If you have saved $1,000 for investing, you have a lot of good choices. That amount is enough to start making you some money, and it just happens to be the minimum amount required for many types of investments. In other words, you’re ready to do some research to find the best investment for you and start learning how to earn money with your money.
Indexed Exchange-Traded Fund
Investors can buy shares of an ETF just like they would a stock. The difference is an ETF is like a mutual fund in that it invests in hundreds of stocks. Investors don’t have to go through an application process like they would for a mutual fund. According to MSN Money, an investor should consider an indexed ETF. Indexed means the ETF buys all the stocks that are in an index such as the S&P 500. Your $1,000 is invested in many stocks instead of one. This provides diversity. If one stock goes down, the others may make up for it.
“U.S. News & World Report” recommends that investors put their $1,000 in a mutual fund. It particularly likes all-stock-market funds. These funds spread investments across all available stocks. That means if the markets go up, so will the $1,000 invested in it. Of course, the opposite is also true, but as Bankrate.com points out, there’s never been a 15-year period where stocks lost money on average.
Investors who want to protect their money may invest in Treasury Inflation-Protected Securities. These are bonds issued by the government that have a special feature. In addition to the interest they pay, they go up in value every six months to match inflation. If investors think an inflationary period is coming, TIPS can be a way to protect an investment. The minimum purchase is $100, so an investor with $1,000 can get 10 of these.
Certificate of Deposit
An investor who wants to stay away from the stock market and bonds may buy a CD through a bank. The Federal Deposit Insurance Corporation insures CDs for up to $250,000 because they count a CD as a bank deposit. Shopping around can pay off. Banks compete for customers’ business and offer a variety of interest rates based on how long the investor is willing to leave the money in the bank. The longer the term, the higher the interest rate.
Investors don’t need a big down payment and lots of real estate expertise to get into the real estate market. ETFs and mutual funds both specialize in real estate. They tend to buy shares in real estate investment trusts. An investor may expect a dividend plus rising share prices as the real estate market goes up. Naturally, if the market goes down this investment could drop as well. Investors must use their own judgment, but this is a quick way to get into real estate for only $1,000.
Kevin Johnston writes for Ameriprise Financial, the Rutgers University MBA Program and Evan Carmichael. He has written about business, marketing, finance, sales and investing for publications such as "The New York Daily News," "Business Age" and "Nation's Business." He is an instructional designer with credits for companies such as ADP, Standard and Poor's and Bank of America.