How to Invest Your First $1000: 10 Best Investments for Beginners
Investing your first $1000 is key to building wealth and securing your financial future. For beginners, investing can be scary but with the right knowledge and strategy, you can make your money work for you. In this post, we will show you how to invest $1000, and 10 of the best investment options to get you started.
1. High Yield Savings Account
A high yield savings account is the safest place to put your first $1000. Unlike a regular savings account, high yield accounts offer higher interest rates so your money grows faster. These accounts are offered by online banks which can pay more because they have lower overhead costs.
Pros:
- Low risk
- Quick access
- Higher interest rates than regular savings accounts
How to Get Started:
- Research high yield savings accounts from banks
- Open and fund $1000
2. Certificate of Deposit (CD)
A Certificate of Deposit (CD) is a time deposit account that offers a fixed interest rate for a set term, from a few months to several years. CDs are low risk so they’re a great option for beginners with $1000 to invest.
Pros:
- Guaranteed returns
- Low risk
- Higher interest rates than savings accounts
How to Get Started:
- Compare CD rates and terms from different banks
- Choose a term that fits your goals and open a CD
3. Exchange-Traded Funds (ETFs)
Exchange-Traded Funds (ETFs) are investment funds that trade on stock exchanges like stocks. ETFs offer diversification as they typically hold a basket of different assets, including stocks, bonds or commodities.
Pros:
- Diversification
- Lower fees than mutual funds
- Flexibility to trade like stocks
How to Get Started:
- Open a brokerage account
- Research ETFs that fit your investment goals
- Invest your $1000 in one or more ETFs
4. Stock Market
Investing in individual stocks can be fun to grow your $1000 but it comes with higher risk than other options. Just do your research and invest in companies with strong fundamentals and growth potential.
Pros:
- High returns
- Company ownership
- Dividends
How to Get Started:
- Open a brokerage account
- Research and pick stocks
- Invest $1000
5. Mutual Funds
Mutual funds gather money from multiple investors to invest in a diversified portfolio of stocks, bonds or other securities. They are managed by professional fund managers so if you want a hands off approach this is a good option.
Pros:
- Diversification
- Professional management
- Access to many assets
How to Get Started:
- Open an account with a mutual fund or through a brokerage
- Research and choose mutual funds that match your investment goals
- Invest $1000 in the chosen mutual funds
6. Real Estate Investment Trusts (REITs)
Real Estate Investment Trusts allow you to invest in real estate without buying physical property. REITs are companies that own, operate or finance income-producing real estate and pay dividends to shareholders.
Pros:
- Real estate exposure without property ownership
- Dividends
- Liquid (traded on stock exchanges)
How to Get Started:
- Open an account
- Research REITs that fit your strategy
- Buy with $1000
7. Cryptocurrencies
Cryptocurrencies like Bitcoin and Ethereum are high risk high reward. Volatile but popular as an alternative investment.
Pros:
- High returns
- Diversification
- Exposure to new financial tech
How to Get Started:
- Open a crypto account
- Research and choose cryptos to invest in
- Buy $1000 worth of cryptos
8. Micro-Investing Apps
Micro-investing apps let you invest with small amounts of money, so they’re perfect for beginners. These apps round up your daily purchases to the nearest dollar and invest the change in a diversified portfolio of exchange-traded funds (ETFs).
Pros:
- Start with small amounts
- Automated investing
- Diversification
How to Get Started:
- Download a micro-investing app like Acorns or Stash
- Link your bank account and set up round-ups
- Invest $1000 and the change from your daily purchases
9. Robo-Advisors
Robo-advisors are automated platforms that manage investments through algorithms. Perfect for beginners to invest $1000 as they manage the portfolio and rebalance for you.
Pros:
- Low fees
- Automated portfolio management
- Customized investment plans
How to Get Started:
- Choose a reputable robo-advisor like Betterment or Wealthfront
- Take the risk assessment to determine your investment strategy
- Deposit $1000 and let the robo-advisor do the work
10. Index Funds
Index funds are mutual funds or ETFs that track a specific market index, like the S&P 500. They’re a simple and cheap way to get broad market exposure.
Pros:
- Diversification
- Low cost
- Index returns
How to Get Started:
- Open a Brokerage Account: Use Vanguard or Fidelity.
- Research Index Funds: Choose index funds that track major indexes and invest $1000 in one or more of those funds.
Final Thoughts
Your first $1000 is a big deal. Try these 10 investments and see what works for you. Remember, the key is diversification, research and long term. Start with these beginner investments and you’ll be off to a good start.
More Resources
Thank you for reading our guide to investments for beginners. To keep learning and developing your knowledge of investing, we highly recommend the additional resources below:
