10 Ways To Invest $1000 (Easy Ideas For Beginners)

If invested right you can double this $1000 in seven years. What's up guys I'm Rose and if you've never invested before and you want a super beginner-friendly video to break down some of your investing options, then this video was made for you. I'm gonna show you ten ways to invest $1,000 and I'll walk you through each tip step-by-step so that you'll actually be able to start putting your money to work after watching this video. The first way you can invest your $1,000 is to invest it in an index fund. An index is a tool that quickly tells you how the stock market is doing. There are lots of indexes out there like the Dow Nasdaq and a bunch of others but let's use the S&P 500 as an example because it's the most widely used stock market index. The S&P 500 is a sample set of the 500 largest companies all rolled up into one easy to read average price. So if you wanted to know how the US stock market performs in 2018, rather than looking up all 500 stocks individually you can just look up where the S&P where the S&P 500 started the year and end of the year and that would tell you how the stock market did in 2018. Although there's a lot more than 500 stocks in the United States there's actually three thousand six hundred and seventy one the S&P 500 is a pretty accurate barometer of how the overall US stock market is doing because it has the 500 largest US stocks. So back to index funds. An index fund is an investment vehicle that mirrors in index. Remember the S&P 500 index – it's just the calculated average of 500 different stock prices so you can't invest in the S&P 500 it's just a number but you can invest in an SP 500 index fund. When you invest in an S&P 500 index fund you immediately become a part owner in each of the 500 companies in that index. And if the S&P 500 index goes up 5% your investment in the index fund also goes up 5% if the SMP 500 goes down 5% your investment also goes down 5%. There's two really good reasons to invest in an index fund. The first reason is that you get safety in numbers – with an index fund you don't have to know how to pick stocks because the S&P 500 consists of 500 widely diversified stocks across different industries sectors and you don't have to be a genius to benefit from the wealth creating capabilities of the stock market. All you have to do to get on that long-term upward trend is to invest in an index fund. So if you're not interested in researching individual stocks then you have to rely on safety in numbers. This strategy is also known as diversification and it works because although not all stocks go up over the long term, the overall market does go up over the long term. The second reason is that index funds offer automatic reinvestment. This is really convenient. Once you make your initial one thousand dollar investment you'll probably want to keep adding to your nest egg, so what you can do is set up automatic monthly contributions from your bank account and the index fund will reinvest this additional cash back into the fund every single month at no additional cost, so you can literally just set it and forget it. Because everything is done for you. There's a few good S&P 500 index funds out there and it doesn't really matter which one you get – they all track the S&P 500 very closely and they're all very low-cost. So here are two you can Google to jump start your research. SWPPX and FXAIX. The second way to invest your $1,000 is to invest in an ETF. ETF stands for exchange-traded funds, and they're very similar to index funds. Just like index funds ETFs track an index and the only difference is in how they're traded. For example, SPY is an S&P 500 ETF that is the exact equivalent of the FXAIX (an S&P 500 index fund – the one that I just mentioned) and both of them are pooled investment vehicles that give you easy access to a large selection of stocks so you get access to hundreds and thousands of different stocks all with one easy purchase. But with the index fund you can only buy and sell your shares once a day, and with the ETF you can buy and sell anytime the stock market is open because it trades just like a stock. Some people prefer ETFs because they like being able to buy and sell their shares whenever they want and but however a big downside to ETF is that they don't offer automatic reinvestment so if you want to keep adding to your portfolio every month with an ETF you'd have to buy more shares of that ETF every month without additional money otherwise your cash will just sit there and will probably incur commissions and fees so if you just want something to set it and forget it and it'll just automatically automatically get reinvested every month then you should just go with index funds. The third way to invest your $1,000 is to invest using a robo advisor app. Now there's a lot of these new apps out there and they make it super convenient for you to invest. Some of them are Stash Betterment Acorns Ellevest Wealthfront and the best part is none of them really have any investment minimums so with $1,000 you're definitely good to go. These apps make it super easy – you hook up your bank, transfer over some money and boom your money gets invested in one of their cookie cutter portfolios that are professionally designed. Out of all the apps I love Acorns – it has a really cute easy-to-use user interface and it has this feature where you can link up your credit card or debit card and it'll round up every purchase you make and invest that spare change into your portfolio so if you really have a hard time saving any money then this could be a good way to just get started all these apps essentially do the same thing they'll just ask you some basic questions about your age your financial goals and your time horizon and then based on your answers they create an investor profile for you and they'll put your money into a prepackaged portfolio tailored to your investor profile these prepackaged portfolios combine a handful of ETFs that will give you well-rounded exposure to a variety of stocks and bonds it's important to note that acorns gives you and other apps like acorns give you very little control over your portfolio so you only get to choose between their prepackaged portfolios and you can't just buy whatever individual stock you want so it's the same with all the apps you're basically giving up control in exchange for convenience and simplicity so if you want to put your money to work and not have to think about it too much and you really don't want to take the time to learn to do it on your own then definitely consider investing with one of these apps the fourth way to invest is to invest in stocks using the magic formula now if you're more of the DIY type you might prefer investing in individual stocks and you probably know this but the stock market right now is that all-time highs and it's been making record highs and highs and has been on the longest bull ru