The Best Ways To Invest $1,000

If you find yourself with a spare $1,000, you might decide you want to invest it. In that case, you’ll need to understand what investment options are available to you and how each one will be expected to perform.

It’s important to remember, though, that the exact sum of money you have will limit your investment opportunities. Shares in some companies can be several thousand dollars each, while some managed funds are more exclusive than others. So, you’ll need to have a good understanding of the part you can play with the money that you have.

Make an investment plan

If you’re new to the game, you’ll need to start with an investment plan. Any investment will inevitably carry risk, so you must understand what you’re getting yourself into.

Start by doing in-depth research into your options. When comparing the different investment options, ask yourself questions such as how much you want to make, the period in which you want to make it, and how willing you are to take risks to achieve your goals.

Then, you can take your $1,000 and, if you invest it wisely enough, begin making gains.

Four ways to invest $1,000

1. Shares

Also known as stocks and equities, shares are many peoples’ first port of call when considering investing. It’s not hard to see why, as shares offer one of the highest and most consistent returns on investment. The average stock market return has been around 10% annually for almost an entire century.

However, you will only get a good return if you invest wisely and learn when it's best to buy and sell the shares you own. If you don’t, the chances are high that you could lose out, especially given how volatile the stock market can be.

2. Bonds

Bonds offer a more stable and secure way of investing your money because the amount you stand to make will be determined at the outset in an agreement between you (the bondholder) and the bond issuer. Then, they’re often called fixed-income investments for a reason.

When you make a fixed-income investment, your earnings will be paid out in regular interest payments over a set period. Once that time is up and the bond has matured, you will get the principal amount you paid back.

However, while bonds are a safer option, they are also less lucrative. So, consider that when deciding whether the risks outweigh the rewards.

3. Managed funds

Invest in a managed fund, and your money will be pooled together with other investors. Managed by an internal or external fund manager, your investment will be used to buy and sell shares or other assets on your behalf.

Since the amount an investor pays into the fund determines how big a portion of it they own, the more you put in, the more you will get out.

4. Exchange-traded funds

A sort of stock and managed fund hybrid, putting your money into an exchange-traded fund (ETF) is cheaper than buying shares and easier. ETFs also offer a way to diversify your investments, as your money will be channeled into various assets, all of which will be from the same asset class.

Plus, while ETFs are externally managed, they are differentiated from other managed funds by the flexibility offered to you as an investor. When you’re part of an ETF, you can buy and sell the units of that fund through a stockbroker, similar to how you buy and sell shares.

Choosing the suitable investment for you

The above investment options are by no means exhaustive but offer a helpful overview of some of the most suitable opportunities available.

This, however, is just a starting point. If any particular option catches your eye, you’ll need to do more thorough research before investing. And, if you’re unsure at any point along the way, get in touch with a financial adviser. They can help you figure out what would make the most sense for you.