{"id":251,"date":"2016-01-10T09:00:55","date_gmt":"2016-01-10T09:00:55","guid":{"rendered":"http:\/\/www.investmentzen.com\/blog\/?p=251"},"modified":"2023-01-21T00:24:22","modified_gmt":"2023-01-21T04:24:22","slug":"best-way-to-invest-1000-dollars","status":"publish","type":"post","link":"https:\/\/www.investmentzen.com\/blog\/best-way-to-invest-1000-dollars","title":{"rendered":"22 Experienced Investors Share Their Best Way To Invest $1000"},"content":{"rendered":"

C<\/span>ongrats! You\u2019ve paid off your debt, have a nice healthy emergency fund, a burgeoning retirement account, and even some extra cash to spare. So what\u2019s next?<\/strong><\/p>\n

If you\u2019re in a good place financially and have some savings, it’s time to start\u00a0investing your money. While you may be a beginner investor and hesitant to take on the risk, keep it mind that starting earlier lets you:<\/p>\n

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  1. Start building your investing skillset when you’re most able to absorb risk<\/li>\n
  2. Gives compound interest the time it needs to work its magic<\/li>\n<\/ol>\n

    Even though investing $1000 is not going to make or break your retirement, building that habit of saving and investing early is a big part of how most millionaires build their nest egg, as Thomas J. Stanley and William D. Danko showed in their classic personal finance book, The Millionaire Next Door<\/a><\/i>.<\/p>\n

    So what’s the best way to invest $1,000? Before we even start talking about investing,\u00a0the general consensus is that you should keep at least 3 months worth of expenses in cash for emergencies (also known as a “rainy day fund”).<\/p>\n

    So if you don’t have that safety buffer built up yet, before you think about investing (even in safe investments with high returns<\/a>), we recommend opening a high interest savings account <\/a>at an online-only bank or at Citi<\/a>, and setting up recurring transfers from your checking account into your high yield savings account. But of course, you’d have to make sure everything is digitally secured, after all, digital security<\/a>\u00a0is a priority now, especially since we are now in the information-technology era.<\/p>\n

    This can earn you up to 1.70%, just for having cash in the bank. If your current bank account isn’t giving you a yield of at least 1.70% (as of 2020, most brick and mortar banks offer a fraction of this), you are leaving money on the table.<\/p>\n

    If you don’t currently have a high yield savings account, we recommend the CIT Bank Savings Builder account<\/a>. They offer up to 1.70% interest<\/strong> on your savings, so if you want to start earning interest on your cash savings, you can claim your high yield savings account here<\/a>.<\/p>\n

    Once you’ve done that, read on for our expert recommended “best way to invest $1,000 dollars”.<\/p>\n

    How To Invest 1000 Dollars<\/h2>\n

    With as little as a $1000<\/a>, you can start making your money work for you.<\/p>\n

    While investing 1000 dollars may seem like a small sum, almost insignificant sum (7% return on $1000 is only $70 you might be saying to yourself), it\u2019s a great foundation to build on. So now that you have the money, where exactly do you start?<\/p>\n

    Even the most seasoned investor had to begin somewhere. We asked 22 experienced investors to answer this question: if you had only a $1000 to invest, what would you do?<\/p>\n

    Editor’s Notes<\/h3>\n

    The answers from our panel offered some fascinating investing insights. Before we dive into the individual answers, let’s take a look at the numbers:<\/p>\n

    Best Way To Invest $1,000 According To 22 Experts<\/h2>\n\n\n\n\n\t\n\n\t\n\t\n\t\n\t\n\t
    Investing Approach<\/th># Of Mentions<\/th>% Recommended<\/th>\n<\/tr>\n<\/thead>\n
    Low fee index funds & mutual funds<\/td>16<\/td>72.72<\/td>\n<\/tr>\n
    Pick stocks of favorite companies\/sectors<\/td>3<\/td>13.16<\/td>\n<\/tr>\n
    Start an online business \/ side hustle<\/td>3<\/td>13.16<\/td>\n<\/tr>\n
    Professional development & education<\/td>2<\/td>9.09<\/td>\n<\/tr>\n
    Pay off debt<\/td>2<\/td>9.09<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n

    Our group of seasoned investors<\/a> overwhelmingly favored a long-term, diversified investing approach — rejecting individual stock picking and actively managed funds — in favor of low-fee index\/mutual funds that track the broader stock market.<\/p>\n

    The data seems to back up our panel\u2019s advice – a white paper<\/a> published in June 2013 by Rick Ferri and Alex Benke compared all-index portfolios against comparable actively managed funds and found that the all-index fund portfolio outperformed the actively managed funds by 83.4%<\/strong> over a 16 year period (1997-2012).<\/p>\n

    \"index<\/p>\n

    This is an important investing lesson: if low-cost index funds can get beat professional stock pickers 83.4% of the time, what chance does an amateur have?<\/p>\n

    Most rookie investors dream of picking a winning stock that quickly turns their $1,000 into $10,000 or even $100,000, but\u00a0our experts (and the data) tells us that this simply isn’t<\/em>\u00a0how investing works.<\/p>\n

    How To Start Investing In Low-Fee Index Funds<\/h2>\n

    16 of our 22 panelists suggested low-fee index funds as the best way to start investing with $1,000, and the data backs them up. Almost all of them suggested investing through Vanguard. The answer seems clear, but you’re not a financial expert, so how can you get started?<\/p>\n

    Although putting together a balanced online portfolio<\/a> of Vanguard ETFs is relatively easy to figure out, even for non-finance nerds, there is definitely<\/em> a learning curve.<\/p>\n

    If you want all the benefits of low-fee index investing but:<\/p>\n