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How to Invest $1000 right NOW: My 3 Favorite Investments

Make your money work for you with these three favorite ways to invest $1000 right now

That last thing you want to do after saving up that first $1000 to invest is to lose it! Whether its $100, a $1000 or a million, you worked for it and now you want to see it work for YOU!

And oh that money can work.

Invest just $1,000 and it can grow more than ten-times over 35 years on a 7% annual return. Commit to investing $1,000 a year and you’ll have nearly $150,000 on which to retire. That’s about how much the average American has saved by retirement and you’ll only need to invest $83 a month.

how to invest 1000 a year

How to Invest $1,000 a Year and Make it Grow!

My three favorite ways to invest a grand are not only great low-cost investing options but offer returns to beat your investing goals and safety from a stock selloff!

That’s more important than you might realize. Protecting your money can be just as important as growing it. The best investments for your $1,000 are ones you might not have heard about but will help diversify your risk from stocks.

How Much Do You Need to Start Investing?

We’ll get to those three great investments for $1,000 in the next section but I want to talk about three key points on how to invest this hard-earned money first. After more than a decade as an equity analyst and financial advisor, I’ve learned that how you invest is just as important as the investments you choose.

You can start investing with as little as $100 on most investing sites but it helps to start with a little more to avoid some of the risks in individual stocks and investments. Investing $1,000 can mean a big difference in being able to get the diversification you need and really start seeing your money grow.

But how should you invest $1,000 and how fast can your earnings pile up in my three favorite investment strategies?

Before we get into my three favorite ways to invest $1,000, let’s cover HOW to invest and why it’s just as important as the investments you buy.

  • Diversification means buying enough individual stocks or investments so that a big loss in one will not seriously dent your portfolio. Invest $500 in one stock and it accounts for half of your $1,000 portfolio meaning a big loss could really hurt. Invest $100 in something and it accounts for a much smaller chunk of your total wealth.
  • Investing fees are one of your biggest enemies and will eat away at any return you earn. Buying ten stocks every three months adds up to $400 in annual fees even at the less expensive investing sites. You’ve already lost 40% of your $1,000 investment and you have only just begun! Make deposits into your investing account regularly but wait to invest to save on fees.
  • Investing has to be for the long-term, whether you’re investing $100 or $100,000! I’ve worked as an investment analyst for more than a decade and can tell you that even the pros don’t know where stocks are going from month to month. Investing should be like a savings account…one with a really amazing return.

With these three points in mind, it should be clear why you should wait to invest $1,000 rather than jumping into the stock market with $100 or less. Investing $1,000 means you’ll have enough to buy a wider range of investments and can do it all at once rather than several times, racking up those fees.

But the question of what you should invest your $1,000 remains, so…

Here are my three favorite ways to invest $1,000!

Investing $1,000 in Peer Lending

Investing in peer loans isn’t yet as common as stock investing but it may soon be. Peer loans offer a lot of the benefits of fixed-income bond investing but pay higher returns and avoid some of the disadvantages of bonds.

I invested $10,250 earlier this year on a special promotion for Lending Club to get $300 bonus cash. That money has grown to nearly $11,500 for an annualized return of 9.65% and it hasn’t even been a year yet.

Investing 1000 in p2p loans

Investing $1,000 in P2P Loans

I’ve been investing in peer loans on Lending Club for a few years and have averaged an annual return of almost 10% – that’s way above the return on other bond investments and at less risk that stocks.

Most investors are way underinvested in bonds and bond-like investments like peer loans. These investments are going to save your portfolio when stocks plunge. You’ll keep getting your monthly earnings on the p2p loans even as the market tumbles.

Five-year bonds of large corporations pay just 2% annually, that’s just barely above inflation but still might be better than investing in stocks if the market hits a rough patch. Even the safest category of peer loans is paying upwards of 6% annually, and these are people with credit scores approaching 800 FICO.

  • Since peer loans are for terms of three- to five-years, prices don’t fall as much as long-term bonds when interest rates rise
  • Investing in peer loans through a retirement account means all the interest you receive is tax free for decades
  • Peer loan investments won’t fall with the stock market, making them a good way to lower your risk in a traditional stocks and bonds portfolio

Before you click out and start investing in p2p loans, check out this article on 3 Lending Club Strategies for Safety and Return. You’ll find a strategy that will fit your return needs and risk tolerance.

Here’s the deal with investing in peer loans:

You can invest a minimum of $25 in each loan so it’s really not practical to start by investing $100 but investing $1,000 means you can buy up to 40 loans for your portfolio. Each loan will be about 2.5% of the total and won’t cause a steep drop in your investment if it defaults.

how to invest $1000 peer lending

I interviewed one peer lending investor that has earned an average of 12% annually since 2009, making a $10,000 profit on his initial investment. He shared his strategy for picking peer loans including which risk categories he chooses and which borrowers he selects.

Open an Account on Lending Club Investing and start investing in peer loans

The New Way to Invest $1,000 in Real Estate

I’ve been investing in real estate for nearly two decades, first in residential rentals and then in commercial space. My first job in college was as a commercial real estate agent and investment analyst.

I love the feeling of taking a property, putting some sweat equity into it and earning a monthly cash flow from the rent. No other investment has made as much generational wealth as real estate.

But traditional real estate investing is a pain…sometimes more than it’s worth.

I’ve dealt with just about every tenant complaint you can imagine, from fixing electrical wiring to that 2am call to light a water heater (yep, they couldn’t just strike a match and do it themselves).

Recently, I found an easier way to invest in real estate. This new online way to invest gives you the monthly cash flows and safety of real estate without all the headaches. It’s called real estate crowdfunding and I’m convinced it is going to become more popular than house flipping or real estate investment trusts (REITs) for regular investors.

With real estate crowdfunding, you invest as little as $1,000 in individual projects managed by professional developers. These projects can be for commercial or residential property and the investment can be in debt or equity…that means you can get a diversified portfolio of investments with just a few thousand dollars, something that was never possible in traditional real estate investment.

I invest on several platforms including the RealtyShares platform, one of the largest and they’ve been buying other platforms to have more deals to offer. It’s free to sign up on the site and browse deals so there’s no obligation to invest.

passive income real estate strategy

Getting Started Investing with $1,000 has Never Been Easier

Staff at RealtyShares reviews the investment documents and does due diligence on property developers. Only about 5% of the deals submitted get approved to go on the site so it’s good to know that there is a level of vetting in the investments.

RealtyShares manages all the payments from the professional developers to the investors so all you have to do is sit back and wait for the checks.

  • As with direct real estate investment, make sure you are investing in multiple properties for diversification. That means different property types and different locations.
  • Invest in a mix of debt and equity deals to further diversify your risk and manage cash flow.
  • Don’t feel like you have to invest all your money at once. The platform posts new deals regularly so it’s best to stagger your investments.

Click to browse deals on RealtyShares for free

I get most of my investments on RealtyShares but also invest on other crowdfunding sites. Since the industry is new, most platforms don’t have more than five or ten new deals a month. It costs nothing to open an account on different sites and you get access to more deals.

PeerStreet is another popular real estate crowdfunding site. The platform offers debt investments backed by the physical property, so it’s a less risky investment than equity, but still targets returns of between 8% to 12% per year.

The Best Stocks to Invest $1,000

For those that still want a more traditional approach to investing your first thousand, stocks can still make your money work for you. Protecting your money while it grows just means you’ll need to understand how different sectors and assets can fit in your portfolio to reduce risk from a crash.

I have a couple of investing accounts but use Ally Invest for my taxable investing account. I first heard about the platform, then called TradeKing, at a financial bloggers’ conference in 2015 and immediately signed up for an account.

Besides offering all the stock research and investment calculators you’ll need to do your own investing, Ally Invest offers the lowest commissions in the industry. Each trade costs just $4.95 and you can get it down to $3.95 per trade on accounts of $100k or more.

One of my favorite ways to invest in my stock account isn’t in stocks at all but in master limited partnerships (MLPs). These are companies that own oil & gas pipelines and storage facilities. These companies benefit from a special tax break. They don’t pay taxes on profits as long as they return the majority of the money they make each year to investors.

That means safe dividend yields as high as 8% plus appreciation on shares. That’s $80 in cash on your $1,000 investment every year.

Better yet, some of the dividend you receive is counted as a ‘return of investment’ so it’s not taxed as income like other dividends. Learn more about MLP investing in this post about dividend income ideas.

Open an account on Ally Invest for up to $1,000 in commission free trades

Investing Starts with Your First $1000 a Year

The real power of investing isn’t to just invest $1000 and then doing nothing. Make investing part of your monthly budget. Investing just $50 a month will be worth more than seven-times the amount of a single $1000 investment over 30 years.

Don’t worry about investing every penny you earn, just put in what you can afford and follow the stock market basics to diversify your risk and lower your investing fees.

how to invest $1000 now

How Investing $1000 Grows Fast

These are just three of my favorite ways to invest $1000 but you should really hold a range of asset classes including stocks, bonds, real estate and peer loans in your portfolio. Whether you’re investing $100 or $100,000 – don’t worry about beating the market. Invest for the long-term and never take money out of your investments.

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