Are you wondering how you can take $1,000 and turn it into even more money? Here are the five best ways to invest $1,000 today.
How to build a $1,000 investment portfolio
What should your portfolio look like? The answer is different for everyone, but it should be tied to your goals and how much or little risk you want to take.
Here’s an example of what a balanced portfolio might look like:
CDs and bonds
15% to 40%
Stocks, ETFs and mutual funds
50% to 75%
Peer-to-peer lending, real estate and alternative investments
0 to 25%
Before you invest $1,000
If you want to get the most out of your $1,000, consider the following before you invest it:
Pay off high-interest debt. If you have any debt accruing 10% or more interest, you’ll come out ahead if you pay this down before you invest.
Create an emergency fund. Prepare for the unexpected by keeping three months of expenses in a high-yield savings account.
Build a vacation fund. If you take vacations often, consider keeping the $1,000 in a high-yield savings account to pay for your next adventure.
Invest in a stock or fund
Stocks and funds give you the opportunity to pick and choose individual investments for your portfolio. If you’re new to investing, consider a blue-chip or name-brand stock. These tend to be big, well-established stocks with a solid performance history and consistent returns.
Or explore index funds and exchange-traded funds (ETFs). By investing in a fund, you own a small piece of many stocks instead of just one, because funds contain baskets of stocks that track major industries or market indexes. Because they hold a collection of stocks, funds offer more diversification and can help protect your portfolio from market volatility.
To invest in a stock or fund, you’ll need a brokerage account. Compare your options by research tools, fees and any other feature that may impact your trading experience.
Invest in peer-to-peer lending
Lend your money to other individuals in need through peer-to-peer (P2P) lending.
Lucrative returns. The average investor earns 6% interest with P2P lending.
Steady cash flow. You’ll receive steady monthly income as the borrower repays their loan.
You’re helping someone in need. Most P2P investors enjoy lending money to help someone who needs it more than they do.
Risk of default. There’s a chance you could lose your money if someone defaults on their loan.
P2P lending is new. This industry has only been around since the Great Recession of 2008, so it’s hard to tell how it will do during the next economic downturn.
Unsecured loans. Borrowers don’t put up collateral for the loans, so there’s a slim chance you’ll get your money back if something happens.
Invest in a CD
CDs have three-month to five-year terms and provide a guaranteed return, but you can’t withdraw money before it matures.
Guaranteed returns. When you park your money in a CD, you earn a fixed-rate, guaranteed return.
Locked-in rates. You don’t have to worry about your rate of return fluctuating when you invest in a CD.
Good for short-term goals. CD terms range from three months to five years, making them a good investment option for short-term goals.
Penalty for early withdrawals. If you need to access your funds before the maturity date, you’ll pay a penalty.
Rates and fees vary by institution. Financial institutions set their own fees and minimum deposits, so you’ll need to shop around for the best rates.
Low interest rates. CDs offer guaranteed returns, but they typically produce lower returns than bonds, ETFs and stocks.
Our top pick: CIT Bank Term CDs
Lock in an interest rate
Tap into for retirement income
Our top pick: CIT Bank Term CDs
Choose from a range of terms with no maintenance fees and $1,000 minimum to open.
Cassidy Horton is a writer for Finder, specializing in banking and kids’ debit cards. She’s been featured on Legal Zoom, MSN, and Consolidated Credit and has a Bachelor of Science in Public Relations and a Master of Business Administration from Georgia Southern University. When not writing, you can find her exploring the Pacific Northwest and watching endless reruns of The Office.
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