A thousand dollars may not be a big amount but if it is invested properly then it will give you a great return. According to a recent Pew Research Study, more than half of Americans are actively investing in Stock.
In the 21st century, there are numerous ways in which you can choose and invest your money to get a good return over time or else you can keep on adding value to your $1000 within time. But How to invest $1000 as a beginner in 2022? Here are the 7 ways you can use to start your first investment journey.
Invest in Stocks
People who are new to investing world might feel scared if they heard the term “Stocks” but this is the best option if you are looking for a good return. If you go through the past 2-year data of the S&P 500 then the return from this is between 16 to 26 percent.
There are multiple ways to invest in stock but it is only safe when you have done deep research about the company you want to invest in. You can invest in one company’s stock that you like but I personally recommend you diversify your portfolio by investing in multiple companies. Investing in multiple companies will lower the risk of loss or losing your capital completely.
There are multiple platforms you can use to invest in US and Canadian markets such as WealthSimple and Questrade as the commission charged by them are very minimum and sometimes nothing.
Open a Roth IRA
A Roth IRA is an Individual Retirement Account which allows you to invest money after paying taxes. You can invest up to $6000 each year and people above age 50 or more can invest up to $7000 from their net income.
It is a best investment for anyone who is saving for retirement or any future goals. There are two different type of IRAs i.e, Tradition and Roth. Traditional IRAs offer tax deferred growth potential where you will taxed only if you withdraw or transfer the money whereas Roth IRAs offer tax-free growth potential where investment grow tax and penalty free if you withdraw after 59 and half years.
You can open your Roth IRA account on several brokerage platforms like WealthSimple, Vanguard and Betterment. There are many more platforms that you can use depending on your research.
Build a Mini Real Estate Portfolio
Real Estate is one of the booming sectors for so long where the average returns are 5 to 11 percent in the US. I know you must be thinking that Real Estate needs a huge investment whereas you have only $1000 but there are several platforms which allow you to buy a small percentage in a huge property.
One of the most popular way is REITs also known as Real Estate Investment Trust which function like stocks, you can easily purchase or sell it from any brokerage firms without things about a Real Estate agent, Lawyer or any extra expenses.
Before investing in REITs, try to gather some knowledge as it is easy to access. I recommend you to start with public traded REITs, it require a few hundred dollars and go for the easier investment which is Equity REITs as compared to Mortgage REITs.
You can use Crowdstreet, Diversyfund, Fundrise and many more for you REITs investment.
Invest In ETFs
If you are complete beginner in the investment sector then ETFs are your best bet.
ETFs are Exchange Traded Fund which are easy to buy and sell and have a low fees (or no fees) as compare to actively managed mutual funds. It makes sense for investors with $1000 because ETFs let you diversify your portfolio more than you could have done with individual stocks.
You can also invest in ETFs through Tradition IRAs where you will pay taxes when you withdraw the money whereas in Roth IRAs your money won’t be taxes in most cases.
The risk in ETFs varies as it totally depends on the investor because some people prefer to take more risk and some less. Before choosing any ETFs to invest your money in, it will be better to find the best one with good returns and better performance.
You can use brokerage platforms like Wealthsimple and Questrade to start your investment in ETFs.
Pay off Debt
When you think about investment, the first thing that comes to your mind is to invest in stock or to get rich quickly whereas the average return on the stock market is 10 percent if done properly or you may lose the whole capital(if traded without knowledge). But I am sure you didn’t know that the interest rates charged by the banks on a credit card can go up to 20 percent.
I know $1000 doesn’t make a huge difference on your debts but it will lower the total amount and some interest too. And if you genuinely want to achieve Financial freedom then clearing off your debts is important.
I do have some credit card debts in the past which is close to $1500 and that is not a huge amount for some people but I was not working and using that card. The moment I paid that bill I felt relieved and now I put 20 percent of my earning into my portfolio.
So, don’t wait for the moment to get a lot of money to pay your debt. Just pay $1000 or whatever amount you have as it will help you live debt free.
Invest in Yourself
You might be thinking “What Invest on Yourself mean?”.
If you want to get the maximum ROI from your investment then I recommend starting investing in yourself. You can start it by investing as low as $20 on a book or Udemy course to upgrade particular skills. The maximum can be some best courses your conference of business owners or CEOs conference.
I have invested the maximum saving in some courses that I always wanted to do i.e, Fitness, Finance and Marketing. Well, this course was all super expensive for me and sometimes I do wonder did I choose the wrong path but now I feel it was a good decision to take that risk.
For example, if you want to start a YouTube channel and create your digital presence online then a course of $20 from Udemy will not affect your budget but in return provide you with packs of information.
I know the name of courses is quite bad nowadays because of some so-called gurus who are charging so high for some basic courses which are available on other platforms.
But I recommend you to set aside some of your savings that is maybe $1000 or more and invest it in something that you like which can be used on courses such as Stock Market, Personal Trainer, Real Estate investment or any specific thing that you always wanted to do.
Conclusion
Well, You can now understand “How and Where to invest your $1000?”.
You must have always thought that you need a huge amount to start your investment ventures but as a beginner investor, you must always put a small portion of your money.
Why?
In case you are a complete beginner then the chances are high that you can make mistakes in your first few months. So, if you put a small amount then it will be easier for you to handle the situation in case you lose that investment.
A small amount also helps you to understand the market much better within time and maybe it will prepare an investor in you who understands the market much better as well as a mental game while investing.
I hope that this article helped you to understand the core principles of each of the sections which you can consider while putting your first thousand-dollar investment.
