Kinds of investments
If you are reading this post 1 week or even 1 day after it was published, there might already be huge changes to the investing situation and stock market, because the situation is changing so quickly and nobody knows what’s gonna happen to the market tomorrow.
In these hard times there are 2 categories of people which represent 2 extremes – one category of people prefers to keep their cash and not do anything with it, because nobody knows what will happen tomorrow. They don’t invest, they just keep the money under the pillow or between the pages of the book as my grandma did. «We will see what will happen in the future and then decide…»
The second category of people is trying to get the big profit very quickly, therefore is looking for some risky combinations to make their best shot and earn the fortune.
I personally believe none of these 2 ways is perfect. In the first case people are loosing time and might loose great opportunities to get some additional income. In the second case many people might loose a lot of money with the risky steps they are making.
Is there any other way to go about our money? Let’s talk about investing.
Probably the best 3 advises I personally heard on investing and I definitely subscribe to them and hit the like button to these 3 ideas:
The First is that we should think of the long term investment rather then the short term.
The Second is that we need to diversify our investment to make it more stable, safe and profitable.
The Third is that we should start right now instead of waiting for the perfect moment.
There is no perfect time to start investing. Something will always be happening in our lives or with the market that can make us think – maybe it’s not the right time now, maybe it’s better to wait. The financial crisis is out there, the market has just crashed, you have no time, or you have just bought the house, or you have just got married or had a new baby. There is always something.
But the reality is that – the sooner you start investing, the better – you will learn quicker, and you will get your profit sooner.
In this post we will talk about 10 ways to invest 1000 dollars.
If you make a quick research on investing you will find out that there are many different kinds of investing and a lot of places you can invest your money in – it can be real estate, gold, business, stock market, bonds etcetera. In many cases you need a lot of money to be able to invest, because there are certain limitations and investing minimums. But if you have only one thousand dollars it doesn’t mean you cannot start investing. It is not a big amount of course, and we should not be expecting hundreds and thousands of dollars coming in from such investment, let’s make it very clear. But if you are a beginner and you are considering investing your first money, it is definitely good to start with a small amount.
It’s good to start with the small amount
The main benefit of starting with only 1000 dollars is the learning experience – if you start investing today even with a small amount like 1000 dollars you will probably not make tons of money in the next couple of month, but you will start getting more and more knowledge in this field, so when you have more money to invest you will know how to do it and how it works, and how to minimize the risks. Consider it an educational course. Usually people pay money for education, but instead of paying 1000 dollars to someone else, you will use it to get the knowledge and experience and even make some additional money on top of this one thousand.
The other benefit is that you don’t risk to loose a big amount of money. I’ve seen many cases when people without any knowledge base or experience invested like 20, 30 or 50 thousand dollars expecting big profit quickly and they lost it all, because they didn’t really know what they were doing, they didn’t know how investing works, and you definitely don’t want to repeat their mistakes. So if you invest 1000 dollars and you focus on learning the main principals and rules of investing – you minimize the risk of loosing money and you also develop good investing habits to do it correctly in the future.
Pay off the debts before you start investing
Before you start investing you probably want to consider paying off the debts first, especially those with high interest. For example if you have a debt of 1000 dollars and you are paying 25% interest, and instead of paying off that debt you decide to invest 1000 dollars with 6% of interest – guess what? You are not making any money, you are actually loosing. So if you have high interest debts – consider paying them off, that’s probably your best investment for now.
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Here are 10 ways you can invest 1000 dollars.
Robo-advisers Betterment and M1 Finance
If you would like to build your investment portfolio, but you are a beginner, you would appreciate if someone with experience would give you a good advise and help you to make your first steps in the world of investing. But such advises are not given for free, and with 1000 dollars to invest you probably don’t want to pay financial advisers. Robo-advisers can be a great solution. Robo-advisors take some of the best investing strategies and use artificial intelligence to implement them. If I am a beginner and I know nothing about investing, then probably these robo-advisers can make better investing decisions then me. You can get your investments set up with much lower costs or no cost at all, and you can almost forget about it, because you don’t have to do anything. You account will be actively managed and you will get all benefits.
The biggest players in robo-adviser market are Betterment and M1 Finance, definitely check them out if you want to start investing.
Real Estate – REITs
The next way to invest 1000 dollars is to invest in Real Estate. You probably think «how can I invest 1000 in the real estate? Should I buy a doghouse or something?» No, you don’t have to buy or manage any property yourself. You can invest in REIT which stands for Real Estate Investment Trusts with even less then 1000 dollars. The same as buying a stock in the company, you can buy a share in the property. The Real Estate Investment Trusts collect the money from investors like you and me and buy property of the certain category – like office facilities or medical buildings, shopping centers, residential apartment buildings or senior citizen centers and they give some part of their profit to us investors in the form of dividends. – Fundrise . com – – hold them within Roth IRA or 401 to minimize the tax Realty Income Corporation, Four Corners Property Trust
Another very simple and very common method of investing is buying a dividend stock. What that means is that you are actually buying a very small part of the company you have chosen, and now you are entitled to some of their earnings, which are paid in the form of dividends usually 4 times a year. Normally the companies pay between 1.5% to even 6 or 7% per year. You can check that before you buy a stock.
So if you invest 1000 dollars, you can get from 15 to 70 dollars after 1 year. This doesn’t sound like a huge money, but it’s totally passive, you don’t have to do anything. In addition to the dividends paid 4 times a year, the price of the stock will hopefully also grow over the time, and if it grows 8% – it will give you 80 dollars on top. Yes, it can happen that the price of the stock will fall – in that case you will loose if you will sell this stock. You don’t have to sell it, you can wait until the price goes up again. The dividends percentage doesn’t change if the price grows or falls, so at least you can count on that passive income.
You probably heard the terms Index funds, Mutual Funds, Exchange traded Funds. The idea of this is that instead of buying a Dividend Stock of some specific company, you buy a small piece of everything and by doing so you diversify your investment money. Diversification is a very good habit, super important for all investors, no matter if you invest one thousand or one million.
The good thing about Index funds is that you are investing your money not only in different companies, but also in different sectors of economy, so if one sector of economy has problems, another sector will compensate that. This kind of investing is very stable and very consistent. Index funds also have dividends, and the expectation is that the stock price will also grow over the time, the same as with dividend stocks. It’s good for long term investments – if we look back at the past 20 to 30 years, the stock price grows on average 6-8% annually. The great platform for this kind of investing is M1 Finance – you don’t pay management fees or trading commissions, and you can purchase fractional shares.
Don’t try to predict the market – we all are just guessing. It’s much better to invest consistently and do it long term.
The next way to invest 1000 dollars is Bonds. Bonds is a sort of a loan, when State or Government or Companies want to borrow money with the promise to return it after some time with the interest. Important thing to mention is that bonds have a Maturity date, which means you will get your money back with interest after the bond matures. It can be from few months to few years, depending on the bond. This is considered to be a very stable investment, especially if the bonds are issued by the State, therefore many investors keep at least some bonds in their investment portfolio.
The next method I would like to mention here is starting your own small business. Unlike the other methods we mentioned, this way of investing will also require some of your time and efforts, but you can also make a better money. You can use 1000 dollars to buy or produce some goods and then sell them at the bigger price, or you can buy some basic equipment and provide the services. This is not a passive income and it involves a bigger risk, but on the other hand it gives you the opportunity to start your own small business and then grow it. When I started my first business I invested less then 100 dollars just to buy used cell phone, so that my clients could contact me easily. After 4 years I had my own shop and a manufacture to produce the wooden floors of my own brand.
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