A $1,000-investment can go a long way if you know where to put it and how to use it wisely. Although it may seem like a small investment, it’s a good amount to get started. We spoke with experts who shared their ideas on the best ways to invest $1,000.
Here are the top 21 tips for how to invest $1,000:
1. Turn a Passion Into a Business
Tom Blake, Owner, This Online World
Investing $1,000 into a business opportunity might not seem like a significant venture, but $1,000 of smartly used capital can serve as the perfect start to an entrepreneurial journey. If you have ever had a business idea but lacked the funds to pursue it, your $1,000 investment can act as the jump-start to set your plan in motion.
Whether you invest the capital in new tools and machinery to make products, a professional website for a new online business, or even a small amount of inventory to begin testing the market, $1,000 is the perfect amount of money to invest in starting a new side hustle or business. Additionally, investing this low amount of capital is great for beginner entrepreneurs, as you can reduce your risk while testing proof of concept, and only begin to scale as you generate revenue or see signs of growth. Ultimately every business has to start somewhere, so why not start out with $1,000 and some sweat equity?
2. Invest in a Thought Leadership
Paige Arnof-Fenn, Founder & CEO, Mavens & Moguls
Invest your $1,000 to start writing articles, do blogging, and give talks on areas where you have expertise. You will build a strong reputation online and off, and will become known as a go-to source in your field. Spread your brand via social media and you will build your network of followers too. This is a great and efficient way to build your brand and find new customers without spending a lot of money.
3. Choose a Variety of Securities
Jean Chatzky, Author of Women With Money, JeanChatzky.com
Consider investing in a variety of securities. Make sure to take into consideration the particular stocks, bonds, or funds you choose to put in your asset buckets. If you’re looking for an easy way to find the right investment mix for you, look at a target date retirement fund with a date in the title that lines up with approximately when you’re planning to stop working.
4. Use a Peer-to-Peer Lending Site
Riley Adams, CPA, Owner, Young & the Invested
A newer alternative to traditional stock and bond investments is peer-to-peer lending platforms. These services issue loans to interested borrowers and then offer these loans as investments to lenders willing to fund the loan. The funding increments vary from site to site, but for LendingClub, you can purchase loan notes for as low as $25 per note. Buying small portions of many loans can diversify your investment portfolio and guard against taking on too much default risk. Depending on your underwriting criteria, this can be a great alternative to consider for your investing portfolio if you only have $1,000.
5. Invest in Real Estate
Daniela Andreevska, Marketing Director, Mashvisor
Real estate is one of the best investment strategies due to the low risk and the high potential return, and real estate investing with just $1,000 is feasible. It can be done in a few different ways, including a more passive approach such as crowdfunding and REIT or a more active strategy like a partnership and syndication. To succeed, make sure to find a profitable location and assemble the right team.
6. Pay for Online Courses
Lidiya K, Owner, Let’s Reach Success
One of the best ways to invest $1,000 is to invest it in yourself, and one of the most valuable and powerful ways to do that is to learn from those who’ve already achieved what you’re after through joining online courses. There are several online courses (which may sometimes seem pricey but are totally worth it) where experts share everything they have learned so we can have the same results faster and without making their mistakes.
7. Invest in Mutual Funds
Jacob Dayan, CEO, Community Tax
Mutual funds consist of a pool of money from many investors that is invested by a company in securities, stocks, bonds, and short-term debt. All of these combined are known as the portfolio, which investors buy shares of. Some pros are that the portfolio is diversified, and typically carries higher earnings and lower risks. Your portfolio is managed for you, and you can invest in small or large amounts, making them available to virtually any investor.
Some cons and risks are that the fees associated with mutual funds are higher than other options such as exchange traded funds (ETFs), the capital gains tax is applied to mutual funds, and the share price is only calculated once per day rather than continuously throughout the day (like stocks are). No matter what, before investing, do a thorough analysis of mutual funds before committing.
8. Pay Off Your Debts
April Lewis-Parks, Director of Education, Consolidated Credit
If you have a windfall of a $1,000, you can use that money to pay your financial obligations first. If you are carrying high-interest rate debt (15% and above), use the money to pay it off or at least pay it down. High interest can suck the life out of your savings and ruin your debt-to-income ratio.
9. Invest in the Stock Market
Yuko Kawamoto, Finance Staff, Founder’s Guide
One way to grow your $1,000 is to invest it in the stock market. Make sure to understand the risk associated with the stocks that you buy, and don’t let your emotions affect your investing strategies. While it can be risky, investing in the stock market can be financially rewarding, especially if you think long term. This is not a get-rich-fast scheme, so be patient and do your homework diligently when it comes to choosing which stocks to buy.
10. Use Your $1,000 to Start Your Business
Matthew Gillman, CEO, SMB Compass
If you’re looking to become an entrepreneur, $1,000 could be all you need to take your first step. Writing a business plan will cost $0, but you want to make sure it’s tested before you start to spend money on your business. Test your business plan by speaking with friends, family, and other people in your industry. It’s also important to survey your target audience. Do they need your service or the product you’re selling?
Once you’re confident in your business plan, it’s time to start building your business. Day 1 is not about perfection—it’s about getting to market and starting to drive revenue. The essentials: 1) Build a free website using companies like Wix or Weebly; 2) Order business cards; and 3) Pick up the phone and start calling leads. The only thing you’ve paid for is business cards, which will cost around $10.
As you generate revenue, it’s important to take additional steps, such as forming a legal entity, getting an accounting system, and opening a business checking account. It’s always recommended to speak with an accountant to make sure you set everything up correctly.
11. Use the Money to Register a Business
Paul Kassabian, Legal Product Counsel, LegalZoom
There are endless ways a new business would benefit from investment, but one way to invest $1,000 that will go a long way towards running a successful company is registering your business with the state. Forming an LLC or corporation can help protect your business name and personal assets. Registering a business also makes it possible to open a business bank account, a necessary step to keep your business and personal funds separate. Many businesses also need local licenses or permits, so make sure you’re familiar with your state and local requirements.
12. Invest in a Small Website
Stacy Caprio, Business Coach, Stacy Caprio Inc.
Try investing in a small website that makes $50 or so a month, which is the industry standard in website investing. For example, 20x the monthly profit valuation of any site is the usual cost ($50 x 20 = $1,000). This is a great investment because, barring all risks aside, you’ll make your initial investment back within less than two years, and the rest will be pure profit, something not possible in any other type of investment.
13. Open a Roth IRA
Ollie Smith, Chief Executive Officer, ExpertSure
As the old saying goes, it is never too early to start preparing for your retirement—so why not open a Roth IRA account? This specifically designed retirement fund enables you to withdraw its funds tax-free, unlike other similar accounts. The great thing about this account is that you contribute to it with money that has already been taxed, so you will not be taxed when you take the funds out. When the times comes, as long as you follow the rules, you won’t be taxed on the interest earned either, making this option a no-brainer for your cash.
14. Attend a Conference
Raymer Malone, CFP, Owner, H.I.P. Insurance Agency
One of your topmost priorities should be investing in yourself. One of the best uses of $1,000 is to attend a conference. Try to attend several conferences per year—some directly related to your business, others that are more tangential. They are fantastic opportunities to make new connections, learn something new, and refocus your business as a whole.
15. Invest in Tax-free Municipal Bonds
Avi Sinai, Owner, HM Capital
Tax-free municipal bonds can provide you with decent returns on your money, and the best part is that it’s tax free. This means the net return is comparable to much higher-yield bonds. You can even purchase in an exchange traded fund (ETF) of municipal bonds, so you can invest any amount you want. For example, a CMF is a California municipal bond ETF with a 4.75% yield.
16. Buy a Low-cost Index Fund Within a Tax-advantaged Account
Brandon Renfro, Professor & Finance Planner, BrandonRenfro.com
If you are investing for a long-term goal like retirement, you should buy a low-cost index fund within a tax-advantaged account. The tax-advantaged account will reduce the tax dragon in your investment. However, you’ll be penalized if you withdraw the money early. If you’ll need the money sooner, look at something more stable, like a short-term bond fund. It will still provide you with diversification across a number of bonds, but will be less volatile than a stock fund.
17. Invest In & Learn About Cryptocurrency
Mark Moss, Founder & Market Analyst, Signal Profits
From its inception, bitcoin was designed to be peer-to-peer without the need for banks or other financial institutions as intermediaries. It isn’t here to fit in with the financial system, but rather to provide an alternative to the traditional banking system. New technologies have a way of leapfrogging or jumping over older technologies. Anyone with a mobile phone with internet access can have a bank in their hands. By using cryptocurrency, they can enter the global financial markets, without ever having access to traditional finance models.
18. Improve Your Existing Business
Nick Disney, Owner, Sell My San Antonio House
If you’re an existing small business owner, the best place to invest $1,000 is right back into your business. Making improvements to your business will more often than not give you a much larger return on your investment than trying to invest the money outside of your business. If you invest the money outside of your business and it brings you a 10% or even 20% return, you will make $100 to $200. However, if you invest that money back into your business and it brings in one additional sale or one new client, what is that worth—$2,000, $3,000, or maybe more? Ask yourself, “Where could my business be more efficient?” or “What system or equipment could we bring in that would definitely help us attract more clients?” and then invest the money there.
19. Try a Simplified Real Estate Investment
Brian Meiggs, Founder, My Millennial Guide
If you are interested in investing in real estate, there are companies that offer simplified real estate investment to the point that you do not have to be a landlord. The money you make depends on the projects that are invested in. There is technology that makes it easy to point out profitable projects and there are many investors who are able to use it effectively.
20. Invest in a College Savings Plan
Kelsey Pritchard, Public Relations Strategist, Bozell
One of the best ways to invest $1,000 is in a college savings plan for your child’s future. Through compound interest and tax incentives, that amount could grow to nearly four times the original investment in over 18 years. Investing in a college savings plan is the best way for parents, grandparents, aunts, uncles, and godparents to lessen a child’s reliance on student loans, and the stress that comes with paying them off.
21. Make Extra Payments Toward Outstanding Loans
Dock David Treece, Senior Financial Analyst, Fit Small Business
Most people have debt of some kind. Whether it’s student loans, car payments, or a home mortgage, using extra cash to make additional payments against any outstanding loans can save you a lot of money in the long run. By making extra payments, you can finish paying off your loan faster, save on interest expense, and free up money to invest each month.
For most people, $1,000 may not be enough to build their dream business or start earning high returns. However, with patience and a good attitude, you can use the right investment or business idea to grow your $1,000 over time. Use the ideas above if you want to start making your money work for you.