Any business would need funding. One of the toughest phases of investing in uncertainty – and that you have to get over in order to get started.
When you have $1,000 or less to invest, there may seem to be only a few options. But the good news is some of the wealthiest investors in the world started somewhere. And though it doesn’t get a whole lot of publicity, there are actually numerous options available for your small amount of money. We list the best way to invest that $1,000 and make it grow into a bigger nest egg.
But before we get into the investment options, it’s important to realize there are some caveats to investing when you’re just starting out.
You have to cover your bases. This means you need to pay your debt so you start with a clean slate. You should also research and determine your investment goals so you can figure out what investment strategy fits your profile.
Here are different tried-and-tested options on how to invest $1,000 right now:
- Motif Investing. If you’re more adventurous when it comes to investing, Motif Investing could be the best choice for you. Motif is based on creating mini-mutual funds, called motifs. But these aren’t your grandfather’s mutual funds. The motifs are unconventional conglomerations of up to 30 stocks or ETFs. The motif is typically based on a very narrow concept, such as solar heating in China or organic restaurants. The platform has more than 150 motifs offered by the site, but thousands more are created by participants. Or for the adventurous, you can create your own. For $9.95 and a minimum of $250, you can invest in a single motif. With $1,000 you could invest in four of them (allowing of course for the $9.95 fee for each). The beauty of Motif is for very little fees you can be diversified into a mix of up to 30 funds.
- This is your best option for retirement planning. Betterment determines your risk tolerance and then builds a portfolio of exchange-traded funds (ETFs) that are consistent with that tolerance. The entire service is automated, which means you invest your money and let the platform handle it for you. There’s no trading and no rebalancing; Betterment handles it all on your behalf. There’s no account minimum with Betterment. Your fee will be 0.25% of the account balance per year. This will enable you to accumulate a steadily larger balance without having to pay ridiculously high fees. Betterment is the perfect a retirement account since it offers a combination of professional management, diversification, low fees and no account minimum.
- Acorns is a somewhat a unique investing app which takes your spare change from every purchase you make. When you buy your favorite chicken burrito at Chipotle for $6.50 Acorns will round up to $7.00 and invest $0.50 from your checking account. Acorns can do this with every purchase you make. As you can imagine, this can start adding up very quickly.
It’s an easy and painless way to start investing with very little money. In fact, we recommend Acorns as our best microsavings service. Acorns makes the service simple and does the investing heavy lifting for you. The service costs $1/month when you have under $5,000 and 0.25% per year after that.
If putting your money into investments that have risk of principal is something you’re not comfortable with, you can always opt to keep your money in your bank. Though right now the returns are small, they’re the best places to start building a nest egg. If nothing else, you’ll never lose money on the investments you make.