We all fantasize about financial independence, both for us and our families. However, working a regular 9-5 job isn’t enough to gain financial independence for most people. This is where investing comes into play.
According to Gallup, only 56% of adults invest money in the stock market in the United States. And the stock market isn’t even the only approach to investing.
For most people, investing seems perplexing and untrustworthy. However, once they educate themselves about various types of investing and the likelihood of risk, they’ll be more inclined to start investing.
But how much funds is sufficient to invest? Is $1000 adequate? And what are all the different ways you can invest $1000 for your future?
We’re here to provide you with guidance about various means of investing and support you in assessing where to invest your $1000. In this article, we’ll explain:
- What is the best way to invest your $1000?
- What are some other things you should do before you start investing?
- How can you gain financial freedom with the concept of Infinite Banking?
We hope that this article will help you understand the advantages of investing and aid you in opting for the most adequate way to invest your money right now.
Where to invest $1000 right now
What is the most sufficient amount of money a beginner could invest? Well, it turns out that possessing $1000 ready to invest is more than enough.
Of course, this is little money in the investing world, but you have to commence with something, raise a foundation and attain more money to invest in the future.
This is why we created a list of the best ways to invest your $1000. Which options seem most outstanding for you?
Savings accounts
Our first advice is to always put some money away in a savings bank account. This may seem like a given, but not everyone saves money the proper way.
The best action to take is to have two types of savings — one as an emergency fund and the other established for investments. For example, our rule of thumb is to put 20% of our income towards savings, no matter how big it is.
A safety net is something that everyone should have, just in case, and it should exist regardless of everything else and be tapped into only in case of a great emergency.
On the other hand, the parts of savings you can invest you can also use to put into a high-yield savings account.
The difference between a regular savings account and a high-yield one is in the rate of interest. A regular savings account has an interest rate of 0.09%, barely covering inflation, while a high-yield one has up to 20 or 25 times that amount.
This way of investing has a low-risk level, it’s FDIC-insured, so you don’t have to worry about losing your investments, has an annual percentage yield (APY) of at least 1% and gives you a faster rate of return.
Pay for your debt
Before you start investing, you have to take care of your debt. Accumulating debt can make you lose more money in the future because the interest rates keep increasing.
According to the latest statistics, around 77% of American households have some type of debt and the total of said debt is $14.56 trillion.
Consumer debt is one of the most common types of debt, and it should be resolved as quickly as possible. If you have consumer debt, the best way to invest your $1000 is to put it towards your credit cards. This can lower the interest rate for everything else you plan on getting a loan for, including mortgage and auto loans.
The key takeaway from this is not to invest money if you have a significant debt that you can’t seem to take care of. Once you start compiling debt, it may seem like it’s impossible to get rid of, but that’s not the case. The Internet is filled with sources that can support you in getting rid of debt, such as debt reduction apps and calculators and plenty of tips and courses.
Once you get rid of debt, you’ll find that the money you save is perfect for investing.
Peer-to-peer lending
Peer-to-peer lending is perhaps one of the fastest ways to get your investment back with a high-interest rate. However, it’s also one of the more risky ones.
Before, approving a loan had to be done through a bank or credit union, but online peer-to-peer lending completely cuts out the middleman and their fees. This means that the annual average return for you can range from 7% to 11%, but it can be even more.
Online peer-to-peer lending websites have made it possible for people to loan money to others and get a high return. Having $1000 to invest in peer-to-peer lending is an extremely high amount that can pay off immensely.
For example, all you need to do is spend an hour on a peer-to-peer lending website, and you can loan money to someone and get a 10% return. If you invest $1000, that return will be $100. This may not seem like a lot, but that’s for one hour of work.
You have to start from something and multiple investments like this can yield more money in the future.
On the other hand, peer-to-peer lending is risky and not FDIC-insured. You also have to research the best websites to do this on.
Online business with passive income
Of course, $1000 is not enough to invest in a large-scale business, but you can always start a side hustle.
There are plenty of side hustles experts suggest investing in. Our advice is to start an online business that lets you gain passive income.
If you work 9-5, you won’t have enough time and energy to invest in a full-scale business, but creating different content online can prove to be the best way to invest money and time if you’re patient enough. The returns for this are more visible in the long run.
The possibilities for online content creation that lets you gain passive income are plenty. You can start blogging, vlogging, creating courses or any digital goods, like ebooks or PDFs.
This isn’t as overwhelming as it may seem. Do you have any interests? Are you creative? Are you an expert in something? Do you have a lot of knowledge about a particular theme that you can share with the world? Use the Internet to do so and gain money from it.
Of course, this isn’t that simple, but there are plenty of accessible online sources that you can use to learn how to gain a following and market yourself. Always educate yourself first.
Retirement investing
Investing in your retirement is something that you can never go wrong with, no matter how early you start. If you don’t have retirement savings, starting with $1000 is more than enough to snowball from.
There are two of the most common types of retirement accounts that you can invest in. One of them is the 401k and the other is the Roth IRA.
In case your employer provides you with a retirement account and offers high matching contributions, it’s better to invest in a 401k account for your retirement.
However, if the matching rates of your employer are too low or if they don’t even offer a company-provided retirement account, the better option for you is to open an individual retirement account (IRA).
If you invest $1000 in your Roth IRA and continue investing annually, you can get an average return rate of about 7% to 10%. This depends on the types of investments you make and the market conditions, so it’s best to contact a financial advisor before choosing.
The risk level for investing through IRA varies and it isn’t FDIC-insured. Additionally, IRA accounts have an investment limit. But if you have the proper knowledge, you can make it work.
Invest in ETFs, index funds or mutual funds
The stock market can seem overwhelming and hard to navigate, but there are a couple of ways to invest that will let you earn your money back with lower risks than usual stock would.
One of these ways is exchange-traded funds, also known as ETFs. They make it easy to diversify your investment portfolio by letting you purchase various stocks and fractional shares in one single ETF.
One of the best advantages ETFs have is low-cost investment fees, or even no fees if you look for a broker with commission-free ETFs. You don’t even have to spend $1000 on them, you can invest with less than $10 and it’ll still be accepted.
Other similar types of investing are mutual funds and index funds. However, these require more considerable funds, with some even requiring minimum investments of over $1000. The mutual fund aims to beat a stock market index, while an index fund seeks to match said index and keep growing. These two are better the more you invest.
The risk level for all three of these options varies, so make sure to educate yourself and get an excellent professional broker, especially if you’re more interested in mutual and index funds than ETFs.
Individual stocks
Purchasing an individual stock through firms like NASDAQ or Robinhood is likely the most straightforward way of investing. However, you’ll still need to educate yourself about the market conditions and what this type of investing entails before establishing a brokerage account.
High commission fees in the past made it almost impossible to purchase or sell individual stocks, but today many stockbrokers offer commission-free purchases.
Still, having $1000 to invest may not be enough for big-scale companies like Amazon, whose shares keep skyrocketing. However, it may be enough to purchase stocks of plenty of other companies you like and know they have a sure future. One of these investment options could be buying shares of companies you like, although most likely not Netflix or Apple, as they aren’t as affordable.
You should check your stocks frequently to make sure you sell them or purchase more at the right time, but make sure not to do it too often. Making emotional financial decisions in the heat of the moment can be highly damaging to your financial security.
Remember to do your research, investigate all the different strategies and make sure that you’re financially stable enough to invest in a single stock before purchasing. An important disclaimer — investing products aren’t FDIC-insured and can lose interest.
Robo advisors
Instead of spending a lot of funds and time on a regular financial advisor or an investment manager, you can opt for a robo advisor. A robo advisor is a digital platform based on artificial intelligence and efficient algorithms that provides you with financial advice, investment options, best stocks, trends, and vital information that’ll help the betterment of your investment portfolio.
Utilizing financial technology is standard practice for plenty of people and for a good reason. A robo advisor investment account gives you the right solutions and investment strategies in almost no time compared to working with typical advisors. You can check your robo advisor account anytime and they usually have little to no fees.
You can invest your $1000 in a robo advisor account, but it doesn’t even take much. Most of these types of accounts require a minimum of $500, so you’re more than set.
Once you choose between some of the most popular and excellent robo advisor websites, you’re required to fill out a questionnaire about your current finances and your future financial goals. Next, the robo advisor will utilize its algorithms to establish the best investment options and stock picks based on your risk tolerance and objectives.
Robo advisors are an excellent way to handle your portfolio without too much hassle, but the risk still varies.
Real estate investment
This is a part of this list that you most likely didn’t expect. How can anyone invest in real estate with only $1000?
Well, this amount may not seem like much in the world of real estate investments, but there are still ways to make it happen.
The first option is the real estate investment trusts, also known as REITs. You can purchase REITs through a brokerage firm, just like stocks.
Purchasing a REIT lets you get a stake in the commercial real estate market without becoming a landlord or having to worry about selling the properties. Additionally, because they function like stocks, you can sell and purchase them anytime you see fit.
It’s best to start with publicly traded REITs, but make sure to purchase an Equity REIT instead of a mortgage REIT.
Another option for real estate investments is crowdfunding, but this option will cost you more. However, a couple of companies let you join real estate fundraisers with even less than $1000. On the other hand, this option is only good if you’re patient enough to wait for excellent results in the long run, with varying degrees of risk.
Cryptocurrency
The final and freshest form of investing on the market that we can advise you on is investing in cryptocurrency.
Cryptocurrency is a complex concept, but it’s best to explain it as a digitally encrypted form of payment that can be used online. Investing in crypto is most similar to investing in traditional individual stocks.
This type of investing faced a significant soar, especially in 2020 and 2021 during the pandemic, making it one of the best short-term investments available today and one of the more risky ones.
Cryptocurrencies like Bitcoin, Dogecoin and Ethereum faced significant growth and even made headlines.
However, just like individual stocks, cryptocurrency isn’t reliable and fluctuates repeatedly and even remarkably significantly. An initial investment of $1000 can become extraordinarily profitable over time, but this also takes patience. Always remember not to make emotional financial decisions and always have the proper knowledge of the market conditions.
Additionally, it’s best to invest in well-known cryptocurrencies like Bitcoin. Not only are they most likely to let you get back on your investment, but they’re also not scams. Unfortunately, the increase of cryptocurrencies in 2021 resulted in a lot of scams being created. So do your research and ensure that you’re investing in a reliable cryptocurrency!
Our most important tips before investing
Beginning your investing journey without any prior preparation can be extremely damaging to your financial future, but taking too long to prepare for investing can also e harmful. These are some of the best tips we have for everyone who wants to dabble in the world of investments.
The most crucial step is the start.
For most people, the idea of investing can seem terrifying because of the risks it entails. But you have to know that you can’t make money unless you spend it.
The risks are always going to exist, but you can educate yourself, have adequate strategies and take the proper steps to lower the chance of risk altogether. Additionally, in most cases, the chance of success is greater than the chance of losing everything.
Of course, before you begin, make sure that you’re financially stable enough to make investments. As we stated before, accumulating consumer debt will hurt you more in the long run. If you have credit card debt, you should take care of it before investing.
You should start investing as soon as possible because that lets you establish diversification of your portfolio. It’ll be less risky and you’ll be able to build compound interest on your investments.
Money is a tool
Another piece of advice we have for you is to change your mindset towards money. You always need to remember that money is a tool and you’re the one handling it.
This means that money isn’t supposed to control you. You’re supposed to control it. Money is just a way for you to live the life you want to live and reach your goals.
Once you change your mindset about money and personal finances, you’ll realize how simple it is to increase your assets over time.
Educate yourself
Another crucial step you need to take before investing in anything is doing your research. As we already mentioned in most of the different types of investing listed above, educating yourself about the appropriate investment option is the key to success and minimizes your risk levels.
This applies to simple things like choosing the best website for peer-to-peer lending or robo advisors, but it’s also applicable to problems like investing in an individual stock and other more complicated matters.
Investing isn’t a guarded secret of the few professionals. There are plenty of books and online sources you can utilize to educate yourself on smart ways to invest. Utilize this and over time, you’ll become your own financial advisor.
Have a goal, but don’t make emotional decisions
Thinking about long-term investments may seem tedious and unreliable, but it’s the best way to succeed. Know what your investment goals are before investing, don’t just go in blindly.
Do you want to invest in making money for retirement or college education? Do you want to buy a home or just build up your savings account over time just in case? Regardless of your objective, it’s just important to have an end goal in mind.
However, it’s more important to stay calm and learn how to control your emotions when investing. Investment can always fluctuate, but the key is to remain calm when everyone else is panicking.
As we mentioned before, making emotional financial decisions can be harmful. Educate yourself and stay patient.
Invest in your future
Investing can seem like an arduous and unreliable task for managing personal finances, but it’s one of the best ways to gain financial freedom.
As we mentioned above, you can invest with even less than $1000 and still profit from it. Investments don’t necessarily have to be enormous or related to the stock market. Two of the most important tips we have for you are to start investing and know your objective.
But what if we told you that there are other ways to ensure your financial freedom while utilizing the advantages of specific life insurance policies?
We’re here to teach you about the concept of Infinite Banking.
This concept can be used to help you secure your financial future and bring you additional benefits. If you want to try Infinite Banking, you first need to own a Whole Life insurance policy. Here are some of the crucial aspects of this concept you should know about.
Infinite Banking is a strategic method for utilizing your Whole Life insurance policy to create an endless banking system. To put it in other words, Infinite Banking means being your own banker.
Owning an overfunded Whole Life insurance policy has many benefits, one of them being that you can borrow money from it using your policy’s cash value and repay it later. This way, you borrow money from yourself instead of a bank, and you pay it back to yourself with the rate of return, thus becoming your own bank.
With the Infinite Banking method, you can access your financial goals and gain complete control of your finances without dealing with banks and fees.
Infinite Banking involves:
- Overfunding (with after-tax funds) a high cash value whole life insurance policy from a life insurance company.
- Accumulation of Cash Value (tax-free) throughout the years you are a policyholder of your Whole Life insurance policy.
- Tax-Free Loans taken out against your whole life insurance policy’s cash value to use for your financial expenses.
All of these aspects culminate in creating your own bank. You borrow from yourself while your Whole Life insurance policy still earns dividends even though you’re using those funds elsewhere.
No matter what your financial objectives are, Infinite Banking can help you reach them. Entering the Banking Business gives you better control over your finances and helps you build wealth using the life insurance policy.
Final thoughts
Investing is generally something that most people avoid because they believe they don’t have enough money to do it or they think it’s too risky. But, now that you know all of these new things, the essential step is just to start.
Remember that the earlier you start, the more risk you can handle and the more time you’ll provide for your investments to gain compound interest. So start investing now with new tips and strategies in mind!
We hope that this article answered all of your questions and helped you choose the right way to invest your money to ensure your financial future. We also hope that it made you interested in the concept of Infinite Banking with Whole LIfe insurance.
If you want to learn more about Whole Life Insurance and improve your personal finances, you can sign up for our premium membership to join our masterclass! We are looking forward to seeing you at the Wealth Nation community!