So you have an extra $1,000 and you are looking to put them to use. Great idea! Let me start by saying that $1,000 is a good amount of money for the majority of people and I understand that most people are unwilling to experiment. This is perfectly fine as that depends on your risk tolerance and your current situation.
However, this list is catered towards both groups, people that want to utilize money by experimenting and people who are unwilling to risk money but are looking to utilize their investment.
Invest in yourself
It may sound clichéd, but yes invest your first $1,000 in yourself. I think that’s would deliver the highest return on investment(ROI) compared to anything else because that would improve your well-being.
Invest in yourself, it could be a book about investing, a seminar to develop public speaking skills, perhaps coding to develop a website or automation tool, enhancing your skillset with new online courses, or getting a new credential that would help in career advancement.
It could be anything that would assist you to progress in whatever phase you are if it is a career then focus on skills that will prepare you for that promotion. If it’s a dead-end job, then go for a career change by learning a new skill or getting a certificate. If you run a business then attend seminars that would teach you modern ways to increase client base or improve your business.
Starting an Online Business
Starting a business has never been easier until now. With e-commerce, the barrier for entry is fairly low, which makes it easier to start your own without taking a loan for a business.
E-commerce platforms like Shopify eliminate the coding aspect of an online store. It’s simply a drag and drop website that takes care of the payment processing and offers a variety of extensions to set up your business. For more information head over to our complete article on online businesses.
With e-commerce, you have to find a product that people are interested in or introduce them to new tools that would assist them in performing a task. Set up an attractive website and advertise your product on platforms like Google, Facebook, Instagram, Pinterest, etc.
Invest in Stocks
This is for someone who is merely looking for some passive income. The key to investing is to invest and forget. By that I mean is, you won’t get a good return right away, in fact not in a couple of years but that depends on the type of investment you make.
There are three types of securities you can invest in: government bonds, index funds and stocks. Each of them has its pros and cons, that depends on what your goals are. Government bonds like U.S treasury bonds offer a relatively low rate as 1.52% for one month as of December 6, 2019, but are considered risk-free because you are giving money to the U.S government. Stocks vary depending on the company it’s invested in, here I would recommend going for dividend-paying stocks like Apple Inc. as it is a well-established organization, that offers decent dividends and have been increasing in value. Index funds are like a group of stocks, for instance, Vanguard S&P 500 Index ETF is up 18.84% in 2019 and yields 1.48% dividends.
Investing long-term while this isn’t going to make you like millions of dollars right away but if leftover years on the right stock could produce an excellent return. This depends on your goals and your risk tolerance but if you are interested and not sure how to, then start with Investing 101.
Become a Trader
Trading is buying and selling of financial instruments. This could be in a stock market, commodity market, stock exchanges, currency, futures, etc.
Trading varies on the type of financial instrument but generally, it is performed by studying charts, price movements, news, and other instruments to predict the direction of the price. Since trading can be done electronically, you would need an online broker that would execute your trades. For currency trading(Forex) you can try FXTM, for stock trading actively I would suggest QuesTrade, for passive trading I would suggest Wealth Simple Trade if you are Canadian, and Robinhood if you are in the US.
Lastly, trading could be a great source of income, and it is something that if you develop the understanding and a perfect strategy for you could make millions. However, if you are interested, I recommend trying it out for a short period with just the $1,000 and see if you can get a hang of it. If you are green, great! Keep going but if not, then don’t get sucked in the hype and glamour by depositing more.
Take away points
There are multiple ways to invest $1,000 but this depends on your current situation and goals. If you are the type of person, to start a business my advice for you is going to be a little bit different than someone who just wants to invest passively.
The most profitable investment is to invest in yourself, by upgrading your mindset and skillset. If you are interested in a business, I suggest looking into e-commerce as it is a lucrative way to make money, with a low barrier to entry, but has a steep learning curve. If you are looking for some passive income then the stock market is for you. The key to investing is to forget your investment and not withdraw any profits; let it grow. Lastly, if you are willing to experiment then, Trading could be for you. There is a learning curve with strategies and there a significant chance of losing money – be careful.