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Did you know that you’d only earn about $8 in interest if you put $1,000 in a savings account for 10 years? Where to invest 1000? The national average interest rate for savings accounts is a measly 0.08%, which is a drop in the bucket compared to the potential returns you could get if you invested that money instead of leaving it in a regular savings account.
Of course, the next option – Certificate of Deposit – isn’t much better, with current rates hovering around 1-2% for 24-48 month terms ($40 in interest for a $1,000 CD at 24 months or $82 for the same amount at 48 months). Savings accounts are good for having easily accessible cash in case of emergencies and CDs are useful for stable growth at a guaranteed rate of return, but neither of these options is ideal for maximizing your returns on investments.
Rather than letting $1,000 languish in a low-interest savings account, here are some financially savvy alternatives to consider where to invest 1000.
Invest the Money
There are so many ways to get 7-8% or even 10% returns on investment by strategically placing your spare $1,000 in an investment account. For instance, you could invest with Betterment by opening an account (general investing, everyday savings, dedicated fund for one of your long-term financial goals, etc.) and letting the advanced investing algorithm determine how to optimally allocate your cash between various stocks, bonds, mutual funds, and ETFs. Betterment charges just 0.25% annually to manage your account; no costly hidden fees or surprise fee hikes with this personalized robo-advisor platform.
You could also invest in individual stocks with M1 Finance. Unlike most online investment services, M1 doesn’t charge any account management fees or commissions; they make their money through interest on margin accounts and cash reserves so individual investors can enjoy their service free of charge. Why would you waste $5-10 or more on account management and/or brokerage fees to invest your $1,000 when you can put every penny towards your new investment fund instead?
If you’re wary of investing in individual stocks or yousimply want more diversity for your portfolio, another good option is Stash Invest, whichrequires just $5 to start investing in a variety of ETFs that align with yourpersonal investment goals and lifestyle. For example, an eco-conscious investorcould select environmentally friendly companies and green tech manufacturers. StashInvest costs just $1 per month for accounts with balances lower than $5,000 (otherwiseit’s a 0.25% annual account management fee), which makes it a low-cost andbeginner-friendly option for investors who want access to more than justindividual stocks.
Finally, did you know you can get involved in commercial real estate investments for as little as $500? Fundrise was designed to help everyday investors access the lucrative commercial real estate market through lowered entry barriers ($500 or $1,000 for an “advanced portfolio”) and low management fees. Several properties owned by Fundrise and its investors have produced annual gains in excess of 10-12%, so this is an ideal option for people seeking higher returns on their investments and greater diversification for their portfolios.
If you’re looking for places where to invest 1000, you might want to check out investing withBettermentorStash Invest.
The newest robo-advisor on the market calledM1 Financegives the more established, sophisticated investors great investing options.M1 Financesimplifies the investment process for beginning and experienced investors alike. Unlike other robo-advisors, M1 Financedoes notcharge a fee, and it gives you the option of taking more control over your investments if you want them (and less if you don’t).
Consider a LifeInsurance Plan
Even if you already have life insurance throughyour employer, it likely isn’t enough to cover your expenses andfinancially protect your loved ones in case you unexpectedly pass away. Manyfinancial professionals recommend you have life insurance coverage worth atleast 8-10X your annual salary, while most employer-provided life insuranceplans cover maybe 1-3X your annual salary.
With this in mind, putting that extra $1,000 into your ownlife insurance plan could be worthwhile, as long as you choose a reputableinsurance company and get the personalized coverage and amounts you need foryour living situation. Haven Life is renowned for offering exceptional termlife insurance policies online, with the added bonus of being able todetermine whether you’re approved within minutes instead of having to wait formultiple medical exams and lab tests to be processed.
Prior to taking out a new life insurance policy, be sure toconduct some research beforehand. Should you get term or whole lifeinsurance? $500,000 or $1,000,000 coverage? Exam or no exam? 20 years or 30years? Ensuring you know exactly what you need before contacting insuranceagents is important if you want to avoid being overcharged or oversoldsomething you don’t want or need.
Pay Off Debts
A final thing where to invest 1000 is paying off debts. If you have student loans, an extra $1,000 payment can potentially shave 2-4 months off your payment timeline. If you have a mortgage, an extra payment of $1,000 may not reduce your pay-off timeline, but it could help you save money on interest and build equity while you’re at it (which is even more important if you’re currently paying PMI).
If you have credit card debt then itwould be a no-brainer to put the extra $1,000 towards that debt, especially ifthe interest rate is 10% or higher. Think about it: you earn $8 in interestover a decade for a $1,000 deposit in a regular savings account, right? For a$1,000 balance on a credit card with a 20% interest rate, you’ll pay over $200in interest in just 25 months if youkeep up with $50 minimum payments, rather than paying off the $1,000 balanceentirely in one swing.
Recap: What to Do witha Spare $1,000
Don’t let your money go to waste in a regular savings account. There are so many better ways to make your money work for you and actually keep up with inflation and where to invest 1000 (leaving money in a savings account actually decreases the value of it, when you compare interest rates and inflation rates).
Whether you decide to invest the money with a robo-advisor, take out another life insurance policy, and/or pay off debts, you’re sure to get more bang for your buck than if you left it alone in a low-interest savings account or CD.
