how to invest money

5 Ways to Start Investing if You Have an Extra $1,000

One of the most common questions I received is how can I start investing if I have $1,000? Today, I’m going to share with you ways to start investing today! The truth is because most of these investing platforms don’t have trading fees anymore you don’t even need $1000 to start investing, I would say whatever extra money you have now, start investing now, even if it’s only 100. 

The reason why investing is important, is because of the time value of money. The time value of money states a dollar today is worth more than a dollar tomorrow. With that being said, if you hold your money in cash without getting any type of return over time it will actually decrease in value. That’s why when you are talking with grandparents or even your parents they always mention how they made a low salary wage when they were younger.

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Below are 5 different ways to start investing today if you have extra money. 

Invest in the S&P 500

For most people, I highly recommend Investing in the S&P 500.

When you invest in the S&P 500 you are investing in all 500 stocks that are traded. 

With an average 8% return over the last 20 years, this is one of the safest investments to make. I do recommend that you continue to add money throughout time instead of waiting until all at once to put your money in. There are amazing platforms out there such as M1 finance that will allow you to do auto investing. For example, every week you automatically add $25 to the platform to invest. Investing in the S&P 500 is one of the best ways to start investing today!

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E.T.F. aka vanguard 

I also recommend investing in an ETF. Similar to a mutual fund, it’s a collection of stocks. AKA instant diversification. When you invest in an ETF it trades on the open market just like a stock and when you buy into it, it already comes diversified. One thing to note is that ETFs do have a small fee associated with it and you can find the fee directly on yahoo finance. (See screenshot below).

Individual Stocks

Another option on how to invest 1,000 is to invest in individual stocks. I highly recommend that if you are deciding to invest in an individual stock you begin with picking a stock that you know and understand. For example, if you have apple products, take a look at apple stock. Or if you watch Netflix look at Netflix stock. The next thing to consider is do you think this industry or product will be around in the next 10 years and continue to grow and expand? 

Finally, keep in mind that you will want to hold individual stocks for the long term. Think of this like a long term investment. Don’t look at the short term gain or loss.

Money Market Account or C.D. (Certificate of Deposit)

The next option is to hold your money in a money market account or a CD. Of course the amount fluctuates with the fed rate so keep in mind with a CD you are going to lock into a rate and investing in a money market account it will be variable and can change. The highest rates I found right now are from capital one at 1.5% for your money market account. 

Money market – direct access to the money ( credit unions typically have high money market rate – credit union vs bank article) 

C.D. – typically you can’t access or touch your money for a number of months or even a year. However, offers a higher interest rate than a money market account

Robo / Auto investing 

In my opinion, I strongly believe that robo investing or auto investing in the market is the future. These robo investors are stripped of emotions, and are algorithm based trading. Hedge funds have been using something similar for years, and have just become available to the public. While I do think it’s fairly new and more risky than the options above, I think that this is a great option for people who are unsure of what exactly to invest in.  

Where to start investing? Recap ways to start investing

Now that you know 5 different options to start investing, the next big question is where to invest this money? If you are investing in The S&P 500, ETFs or individual stocks I recommend these platforms:

If you are investing your money into a money market or CD the highest place for returns are here: 

If you decide that robo / auto investing is right for you, these are the best platforms I found.

open account
$0 per trade$50 for signing up
open account
$0 per tradeFree share of stock
Best platforms for auto investing and robo investing

In short there are 5 different options I recommend for people on ways to start investing. You can invest in the S&P 500, robo /auto investing is another great options, investing in ETFs or individual stocks and finally add your money to a CD or money market with high interest. I would love to hear in the comments how you decided to invest your extra $1,000. 

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