial investment of $1,000.
Best mutual funds collections are usually included in the platforms of legacy investment outfits and tend to come with an extensive screener with various filtering investment options.
Fidelity - Best Platform for Investing $1,000 in Mutual Funds
One of the largest mutual funds companies in the US, Fidelity harnesses over seven decades of experience. The investment app’s funds catalog is almost unparalleled; investors can browse over a staggering 10,000 Fidelity and other funds, and many are available to buy and redeem without accruing any transaction fees.
Much like Vanguard, Fidelity’s own funds, most notably Fidelity Zero International Index Fund and Fidelity Municipal Income 2025 Fund as of this writing, continuously top the lists of best funds to invest in and yield high dividends and come with low expense ratios. The platform’s screener tools are also a force to be reckoned with; it includes up to 88 search criteria, and investors can single out funds that include specific security.
4. Opt for an IRA Account
An individual retirement account, or IRA, is a long-term savings account that provides certain tax benefits and could be one of the best ways to invest $1,000 for retirement. While it's used mainly by self-employed professionals who do not have access to a company-sponsored 401(k) retirement plan, anyone with earned income can contribute to an IRA – this distinction is important; it is not possible to contribute to an IRA with earnings from interest or dividends.
With an IRA account, you can put your $1,000 to work by investing in a range of products, including stocks, ETFs, mutual funds, and bonds. They are also an excellent choice for introducing discipline to savings: as they are designed to be retirement accounts, the funds are locked in until the account holder is 59,5 age, and early withdrawals come with a 10% fee. Yet there is some wiggle room – providers accept notable exceptions such as withdrawals for educational purposes or buying the first home.
E*Trade - Best Platform for Investing $1,000 in an IRA Account
E*Trade is an excellent choice for first-time IRA account holders. It's not unlikely that platforms have high minimum deposit requirements for IRA accounts, like Interactive Brokers’ whopping $5,000 sub-limit. E*Trade, on the other hand, gets ahead of the curve with incredibly low costs associated with retirement accounts. Besides no lower limit for depositing, the platform also doesn’t charge any ongoing annual fees on the brokerage account.
IRA account holders are exposed to various financial products, including stocks and shares, over 7,000 mutual funds, ETFs, bonds, and more. An early adopter of digital investing, E*Trade’s online products have been in the making since the late 1990s, and it shows. Both the web platform and mobile products are intuitive and easy to use and have gained overwhelmingly positive feedback from their users.
5. Take Your Chances with Forex
Obligatory disclaimer: just because you can invest in something doesn’t mean you should.
Forex trading involves buying and selling currencies in a bid to turn a profit by speculating whether the price of a currency will rise or fall. The forex market is gigantic – it includes big players like banks and hedge funds besides retail traders, and due to the sheer volume of trade flows, price swings are also equally gigantic. Overall, it may not be the best way to invest $1,000 for those with weak risk tolerance.
Leverage is also commonly used in FX trading. It refers to borrowed money from the trading platform; it increases an investor’s buying power and may magnify the returns significantly, but it can also exponentially increase the losses on the brokerage account. Unless the correct risk management tools are used, it is possible for the account balance to go negative and the investor to end up with a massive debt.
As demonstrated, FX trading comes with crucial risks and incredible complexity, and the importance of the right kind of education before investing and understanding the risks involved cannot be overstated. Following that sentiment, best forex brokers typically include these in a bundle; the wealth of educational materials, robust risk management tools, and exposure to a variety of markets.
IG - Best Broker for Investing $1,000 in Forex
There aren’t many FX brokers available for US traders due to regulatory complications. Yet, IG has weathered the storms and reentered the market back in 2019, quickly becoming among the best available investment options across the country.
While its prices are not precisely a bargain, IG still maintains reasonable costs for the quality of its impeccable trade execution quality, access to markets, and far-reaching research and analysis tools. What sets IG aside from the competition is also its unyielding commitment to trader education. Newcomers to forex trading are prompted to browse IG Academy’s courses organized by level of knowledge, comprising interactive exercises, quizzes, and much more. Set up your brokerage account and start trading.
| Name | Score | Visit | Disclaimer | |
|---|---|---|---|---|
 | 8.9 | Visitig.com | Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. |
6. Go Virtual with Cryptocurrencies
Cryptocurrencies took the world by storm back in 2009, and the market has never been free of controversy since. Originally established in a bid to revolutionize by making intermediaries, like banks, essentially redundant, virtual assets have instead become sensational trading products. They remain a popular investment option among retail traders and businesses, most notably Tesla and Apple, albeit very risky and volatile. Needless to say, our advice for Forex very much applies to investing in cryptocurrencies – virtual assets are by no means the best way to invest $1,000 for wary investors or those who seek more probable returns.
Cryptocurrencies experienced their last bullish run in 2022, which ended with a devastating crush, and as of this writing, the market has not been able to recoup its heyday. While there isn’t enough historical data to say cryptocurrencies will power through their woes, there have been over 400 obituaries written for Bitcoin to this day. Yet, there hasn’t been a definitive exodus.
With businesses taking an interest in blockchain-based technologies, the market has received significant investments over the past couple of years. By studying cryptocurrencies that promise substantial development, you can put your $1,000 on coins that promise growth and development in the long haul. You also have lots of robust cryptocurrency exchanges to choose from.
Crypto.com - Best Platform for Investing $1,000 in Cryptocurrencies
An established cryptocurrency exchange, Crypto.com is highly regarded for its easy-to-use platform, variety of customer support channels, an impressive range of over 250 coin listings, and wealth of educational materials in its arsenal. While many crypto exchanges struggle with state-specific regulations, Crypto.com is available in 49 states across the country.
The crypto market is still experiencing a depressed period, but through staking and locking coins for a set period of time to help blockchain operations, it is possible to put investment into work and lock in guaranteed returns over time. Crypto.com allows staking with three major coins, BTC, ETH, and USDC, with return rates of 1.5%, 2.5%, and 4.5%, respectively.
| Name | Score | Visit | Disclaimer | |
|---|---|---|---|---|
 | 8.7 | Visitcrypto.com |
7. Employ a Robo-Advisor
Those who are terrified of the thought of picking individual stocks, ETFs, or any assets for that matter, may venture into the comforting realm of robo-advisors. Automated solutions as such are gaining traction and could be the best way to invest $1,000 for those who are looking for a hands-off experience.
Robo-advisors refer to algorithm-driven, automated portfolio management programs that execute investments with little human intervention. Depending on the preferred broker, investors may or may not be able to choose which assets to include. It’s also worth noting that auto-management by no means eliminates the inherent risk of investing.
Despite potentially yielding some additional management fees, robo-advisors are becoming increasingly cheaper to use with no significant minimum deposit – a $1,000 initial investment is more than enough to begin. Investors are typically given a set of questions with which they can detail their long-term goals and risk attitude, and the program selects trades based on their investment personality.
There are plenty of investment platforms that offer robo-advisor features; the best ones typically have robust goal planning, good customer service in case things go wrong, and a track record of quality execution.
Betterment - Best Robo-Advisor for Investing $1,000
Launched in 2008, Betterment is the first commercialized robo-advisor and remains a top choice for first-time investors with a very low account minimum. Upon signing up and setting up your brokerage account, the platform asks a series of questions to establish the user’s long-term financial goals, like saving for a down payment, retirement, or paying for tuition, and matches them with suitable portfolios managed and rebalanced automatically.
The portfolios consist of a balanced account of low-cost ETFs and accrue an annual management fee to be charged from the total amount of funds locked in the platform. Those who wish to be completely hands-off can opt for the recurring deposit scheme where a set amount is charged from the connected bank account on a monthly basis.
Take a Moment to Reflect
Do not underestimate the power of $1,000 – while it's a relatively low amount to begin investing, it can make a world of difference. Regardless of the amount, it’s wise to plan ahead rather than make an impromptu decision. Here’s a brief list of considerations that may get the ball rolling.
Understand the limits of your comfort zone – Investments are divided into categories of high risk and low risk, but there are always risks involved. Establish your risk tolerance from the get-go and choose your investment products accordingly. The total range of financial products to invest in is beyond the scope of this page, yet as it briefly sets out, there are numerous that cater to varying degrees of risk tolerance.
Set out your goals – Some methods, like IRAs or value-based investing, are designed to be long-term investment horizons. While not every form of long-term investment rigidly discourages withdrawals like IRAs, they only yield significant returns in the long haul as they provide a steady yet gradual increase in value. Any instrument can be used for a short-term investment, but they tend to be more volatile than assets suitable for long-term investing. This form is more suitable for those seeking near-immediate returns and having the time to regularly commit to rebalancing their portfolios.
Diversify – As said before, $1,000 is a substantial amount and is more than enough to diversify between different asset classes. By selecting different instrument prices, which will go up and down in different market conditions, you can offset the dips in the market and potentially save yourself from significant losses.
Bonus: Take a financial snapshotWhile $1,000 is a solid amount for starting with investing, it can also be quite beneficial for improving your overall financial situation. One of the golden rules of investing is never to put more money than you can afford to lose. While this mainly refers to keeping a portion of your income set for basic necessities like rent, mortgage payments, groceries, or bills, it also involves tackling high-interest debt and having an emergency fund ready before investing.
There’s no better investment strategy than one that includes being covered for unexpected situations like sudden unemployment and being debt-free before you can start building your wealth.
Consider Alternatives
Investing doesn’t always mean putting money in assets – there are plenty of other ways to put your money to work that admittedly may have less tangible returns and perhaps are riskier.
Invest in yourself – Putting your savings into education can potentially be life-changing and may provide opportunities to pivot your career towards a more lucrative field. There are numerous online course providers like Skillshare or Udemy through which you can learn valuable skills, like learning how to code, web design, graphic design, data analytics, and more.
Invest in art – Historically, collecting artworks had been reserved for high-worth individuals, but now it’s possible to start collecting originals for under $1,000, even from established curators like Saatchi. If you have an eye for it, you may very well hit the jackpot and return a profit in a few years. For as much as $1,000 you can get a piece of a Warhol, Kusama, or even a Monet using Masterworks.
Start a side hustle – You can use your $1,000 to budget a small business of your own, like starting a blog or selling handmade products online, provided that you have the proper skill set. While this is a form of investment that requires long-term commitment and special interest, it is very much viable.
Wrapping Up
So, what is the best way to invest $1,000? There are numerous ways to grow your initial investment, laid out on this page and more, but it ultimately boils down to your financial situation, appetite for risk, and short- and long-term goals. While it’s incredibly important to know your investment options, it's equally, perhaps more, important to have an honest understanding of personal circumstances before moving on.
For those with larger savings, we also discussed how to best make use of $10,000, $20,000, and $50,000.
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