Where Should You Invest Your First $1,000?

Do you have an extra $1,000 that you want to invest but don’t know where to stash it?

If you’re like me you’ve never had a company 401k plan to invest in. That means when it comes to investing you have to do some research and pick the options that best suit your needs. I’ll be the first one to admit: getting started with investing is intimidating!

Luckily you don’t have to have a large amount of money to get started investing. If you’ve got an extra $1,000 saved up and you’re ready to get started here are some options you have.

Invest $1,000 in Mutual Funds

Mutual funds are managed investments that are spread out among a number of assets such as stocks, bonds, and short term debt. A pool of investors put money toward mutual funds and then each investor gets to claim part ownership of the mutual fund.

There are several mutual funds you can invest in however, not all of them can be started with $1,000. You’ll need to do a little research to find mutual funds that you can open for $1,000 but most will require that you deposit a minimum of $25 per month after opening the account.

Invest $1,000 in a DRIP

DRIP stands for dividend reinvest plan. A DRIP is a plan that automatically uses dividends from a stock to buy more shares of the stock. The good thing about DRIPs is that you normally only have to purchase one share of a stock to get started. This means you can actually start investing in DRIPs for less than $100.

The first investment I ever made was one share of McDonald’s stock. (Don’t ask me the logic behind choosing McDonalds because there wasn’t any I was just ready to get started and pick McD’s in the heat of the moment.) The point is that McDonalds is just one of many stocks that pay dividends. Had I done a little legwork beforehand I would’ve invested in McDonald’s DRIP.

Invest $1,000 in a Certificate of Deposit

If you’re looking for a low risk investment you could open up a CD. Keep in mind though that CD’s bring very little return and you have to put your money up for a specific period of time.

That means you’ll have to wait until the end of the CD’s term before you can put your money elsewhere if you do decide to take a different investment route.

You can read all about certificates of deposit here.

Invest $1,000 in Yourself

Is there a certain class or certification that if you took would enhance your career? If so, investing that $1,000 in yourself could be the best bet.

I just paid $600 for a writing course – not because I can’t write but because I thought it would give me more knowledge and a competitive edge. When you make the right investments in yourself you can get returns that far outweigh anything the stock market will bring you.

What Would You Do?

There are more options than the four above for investing $1,000. What you decide to invest in all comes down to risk tolerance and personal preference.

Since investing is one of my main goals for 2014 my plans are to invest in mutual funds and DRIPs. Where would you invest your first $1,000?