How to Invest $1,000 – 15 Best Ways to Invest $1k in 2020

1. Robo-advisors – Low-risk strategies aim for 5% per year

Robo-advisors are a new breed in the financial investment space. They essentially act as a virtual financial planner, building their investment strategies via artificial intelligence and machine learning. This means that you can obtain assistance on which investments to back, without needing to pay huge fees to traditional financial advisors.

How to invest in Robo-advisors?

If you’re keen to invest your $1,000 via a robo-advisor, then you might want to consider M1 Finance. With more than 25,000 users and over $100 million in client funds, M1 Finance is an industry leader in the Robo-advisor space. One of the main attractions is that the platform does not charge any fees or commissions, and you can get started with an investment of just $100.

 

Step 1: Register an account with M1 Finance by providing a range of personal information

Step 2: Answer some questions regarding your financial circumstances (net worth, risk tolerance, etc.)

Step 3: Choose which account type you want (individual, joint brokerage, retirement or trust account)

Step 4: Deposit some funds

Step 5: Set-up your robo-advisor parameters (risk levels, auto-invest, etc)

Step 6: If you like the strategies that the robo-advisor suggests, then choose how much you want to invest

Pros and cons of investing in robo-advisors

2. StashApp – Aim for 5% per year by diversifying your risk

If you’ve got $1,000 to invest, but you want to start with really small amounts, then we would suggest looking at StashApp. The platform allows you to invest in hundreds of stocks, funds, and bonds, essentially allowing you to build your own portfolio. The key selling point to StashApp is that you can get started with just $5. Once you start to get more comfortable, you can begin to increase your exposure.

How to invest with StashApp?

As the name suggests, you will need to download the native mobile app to get started with StashApp. It’s available to download free of charge on both Android and iOS devices.

 

Step 1: Head over to the Google Play or iTunes Store and download the StashApp application to your phone

Step 2: Open an account

Step 3: Provide your social security number and verify your identity

Step 4: Deposit some funds

Step 5: Browse the vast range of stocks, bonds, and fund available

Step 6: When you’ve chosen an asset to invest in, choose how much you want to invest and complete your trade.

Pros and cons of investing with StashApp

3. Stocks and Shares – Up to 10% per year

The stock market is an excellent way to increase your $1,000 over time. There are literally tens of thousands of companies that are now publically listed, which is great if you’re looking to diversify. When you buy stocks and shares, you’ll be looking to make money via two key methods. Firstly, you’ll hope that the price of your shares will increase over time, and when you decide to sell them, it will be for a higher price than you originally paid. Secondly, a lot of companies pay dividends. This is where companies share some of their profits with shareholders, and this is usually between 2-4% every year.

Note: Instead of investing your entire $1,000 in one company, you should instead lower your risk by buying shares in multiple companies. In fact, choosing 10 or more companies from multiple sectors would be a very smart move.

4. U.S. Treasury Bonds (T-Bills) – Around 1-2% per year

If you want to invest your $1,000 into one of the safest markets in the world, then you should consider buying some U.S. Treasury bonds. This is where you lend money to the U.S. government, and in return, they will pay you interest. When the bonds expire, you then receive your original $1,000 investment back in full. You can buy U.S. Treasury bonds, or simply “T-Bills”, both short-term and long-term. In fact, T-Bills can be purchased on a 3-month basis, all the way up to 100-years! In terms of risk, the only way you would lose your investment is if the U.S. government collapsed, which in reality, is never going to happen.

Note: Don't forget, you can't get your money out until the bonds expire. Only buy bonds for a duration that you can afford not to touch your $1,000 investment.

5. Cryptocurrencies – Jan 2019 – May 2019 – Bitcoin +122%

If you have a higher appetite for risk, then cryptocurrencies could be a good destination for your $1,000 investment. Cryptocurrencies such as Bitcoin are highly volatile, however, on the other hand, they offer opportunities to make big gains in a small period of time. For example, while Bitcoin was worth less than 1 cent in 2009, the cryptocurrency hit almost $20,000 in late 2017. There are now more than 2,000 different cryptocurrencies to choose from, meaning that you can diversify your holdings. Other notable cryptocurrencies include Ethereum and Bitcoin Cash.

Note: Cryptocurrencies are on the most speculative, high-risk asset classes in the investment space. While double-digit growth in a single day is not uncommon, the markets could equally go the other way.

6. Real Estate – 5-15% per year (rent and appreciation)

Real estate is not only one of the safest assets out there, but it also yields some highly lucrative returns. Although you won’t be able to buy a house with your $1,000 investment, did you know that you can now buy a fraction of a property? Known as crowdfunding, companies such as PropertyPartner allow you to buy shares in a property, meaning that you will be accustomed to both monthly rental payments, as well as appreciation gains.

How to invest in real estate with $1,000?

If you want exposure to the real estate industry, but you’ve only got $1,000, then you’ll be best using a crowdfunding platform like PropertyPartner. You’ll pay just 2% in fees when you make an investment, however, it is highly likely that you’ll make this back within the first year – both in the form of rental yield and appreciation.

Step 1: Open an account with Property Partner

Step 2: Verify your identity (upload a copy of your government issued ID)

Step 3: Choose the property that you want to invest in

Step 4: Enter the amount that you want to invest

Step 5: Enter your debit/credit card details

Step 6: Complete your purchase

Pros and cons of investing in real estate

7. Peer-to-Peer Lending – 4-7% per year

Although peer-to-peer lending is a rather new investment class, the phenomenon appears to be hugely popular with low-level investors. As such, it’s perfect if you only want to invest $1,000. The way peer-to-peer lending works is you loan-out money to another person, and in return, you earn interest. Therefore, you are essentially performing the role of a bank. Interest yields average 4-7%, depending on the credit rating of the person you are lending money to.

How to invest in peer-to-peer lending?

If you like the sounds of peer-to-peer lending, then we would suggest looking at LendingClub. The platform is a market leader in the peer-to-peer lending space, and even better, they allow you to get started with just $1,000. You also have the option of diversifying your risk, by loaning money to multiple people. This way, if one person defaults, you won’t feel the effects as much.

 

Step 1: Open an account with LendingClub

Step 2: Answer some questions to ensure you are eligible to lend-out money

Step 3: Verify your identity

Step 4: Browse the many different loans on offer. Each option will have a risk level attached to it and a fixed yield

Step 5: Once you’ve decided which loans you want to back, deposit some funds

Step 6: Complete your investment

Pros and cons of investing in peer-to-peer lending

8. ETFs – Up to 10% per year

Exchange Traded Funds, or simply “ETFs”, allow you to track an asset or group of assets. For example, instead of buying shares in the top 500 U.S. stocks individually, you can simply invest in the S&P 500 ETF in a single trade. ETFs can be purchased in virtually any sector, including but not limited to stock markets, commodities, real estate, and even marijuana!

Pros and cons of investing in ETFs

9. Invest in a New Business Startup – Up to 15%

Imagine having had the chance to invest in Apple when Steve Jobs was still operating out of his garage? Well, although this might sound a bit extreme, you might want to consider investing your $1,000 into a new business startup. Although you might not see any returns for some time, if the company does become highly successful, your gains are likely to follow suit. Other opportunities lie in loaning money to new and exciting startups.

How to invest in a new business startup?

If you’re only looking to invest $1,000 into a new business startup, then you’ll need to use a well-known crowdfunding platform. This means that your stake in the company will be proportionate to the amount you invest. One of the leading crowdfunding platforms in this respect is Crowd2Fund, who allow you to back small British businesses that need help with funding. The platform claims that annual returns can amount to up to 15%.

 

Step 1: Open an account with Crowd2Fund

Step 2: Deposit some funds by using a debit/credit card

Step 3: Take some time to scroll through the many different small businesses that require help with funding

Step 4: Choose how much you want to invest (minimum is £10, so USD equivilent)

Step 5: Confirm the investment

Note: Although funding small business startups offers some excellent annual returns, the risk is also high. If the new startup doesn't quite make it, they could default on their payment.

10. Commodities – Depends on commodity – 5-15% per year

The commodity investment space is a multi-trillion dollar arena. Commodities refer to physical assets such as gold, wheat, diamonds, silver, and oil. Although commodities don’t pay dividends or interest payments, they are viewed as a store of value against turbelent financial markets.

Pros and cons of investing in commodities

11. Savings Bonds – 1-3% per year

Savings bonds are of a similar nature to savings accounts, however, the interest payments on offer are much higher. You are essentially lending money to a bank or building a society, who in return, will pay you regular interest payments. Expect to earn between 1-3% per year. Very low risk, especially if investing with an established financial institution.

How to invest in Savings Bonds?

Once you’ve decided which savings bonds you want to invest in, you will need to open an account with the respective bank or building society, and then transfer funds across. You’ll receive regular interest payments (quarterly or annually), and then your original investment back once the bonds mature. An attractive savings bond currently available is that of QIB (UK), who are offering 2.05% interest for just a 1-year term.

Step 1: Open an account with QIB (UK)

Step 2: As QUB (UK) is a financial institution, you’ll need to verify your identity

Step 3: Decide how many bonds you want to buy, and then transfer the funds across via bank transfer

Step 4: At the end of the 1-year term, you can withdraw your investment (plus interest payments) back to your bank account

Pros and cons of investing in savings bonds

12. Mutual Funds – Aim for 10%+

If you want to invest $1,000 into the financial markets, but you want somebody else to manage your funds on your behalf, then you should consider a mutual fund. An experienced fund manager will buy and sell investments on your behalf, for a small annual fee.

How to invest in mutual funds?

The easiest way to invest your $1,000 into a mutual fund is via an online broker. Hargreaves Lansdown, for example, allows you to choose from dozens of leading mutual funds. The platform charges an annual fee of 0.45%, which is good value, as you won’t need to choose the investments yourself.

Step 1: Open an account with Hargreaves Lansdown

Step 2: Deposit funds using a debit or credit card

Step 3: Head over to the funds section and decide which mutual fund you want to invest in

Step 4: Enter the amount you want to buy, and complete the trade

Step 5: You will receive dividends directly into your Hargreaves Lansdown account

Step 6: You can cash out your $1,000 investment at any time

Pros and cons of investing in mutual funds

13. Help Fund Property Developers – 8-12% per year

If you want to invest $1,000 into the real estate industry, but you don’t want to have your funds tied up long-term, then you should consider investing in property developers. These are companies responsible for building real estate, who subsequently need cash to help fund projects. By loaning money to the property developers themselves via crowdfunding, you can expect to make between 8-12% in annual interest.

How to invest in property developers?

The leading property development funding platform is the Property Crowd. You can choose from a number of different projects to back, each with their own yield and loan period.

Step 1: Open an account with the Property Crowd

Step 2: Deposit funds using a debit or credit card

Step 3: Spend some time looking at the different projects that need funding

Step 4: Choose how much you want to invest in your chosen project

Step 5: At the end of the term, withdraw your original investment (and interest payments) back to your bank account

Note: The most important thing to remember before investing in property developers is that you should do a lot of research on the company. Only choose developers that have a strong history of building real estate projects.

14. Penny Stocks – Make or lose 20%+ in a year

If you want to invest your $1,000 into a high-risk, high-return marketplace, then you might want to consider penny stocks. These stocks are generally issued by really small companies with low liquidity levels. As such, the marketplace is extremely volatile. While on the one hand returns can be huge, as can the losses. If you do invest in penny stocks, make sure you diversify by holding multiple stocks.

Pros and cons of investing in penny stocks

15. The Legal Marijuana Industry – Aim for 5% per year

With dozens of countries of legalizing medical marijuana, and the likes of Canada, Uruguay and 9 U.S. states legalizing it recreationally, the marijuana industry could be a really wise investment. Although the legal side of the industry is still in its infancy, you can still make an investment with ease. You have the choice of backing established Marijuana companies (such as growers), or instead, investing in an ETF.

 

Pros and cons of investing in the legal marijuana industry