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Best Way to Invest $1,000 Dollars (8 Methods to Consider!)

Lately, many people have been coming into a lot of money that can help their households. I know I have! I choose to use some of my money to invest to build up finances for my family. If you’re like me and want to know how to invest at least $1000, then you’re in the right place! Take a look at the best way to invest 1000 dollars. 

Best Way to Invest 1,000 Dollars: 8 Methods to Consider!

If you’ve been trying to find better ways to grow your money and aren’t quite sure how to do it, I’m glad you stopped to check out this blog, because I’ve got great news to help you out! Below you’ll find the best way to invest 1000 dollars so that you can see some growth. 

1) Emergency Fund

Investing in an emergency fund is always my go-to whenever I’m asked how to invest. I think it’s great to have some “rainy day” funds set up.

It’s good for so many reasons:

  • helpful if something breaks down and needs a fix
  • need to take an unexpected trip out of state due to familial issues
  • unexpected medical bills

Whatever the reason may be for you to need some extra money, an emergency fund can really come in handy.

This is also good for those of us who like to set budgets. If you don’t like going outside of your set budget for big expenses, having an emergency fund will help for those big events that you didn’t budget for. If you’re looking for something to get you started, this is the FIRST thing I would consider investing in. It’s always better to be safe than sorry. 

Related: Expect the Unexpected: 3 Reasons to Start an Emergency Fund

The top 8 ways to invest $1,0002) High-Yield Savings Account

Another great way to invest $1,000 is to put it in a high-yield savings account. I look at these accounts as more of a slow and steady way to grow your money. But, it’s still a great way to grow your money.

A few banks to consider for your savings include: 

  • Citibank (0.50% APY; $0 min.)
  • Axos Bank (0.61% APY; $250 min.)
  • Alliant Credit Union (0.55% APY; $5 min.)
  • Ally Bank (0.50% APY; $0 min.)
  • TAB Bank (0.50% APY; $1000 min.)

When looking for a high-yield savings account, make sure to look for the highest APY as well as any perks that work for your personal situation.

Maybe you’re looking for an account that offers an ATM card with your savings account. Or, you want a savings account that doesn’t charge a monthly service fee. Whatever it may be, just make sure you search for the right account for you before making a hasty decision. 

3) Real Estate Investing

When I say invest in real estate, there are many ways to invest $1,000 into the real estate market. However, for each of the ones I’ll suggest, you need to be in it for the long run. There will not be any short-term ways to make real money in real estate (I don’t have any get-rich-quick schemes here, sorry!). 

So, there are 2 big ways for you to use 1,000 dollars to invest in real estate: 

Real Estate Crowdfunding

Real estate crowdfunding is one of the ways to make passive real estate income without actively participating. You basically just watch the money grow, no hands-on effort necessary. You should realize though, that since you aren’t putting in all the effort of owning and operating a place of your own, the returns will be less.

The best way I’ve seen to invest in real estate using this method is through a site called Fundrise. You can start investing with as little as $500 but I’d suggest investing at least $1,000 to see more of a return on your investment. This is also great if you’re interested in private real estate. 

There are other sites to look into for real estate crowdfunding like Diversyfund and Yieldstreet. Both sites allow you to begin investing with as little as $1,000.

Real Estate Investment Trusts (REITs)

If you’re looking for another way to invest passively in real estate, you may be interested in REITs.

If you’re unsure of what this is, they’re companies that own or finance income-producing real estate. All are traded on major stock exchanges and are in a range of property sectors. You can buy shares of a REIT mutual fund or an ETF. You can also invest in public non-listed REITs and private REITs. You just have to choose what works best for you. 

Investing in real estate can still be risky (even with the passive options above), so I would still recommend doing extensive research no matter which way you decide to go. 

Related: Top Ways to Create Wealth During These Uncertain Times

Best way to invest 1000 dollars4) Invest in the Stock Market

Investing in the stock market is another great way to invest 1000 dollars. The first thing to do is to make sure you have a good investing account. You can either DIY or go the passive route with Robo-advisors. Either way, I’ll give you some info on both!

I’m very hands-on so I prefer the DIY option.

There are many different investment accounts to choose from when it comes to this option: 

These are my top picks, but there are so many others to choose from.

The above options require you to be actively investing. Meaning, your involvement is necessary if you really want to make any money through stock investing. You should also be patient when it comes to stock investing. One red day will not determine the long-term value of your investment, patience will help you stay in for the long-haul and know when it’s time to let go of stock if necessary. 

Passive Investing in the Stock Market

If you’re not trying to be too hands-on with your stock investment, you can always use Robo-advisors like Betterment or Wealthsimple (our affiliate partner). There are others, however, I chose to mention these two because I’ve had good experiences with both.

  • Betterment has no upfront cost, and
  • Wealthsimple doesn’t have any upfront cost either. It’s simple, easy, and you can get started immediately. It’s an excellent tool for a beginner investor.

You can also consider trading stock options once you get more comfortable with stock investing. Although stock options trading can be riskier, there is a lot of potential growth to be had with your initial investment. It’s definitely something to think about if you’re considering stock investing. 

5) Exchange-Traded Funds (ETFs) 

If you’re looking to invest in more securities-based funds, ETFs would be the way to go. It’s a great way to diversify your portfolio and better manage the amount of risk you take on.

Another great thing about ETFs is that they are more flexible to trade than regular mutual funds, seeing as though they can be traded when the markets are open. Just like stock trading in that aspect, which is why it’s great to have some ETFs in your portfolio. 

Just like stocks, you can choose to open a brokerage account and DIY when it comes to trading or you can go through a Robo-advisor if you prefer to be more of a passive investor. Either way, something to consider when investing one thousand dollars.

Related: How to Buy VTSAX (and What Is It Really?) 

401k savings - the key to becoming a millionaire6) Roth IRA

Thinking about the best way to invest a grand? Investing in a Roth IRA can also be a good investment.

  • You pay the tax up front
  • Your money grows tax-free
  • And when you get ready to retire, you can withdraw your money tax-free.

Please keep in mind this should be more of a long-term investment since you get the most out of the funds in your Roth IRA in retirement. Also, you really want to give the money some time to grow. 

Like any investment, you can stand to lose money with a Roth IRA. That’s usually due to early withdrawal penalties and market fluctuations. Even with that, this wouldn’t be a bad way to let your thousand dollars grow. 

Related: Roth IRA vs. Traditional IRAs

7) Open a CD

When thinking about the best way to invest a thousand dollars, opening a certificate of deposit (CD) may be your best options.

CDs can be a very secure and they’re actually easy to open. These accounts come with a fixed rate of interest that can either be good or bad, depending on what your needs are. Being locked in at the fixed rates is great if interest rates are high, but you’re stuck if they’re low and increase over time.

Something else to consider is the type of CD you’d want to invest in.

There are many to choose from, including:

  • Traditional CD
  • High-yield CD
  • Zero-coupon
  • IRA CD
  • Bump-up CD

And a few others too.

There is no minimum requirement so starting with $1,000 would be a good head-start for you.

Once you choose to figure out the banking institution (amongst the other things I’ve told you about), you’ll want to choose the length of time. The minimum time-frame is 3 months, but I’d suggest holding it for longer. There’s more payout that way.

You just have to have to do a little research before deciding if this is the way to go for your financial situation.

Best way to invest 1000 dollars - peer to peer lending8) P2P Lending

Another way to consider investing your 1000 dollars is P2P lending. It’s another decent way to diversify.

It’s basically just cutting out the middle man and letting individuals lend and borrow directly to each other. It’s a very attractive investment because lenders get to enjoy a higher percentage of their returns. Borrowers can also enjoy the cost advantages that come with social lending. To be appropriately diversified, you’d want to start investing at least $1,000. 

It can be a little riskier since these loans aren’t insured and they are more exposed to defaults. It also takes a little more work than traditional lending. However, it is still something to consider after doing your own research. 

Start Investing Those Funds Today!

You’re looking for the best way to invest 1000 dollars. The eight ways above are certainly solid options, but there may be other opportunities in your court as well! Weigh all the options and choose what’s best for you in your situation! 

I gave a few examples of ways to invest that I find interesting and have either already done or I’m considering. But, when you’re looking for the best way to invest $1,000, don’t just jump headfirst. The goal is always to grow your money, not lose it in an instant.

Just remember, nothing is guaranteed.

What do you think is the best way to invest 1000 dollars?

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AUTHOR LaTia Longuemire

My name is LaTia Longuemire. I enjoy writing, singing, and cooking in my spare time. My passion is helping others. At this stage in my lifetime, I'm primarily focused on my children. They are everything that keeps my world spinning.

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