The financial market today offers many good options on how to invest 1000 dollars and make the most out of it. In fact, that amount just happens to be the minimum requirement for many types of investments. Generally, the type of investment you choose to put your 1000 dollars in will largely depend on your personality. If you have the nerves to engage in high-risk high-returns investments, you may consider options such as stocks and forex. If your personality does not encourage you to engage in risky investments, you may have to settle on safer options such as bank deposits and CDs. Below are some of the best investments on how to earn money with your 1000 dollars.

How to Invest 1000 Dollars 10 Ideas to Invest 1000$

1. Indexed Exchange-Traded Funds (ETF)

This is probably the best way to invest 1000 dollars. Investing in indexed ETF means that the ETF buys all stocks that are an index, such as the S&P 500. The good thing about this investment is that it offers diversity, as your 1000 dollars is invested in hundreds of stock instead of just one. As such, if one stock goes down, the others will make up for it.

2. Treasury Inflation Protected Securities(TIPS)

These are bonds that are issued by the government with a special feature in that besides the interest paid, the bonds go up in value after very six months in order to match inflation. As such, this is good way of not only investing but also protecting your money, especially if an inflationary period is coming. The minimum purchase for these securities is $100. If you invest 1000 dollars, you can get ten of these.

Investing in mutual funds is just like investing in stocks. However, these funds spread investments across hundreds or thousands of available stocks. If the markets go up, your investment also goes up and vice versa. If you have the nerves to engage in this investment, you may consider investing 1000 dollars in all-stock-market funds.

4. Your company’s 401 (k) plan

If you already have access to a company 401(k) program that offers a company match, you should consider putting your 1000 dollars in this plan. If you are wondering how to double 1000 dollars, this plan is one of the cheapest ways. Just put your $1000 in a tax-deferred account earning 7% per year. Your investment would take just over 10 years to turn into $2000.

5. Direct Stock Purchase Plan (DSPP)

This plan enables you to buy shares of stock directly from companies that issue it. You will not be dealing with the company directly per se, but rather through a transfer agent contracted by the company to handle the sale and distribution of its stock. There is no minimum initial amount required, as you do not have to open a brokerage account. Do you want to own shares of Microsoft or General Electric? You can purchase them directly from the company.

6. Dividend Reinvestment Plan (DRP)

If you were wondering how to invest 1000 dollars and let the investment to grow on autopilot, this plan is ideal for you. It works like the DSPP but automatically uses your dividend payments to buy more shares of stock. All you need is to set up an account with the transfer agent, make your initial purchase, and let the account administrator do the rest.

7. Certificate of Deposit (CD)

If you wish to stay away from bonds and the stock market, you can buy a CD through a bank. It is good to shop around since banks offer a variety of interest rates as they compete for customers. Normally, the interest rates are dependent on how long you are willing to leave the money in the bank.

This plan allows you to purchase shares, ETFs, and mutual funds automatically using a set amount of money each month. The plan gives you the opportunity to invest in small dollar amounts and does not require account minimums. If you want to have more control over the particular shares you buy, this option would be ideal for you.

9. IRA or Roth IRA at a discount broker

If you are not sure what to do with your 1000 dollars, you can take a traditional approach by opening an Individual Retirement Account (IRA) or a Roth IRA at a discount broker. Although this is not an investment per se, it is a good way to save for your retirement and enjoy the big tax breaks.

You can use mutual funds and ETFs to get into real estate with only $1000. If you expect rising share prices and dividends in the dynamic real estate market, you can buy ETFs and mutual funds that specialize in this market.

Generally, $1000 is not an awful start for investing. With the many options offered by the financial market, you can be sure to find something suitable for your personality. The above options are some of the best ways on how to invest 1000 dollars and reap maximum returns.