Did you recently receive $1000 as part of an inheritance or tax return, or do you have $1000 that you’ve saved up over time?
Rather than letting that money sit in the bank where it won’t earn much in interest or, worse, spending that money on something you don’t really need, consider investing it instead. You can take $1000 and turn it into even more money if you play your cards right and invest it properly.
The key to doing this is finding the best way to invest $1000. Research your different options and choose the one that will ultimately lead to the biggest return on your investment.
Take a look at 7 great ways to invest $1000 below.
1. Pay Down a Sizable Portion of Your Debt
The average American household is currently carrying around almost $140,000 in total debt. If you’re in debt at the moment, paying down some of that debt is one of the best investments you can make.
On the surface, paying down debt might not feel like investing at all. But consider this: If you have debt, it likely has a hefty interest rate attached to it. That interest rate is likely making it hard to pay off your debt and forcing you to pay back more money than you should have to.
By throwing $1000 at credit card debt or another form of debt, you’ll save yourself a lot of money in the long run. It’ll make this approach well worth it in the end.
2. Start Your Retirement Fund
A 2017 study revealed that about 50 percent of Americans don’t have any money saved for retirement. Many of these people are going to end up working long past their 65th birthdays because of this.
If you plan on retiring one day, starting a retirement fund immediately is of the utmost importance. So the best way to invest $1000 might be to launch a Roth IRA.
Roth IRAs will allow you to withdraw money from your plan once you retire without facing tax penalties. You’ll put yourself into a great position as you inch closer to retirement with a Roth IRA.
But even if you decide against a Roth IRA, make sure you’re doing something to save for retirement. Putting $1000 towards it now might not seem very exciting. But you’ll be glad you jumpstarted your retirement savings when your nest egg starts to grow.
3. Experiment With Investing Through an Online Trading Platform
Have you always thought about trying to invest some money on your own in the stock market? While it’s a good idea to do your homework before you take the leap of faith, your $1000 could allow you to learn the ins and outs of trading.
Scottrade, E-Trade, and TD Ameritrade are just a few of the companies that offer online trading platforms to customers. Use these platforms to invest your $1000 in the stock market.
There’s a very good chance that you’re not going to get rich off a $1000 investment in stocks. But if nothing else, you’ll get the opportunity to see first-hand how the stock markets work when you take the time to learn about it yourself.
It might motivate you to set up a meeting with a financial advisor to see how you should be investing your money in stocks, bonds, mutual funds, and more over the long haul.
4. Ask a Robo-Advisor to Invest Your Money
Not everyone feels comfortable playing the stock market on their own. It can be extremely intimidating trying to figure out the best way to invest $1000 in stocks.
If you’re someone who can’t comprehend how to invest stocks, there are robo-advisors that will do the job for you. These robo-advisors make investing in stocks a relatively simple and straightforward process.
When you obtain the services of a robo-advisor through a company like Betterment, you’ll be asked a series of questions to assess your risk tolerance level and your overall investment strategy. Your answers will dictate how your robo-advisor will behave when investing on your behalf.
This is another great way to see how the stock market works without having to make investment decisions on your own. You also won’t usually need much money to get started.
5. See How Peer-to-Peer Lending Can Benefit You
Another great way to invest $1000 is to lend it out to someone who really needs it. Lots of people all across America are turning to peer-to-peer lending services to borrow money to pay off debt and do more with their lives.
Peer-to-peer lending services like Lending Club and Prosper will connect you with those looking to borrow money. You can choose from available loans and provide people with the money they need.
Then, you’ll get money back as people pay off the loans given to them. There is some risk associated with peer-to-peer lending. But in general, it’s one of the safer ways to turn a profit on a $1000 investment.
6. Start a College Savings Plan for Your Child
College tuition is on the rise all across the country. Over the last 20 years, it’s gone up by more than 5 percent. And it doesn’t sound like it’s going to stop going up anytime soon.
If you have a child and you want to make sure they’re able to go to college without racking up a ridiculous amount of student debt, start a 529 college savings plan or another kind of college savings plan for them.
By investing an initial $1000 and then adding to it over the years, you’ll be able to provide your child with a nice chunk of change for college.
7. Pad Your Personal Emergency Fund
Do you have an emergency fund set up for any unexpected expenses that might creep up on you?
If not, use your $1000 to pad that rather than spending it or investing it elsewhere. Most financial experts recommend that you put aside at least $1000 for emergencies.
By doing this, you might be able to keep yourself from falling into credit card debt later. You’ll also sleep better at night knowing you’ve got extra cash at your disposal.
Find the Best Way to Invest $1000 Today
Don’t take your decision to invest $1000 lightly. Instead, find the best way to invest $1000 and do your research before you do it.
By making the right investment, you’ll put yourself in a better position for the future. You might even be inspired to invest more money soon and start your journey down the path to total financial freedom.
Read our blog for more great saving and investing tips.