Saving and building your earnings for the future is important. One of the key points is to start early. If you have some money saved up, but are not sure what investment route to take, here are five wise ways to invest $1,000:
1. Open a money market account. Saving your $1,000 in a money market account, or a higher-interest savings account, can help you to earn more money on your savings. Instead of stashing your money away at home, save it in a higher-interest earning account to earn more on your money.
2. Bump up retirement contributions. If you are just getting started as an investor, a good way to put your investment money to work is to add funds toward your 401(k) or IRA account. An extra $1,000 may not seem like much over a year, but the result is a larger sum later down the road. It has been proven that because of compound interest, your money will grow faster the earlier you start.
3. Buy fractional shares. Fractional shares allow you to get the most of your every dollar. The $1,000 can be used to open an account through a platform like ShareBuilder, where you can select from a variety of investments like stocks and mutual funds.
4. Research mutual funds. Knowing where to invest is not straightforward, but mutual funds can remove some of the guesswork of the process. Researching to find the right option is important. To find an in-depth breakdown of a fund's performance, start with Morningstar. It also offers a useful investment tool that examines your investment portfolio - revealing an overlap in terms of market exposure, and showing the combined fees and expenses of your holdings.
5. Take care of high interest debt first. If you have high interest debt, like credit card debt or high interest student loans, invest your $1,000 in knocking down that debt. Putting an extra $1,000 toward the balance can make a dent in lowering what you owe, and can help decrease the interest you will have to pay.
BONUS: Invest in YOU! Take the extra $1,000 to invest in your skills and development. Take a class that will help you advance in your career, start a side business, build a profitable website, or learn a new skill. While there may be risks associated with these choices, they may help maximize your odds of success!
Good luck investing!