How To Start Investing With $1,000

How To Start Investing With $1,000 by CF Lieu - Certified Financial Planner Malaysia

More and more people realize the importance of investing and how it can help make your money grow over time. However, not all that know of this information have taken action to start an investment. Aside from being reluctant about where the money could end up in the coming years due to the fear of uncertainty, another reason for the low turnout of investment is due to the lack of information and knowledge on how to start investing. We’ll discuss some of the ways you can start an investment with just $1,000.

Start with Low-fee Index Funds

The good thing about starting with a $1,000 investment is that you have a minimum fee at this amount and you will still be able to see an ample dollar-value return. The majority of investors that you are going to ask will recommend that the best way to invest $1,000 is through low-fee index funds, which is logically a good way to start. It doesn’t involve actively managing your funds and is a diversified investment approach. The only catch is your investment will involve a long term (at least 15 years) for you to be able to clearly see the results of your investment. If you are new to the investment scene and you want a good start with your $1,000 investment, you can have an expert or a Robo-advisor do the financial planning for you to make sure investment steps.

Start Investing in Equities

Another one of the most convenient and traditional ways of starting off a modest investment is through investing in equities such as stocks, mutual funds of stocks and exchange-traded funds (ETFs) comprised of stocks. Equities offer a 7% average return over a long time period. This has been the trend over the last 60 years. This is still a higher return rate than other investments and a less risky option if you’re still beginning your investment journey.

Consider Investing in Debt

Although we know of certain situations where debts can be scary and risky, when it comes to investment, investing in debt can possibly work in your favor. Bonds and Treasury securities essentially work like you are investing in debt. You may be familiar or might have even received savings bonds when you were younger. This is an example of an investment in debt issued by the US government.

How To Start Investing With $1,000 by CF Lieu - Certified Financial Planner Malaysia

Investing in bonds can be likened to lend money to the government or a corporation and you are paid the interest in exchange. Treasury bonds are a safe and steady investment due to it being backed-up by the US government. The interest may not be as high as corporate bonds, but you are ensured of a secure and continuous return. If you are willing to take the risk, you can invest in corporate bonds to get more interest paid back to you. However, you have to be prepared for the risk of the possibility that the company could go bankrupt.

Invest with a Robo-advisor

If you are still unsure of how to go about the first three options or if you are very skilled when it comes to investing on your own, a Robo-advisor can be a helpful companion and assistant for you. Simply put, Robo-advisors are investment companies that developed an automated software designed to automatically allocate your investments between stocks and bond ETFs. Robo-advisors do much of the work in your investment and they also provide information and updates regarding your investment performance, holdings and more.

There are many ways to start investing with $1,000. You just have to weigh your options and consider which type of investment works best for your lifestyle and financial preferences. Investments don’t need to start out big, but they need to start outright. Being able to consider investing your $1,000 is already a good start for your journey to financial independence, so choose from your investment options wisely.

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