Capital GrowthCapital ReturnFinancial Strategy

How To Invest Your First $1000

A few days ago I published a podcast titled how to invest $1,000, or I gave my opinions on where you should put $1,000 to make it grow. This post is going to be a follow-up, giving you all the ways I would advise you to invest $1,000 in a list format.

Before we get into the list, here is the podcast so you can listen to it in audio form if you prefer. It goes into much more depth about Vanguard funds and my opinions on them.

Also, I just want to congratulate you for even reading this post, because that means you’re contemplating investing $1,000, rather than spending it. I’m very proud of you for this, It’s a big milestone when you go from a spender to an investor, and you should realize this. With that said, let’s find out how best to invest $1,000.

At this point in your life, you may feel that $1,000 is all the money in the world, or that is not enough. Whatever your opinion, $1,000 is a great starting point to get invested, and get your head in the game. It gives you enough money to trade around to stocks, and actually see some growth in your capital. It’s a perfect balance between enough money to make things happen, but not too much that the risk will outweigh the reward.

1. Vanguard Mutual Funds / ETF’s

I agree with what Warren Buffett feels. Buffett once said that consistently investing in a Vanguard mutual fund or ETF will always outperform the stock market in the long run. It’s by far the best way to save for retirement, and it’s a great way to learn the markets while making some money. Put your thousand dollars into some Vanguard ETF, which are basically folders of stocks that you buy. So instead of exposure to a single stock, you get exposure to 20 to 30 stocks.

I think it’s great, and will allow you to see how compounding growth works. And yes, starting off with $1,000 and investing an extra $50 a week will allow you to end up with $1,100,000 in 40 years. You can read more about Vanguard mutual funds, and the ones that I recommend in this blog post.

2. Individual Stocks

I’m torn on the first two issues. On one hand, I don’t want you to lose your money, and that’s why I recommend the Vanguard funds. Vanguard funds aren’t very volatile, and you’ll lose your money slowly (however they track the stock market, so for the past 10 years they’ve been in the green.) On the other hand, I want you to learn Stock Investing. Learning-by-doing is the best way to gather knowledge, but investing in individual stocks without much prior knowledge will certainly lead to some red numbers. I think it’s a sink or swim situation, and if you try hard enough there’s no way you can possibly sink too far.

Jumping into the stock market, and investing in individual stocks will teach you how to analyze them, understand the markets and other minute details. However, you’ll see your fair share of red numbers.

3. Motif Investments

Investing in Vanguard index funds can be nerve-wracking, especially for a first time investor. Vanguard offers hundreds maybe even thousands of funds, so it’s difficult to choose without much prior knowledge in the stock market. Motif investing changes that because they offer investments into certain topics. For example, you could invest into clean water projects or Chinese solar panels. The Motif investing is similar to an ETF, where it groups together certain stocks and allows you to invest in them with one purchase. What’s great is that you don’t really need to understand investing much, you just need to understand the topics and industries that you think will go up.

4. Stash Invest

Stash invest is a neat app that many of my peers use which it allows you to invest $5 into investments. I don’t know much about this app, but I do know that is a great way to get started, and investing $5 a day will allow you to retire when you’re older. Because so many others use it, you should check it out too.

5. Other Alternative Investments

Don’t just need to invest in stocks nowadays, there are apps that will allow you to invest in many other things. For example, I just found a very neat app (called Rally Rd) that allows you to invest in fractional ownership of collectible cars. Their website states that they have a return rate that is beat New York City commercial real estate and the S&P 500 since 2012. It’s not just this company, there are many other companies that allow you to invest in interesting assets which have very high rates of return.

6. (The Hated Answer) Invest in Yourself

Whenever I ask for advice and people respond with ” invest in yourself”, I tend not to follow it. I like actionable advice that I can take and use right away, rather than learn myself. However, over time I’ve learned that investing in yourself actually is very important, but can be paired with doing things right away. I think investing some of this money and online courses which will teach you how to trade – how to understand the markets and stock indicators is a great idea that will pay off much more than $1,000 investment in stocks. Online courses don’t cost anywhere near $1,000, so you can invest $300 or so into learning, and the rest into stocks (So you can learn by book, and learn by doing, the best of both worlds).

I hope this post gave you some insight about what to do with your thousand dollars, and how to invest it. Whatever the case, remember to have fun, and know that it’s all just a game.

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