There was a time when only big
institutions and people with a lot of money had access to the stock
market. Now you have apps that automatically reinvest your spare
change in ETFs and other products.
The world of investing has changed a
lot and gives more opportunities for the small person on the street
to start building a portfolio. While $1000 is not the best amount to
start investing, it's still enough to take advantage of many
investment opportunities. Here are a few ways you can invest $1000.
Put it in a
High-Interest Savings Account
A high-interest savings account will
not give you the best returns, but it's the surest way to invest
your money. It might take you a lot of time for that money to grow,
but you won't have to worry about blood baths on the stock market
and it doesn't demand too much expertise. Investing is not for
everybody, and if you can't handle the risk and don't understand it,
it's a bad idea to even consider it, so think about this option.
Get Into the Forex
The forex is often pushed on beginners
with little experience and money, and it does have its advantages.
The fundamentals of currency trading are something most people
understand, which makes the concept of forex easier to grasp. It's
also possible to open an account for as little as $100. So that's
two points in favor of the forex.
One thing, however, is that it's not
necessarily the most beginner-friendly investment method. Timing
movements on the forex is much more difficult than on the stock
market. It's much easier to gauge the reaction to news when you're
talking about stocks than currencies.
This is why you shouldnít assume that
you can come in and
start trading the news. If you want to be successful in the
forex, you will need to master technical indicators as they are the
main factor influencing decisions on the markets. You should also
know that itís almost impossible to make good money on the forex
with little starting capital unless you use leverage.
If you donít know how leverage works,
it allows you to control more money than you actually put in. For
instance, if a broker offers you a 1:20 leverage ratio, this means
that you can control a $20 position while putting only a dollar
down. This is done by the broker lending you the money to make up
Leverage can be both great or
disastrous depending on how you use it. We would suggest that you do
not go over 20x leverage if you want to stay on the safe side. We
also suggest that you think twice about trading exotic pairs as they
may be more volatile and not as liquid.
ETFs are the hot new kid on the block
and the word on everybody's lips. ETFs are similar to bonds in many
ways but are traded on the open market just like bonds. Like bonds,
these allow you to invest in a portfolio of industries, and you can
track an ETF's performance to choose which one would be the most
At the same time, you can trade these
just like stocks, so you can use them to be for or against certain
companies or sectors. ETFs also allow you to track the movement of
indices like the S&P 500 or the Dow.
Investing in Stocks
This is one of the most traditional
ways to invest in the stock market. Buying a piece of stock
literally means that you are now a part-owner of a company. But not
all companies will share a part of their profit. Those who do pay
investors back with dividends.
If you have a nice portfolio with
solid companies with a great future and a good financial strategy,
these dividends could keep paying back your whole life. Weíre not
saying youíre going to get rich overnight here. But it could help
you if youíre trying to build a nest egg for the future and you
If you want to
learn to buy stocks, we suggest you check out WealthSimple. They
have a helpful beginner's guide on how to trade stocks and some of
the best options for beginners. They also explain a few strategies
that you can use as well as how to spot when a stock is worth
Start a Business
Thereís also nothing that is stopping
you from investing in yourself and starting a business. You donít
even need that much to start one. You could start a blog or website
with as little as $50 a month and start making money.
Here, it would be wise to invest some
of that money in education. There are
plenty of online classes you could join, and you could try to
get skills that will help you build a sustainable business. We
suggest you look into courses that will allow you to sell or use
your skills, such as web design, writing, or advertising.
Once youíve done that, you can start
looking at different business models. Do you want to start a blog
and monetise it? Do you want to sell services? Or maybe you want to
start an e-commerce site?
Know that these are all attainable
ways to make money online, but all of them demand hard work and
dedication. Your best bet here would be to get someone to mentor you
and give you advice based on experience. The next step is having a
solid plan with a proven business model and executing.
One thing you shouldn't do, however,
is wait until everything is absolutely perfect before getting
started. This is the time for trial and error, and you'd be
surprised at what the world's greatest sites looked like when they
were first launched. So, don't be afraid to fail and take a little
bit of risk.
Robo advisors are a great option for
people who may not have the expertise needed to invest in products
like ETFs, stocks, and bonds, but donít want to hire a financial
planner. These can cost a lot of money, and a lot of people donít
realise that theyíre not in the obligation to give you the best
advice even if they know a certain option would be better for you.
Many of them are incentivised to push
certain products, and itís completely legal for them to do so as
long as these products are deemed ďacceptableĒ. So, you canít take
financial planners at face value.
Robo advisors, on the other hand, will
start building investment strategies for you using advanced
algorithms and artificial intelligence in some cases. They will
start by asking you a series of questions. A lot of these will be to
assess your tolerance to risk.
Whatís great about robo advisors is that you donít have to go for
their picks. If you donít like the strategy, you can always adjust
it based on what you need. Another thing you can do is adjust the
level of risk and the financial instruments youíll be investing in.
For instance, you could go for riskier
investments when youíre younger and lower the level of risk with
time to give you a better guarantee on returns. Robo advisors are
also one of the cheapest and most accessible ways of investing.
Cryptocurrency is another investment opportunity that is
often presented as beginner-friendly. But cryptocurrency is a very
tough asset to invest in, and you should be on your guard before
spending too much money on crypto.
One of the biggest issues with crypto
is the uncertainty in the markets. This is by far the most volatile
of all assets on this list. Cryptocurrencies can go to zero
overnight, and we've seen it before. While bitcoin is not likely to
go to zero any time soon or ever, a lot of its movement is
befuddling even experts in the field.
Buying and trading crypto is also not
as simple as many people might think. For one, coins like bitcoin
have very high fees and make it virtually impossible to trade small
sums, so that's an obstacle both for trading and adoption. It also
can't handle many transactions per second.
You also have to get yourself a crypto
wallet which is a piece of software or hardware that stores your
private and public keys which are crucial for exchanging and storing
transactions. This wallet can also be lost, and your coins along
with it, so that is something you'll have to think about before
putting all your money into the crypto basket.
Here, we would suggest that you do
your research on any cryptocurrency before you invest in it. Learn
about the different types there are out there (privacy coins, stable
coins, payment currencies, blockchain economies) and learn how to
read a white paper. Just like anything else, you should know what
you're investing in, so if you're just doing so because it's the
cool thing to do, you're asking for trouble.
These are all great ways that you
could start investing even if you have limited capital. Now that you
have more options, you can start looking at which ones would fit
your investment style and objectives the best.