How to Invest 1000 Dollars: 15 NEW Strategies for 2022

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the millennial money woman blog post "How to Invest 1000 Dollars"

If you have a spare $1,000 and want to know how to best invest it, then this blog post will help you do just that.

The most important trick to optimizing your $1,000 is to have a game plan ready.

Without a game plan, chances are, you’ll spend the money in a few days.

Money can leave you broke – if you don’t have a game plan.

So, if you’ve been wondering how to invest 1000 dollars with a solid plan of action, you’ve come to the right place.

Keep reading.

3 Things to Consider Before You Start Investing


Before you start investing your $1,000, it’s important to prepare yourself for your investing journey.

Here are 3 things you should consider before you start investing.

1. Do Your Research


You’ll hear me say this many times:

Always do your research.

Even if you’re 100% sure you want to invest in something (whether it’s a stock, index fund, or real estate investment), please make sure to take the time and do your proper research.

That’s because fraud attempts in the financial services industry are up 149% in 2021.

Fraud attempts in financial services are up 149%

Source: CNBC

There are bad people out there, and they’re not afraid to go after your money.

And even though this article can help answer your question on what to do with a thousand dollars, it’s still your responsibility to do further research before financially committing.

Trust me, your bank accounts will thank me later.

2. Determine Your Risk Tolerance


Every person is unique.

And that’s also true when it comes to your risk tolerance.

There is a potential to increase your return if you take higher risk because:

  • The lower the risk, the lower the return
  • The higher the risk, the higher the return

Below are some guidelines that could help you make a decision:

Take More Risk Take Less Risk

You are young

You are nearing retirement

You have a stable income and job

Your income is not guaranteed

You are healthy

You spend a lot on medical bills

You don’t have high-interest debt

You have high-interest debt

You have other sources of income

You are the primary breadwinner

You don’t have impulse purchase decisions

You have impulse purchase decisions

You have extra investments and cash

You don’t have money saved

The chart above is not comprehensive, but it should help give you some guidance on when it might be appropriate to increase your risk or decrease your risk.

3. Plan and Prepare


Ultimately, before you start investing, it’s important to be prepared.

“By failing to prepare, you are preparing to fail.” – Benjamin Franklin

And that’s the point of this section – to help you prepare before you start investing.

Here are some common financial goals that you may want to accomplish before investing:

  • Develop a budget
  • Pay off high-interest debt
  • Build an emergency savings fund

Consider if you’ve already achieved these goals.

If you haven’t yet, then it’s probably a good idea to open a savings account or pay off debt first.

Regardless of your next steps:

  • Do your research
  • Determine your risk level
  • Consider your financial goals

…Before you start investing.

15 Best Ways to Invest $1,000

Below, I’ll show you 15 smart strategies on how to invest $1000, all of which you can implement today to build your wealth.

Let’s get started!

Pay off High-Interest Debt

1. Pay off High-Interest Debt

Fiona's Rating
5/5
Paying off Debt

Risk Level

Low Risk

Who Should Do It

If you have high-interest debt

Why It Makes Sense

You save money because you don’t pay high-interest rates anymore

How to Start

- Pay online

- Call your customer service agent

Best Resource

Before you even think:

“What can I do with 1000 dollars”

The first thing you should do is think about the debts you owe.

Remember, there are 2 main types of debt: Bad debt and smart debt.

Bad Debt Smart Debt

High-interest debt

(typically 10% or more)

Debt used for depreciating assets

Low-interest debt

Debt used for appreciating assets

If you find that you carry high-interest debt, like credit card debt, then your first thought should be “how can I get out of debt fast?”

As a quick refresher, I’ve listed the differences between the 2 methods below:

Snowball Method Avalanche Method

Pay off the lowest balance first

Pay off the highest interest rate first

Financially speaking, it makes more sense to pursue the avalanche method, because you’ll save more money paying off the debt with the highest interest rate first.

However, the snowball method may be better if you have a hard time getting and staying motivated.

That’s because with the snowball method, you pay off your smallest debt first, even if it’s “just” $50.

Seeing your first successfully paid off debt can be a huge motivation and that can help many of us keep up the momentum.

What if you still have debt leftover?

If you find that there’s still debt leftover after making your $1000 payment toward that debt, it’s time to think about a few other options – like debt consolidation.

Here’s roughly how debt consolidation works:

how debt consolidation works infographic

As you can see, debt consolidation is a way of combining all of your different debts into 1 basket and then just making 1 payment.

Debt consolidation simplifies things for you.

One service that can help you consolidate your debt is Upgrade 👇

Upgrade gives you:

  • A fixed-term
  • A low fixed rate
  • A clear pay off date
  • No prepayment fees
  • Affordable monthly payments

This can translate into savings while eliminating the surprises of high-interest rates that can change at any time.

fiona smith the millennial money woman

The Bottom Line:

Before you ask yourself “what can I do with 1000 dollars,” first make sure you have no high-interest debt. If you do have high-interest debt, then the first thing you should consider is using your $1000 to pay off that debt.

Build an Emergency Savings Fund

2. Build an Emergency Savings Fund

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5/5
Emergency Savings Fund

Risk Level

Low Risk

Who Should Do It

Anyone who doesn’t have an emergency savings fund

Why It Makes Sense

You have cash in case you need it, so you don’t have to take on high-interest debt

How to Start

- Enroll online

Best Resource

So what can you do with 1000 dollars?

If you don’t owe high-interest debt, the next step is to consider increasing your emergency savings fund (if you haven’t already).

In other words, if it costs you to live on $2,000 per month, then your emergency savings account should be funded with:

  • Minimum = $6,000
  • Maximum = $12,000

Your emergency savings fund should be:

  • Cash
  • Liquid
  • Easily accessible

Why is it so important to have an emergency savings fund ready?

That’s because 40% of Americans struggle to come up with just $400 to pay for an unexpected emergency expense!

40% of Americans struggle to come up with just $400 to pay for an unexpected expense

Source: CNBC

So what if you feel like saving up for 3 to 6 months’ worth of living expenses is something that just doesn’t seem attainable right now?

That’s OK!

Try to take it in baby steps.

Here’s how I would try to structure my goals if I wasn’t able to save a large chunk of money:

Emergency Fund Goals

Goal for Month 1

$300 in total savings

Goal for Month 2

$600 in total savings

Goal for Month 3

$1,000 in total savings

Goal for Month 6

$3,000 in total savings

Goal for Month 12

$6,000 in total savings

If you’re able to save $1000 in the short term (roughly 3 months), that’s already a huge win!

Here’s a trick:

Don’t just keep your emergency fund money stored in a regular bank savings account, where you earn virtually 0% interest on your cash.

Instead, think about storing your cash in a high-yield savings account (aka a savings account that has higher interest rates) so you earn more money on your cash.

My favorite high-yield interest account is Axos Bank 👇

If you’re struggling to save enough money for your emergency savings fund, then you may want to consider creating a budget.

fiona smith the millennial money woman

The Bottom Line:

Assuming that you have no high-interest debt, the next step would be to build a solid emergency savings fund that should be in cash and equal to about 3 to 6 months’ worth of your living expenses. If you can’t find the extra cash to contribute to your emergency fund, then start budgeting.

Purchase Level Term Life Insurance

3. Purchase Level Term Life Insurance

Fiona's Rating
4/5
Level Term Life Insurance

Risk Level

Low Risk

Who Should Do It

If you are relatively young and healthy and have:

- Kids (or plan to have kids)

- A great career path ahead of you

- Partner who is dependent on you for income

- Debt (student loans, mortgage, credit card, etc.)

Why It Makes Sense

Term life insurance is cheap, simple and it’s a good insurance option for young professionals who want to insure for a specific period (typically 20 to 30 years)

How to Start

1. Apply online or in-person (phone call)

2. Get a free quote

3. Start medical underwriting to see if you qualify for insurance

4. Sign paperwork to put your policy in-force

5. Pay your premiums on time

Best Resource

If you want to know what to do with a thousand dollars and you don’t have life insurance yet, then read this section.

Hear me out: Life insurance isn’t always a scam.

In fact, having the right amount of level term life insurance has several benefits, including: 

  • It helps your beneficiaries pay off debt
  • It reduces financial stress on your beneficiaries
  • It replaces your income upon your death (this is good for your partner)

Yet, only 54% of American adults carry life insurance, and many of those adults often don’t carry enough life insurance.

54% of American adults carry life insurance

The fact of the matter is this:

Not all life insurance is created equally.

There are indeed some life insurance types that probably aren’t in your best interest (I’m thinking whole life insurance).

However, as a general rule of thumb, for young professionals, term life insurance is typically a good life insurance product, when comparing the cost vs. the benefit.

Here’s a quick translation into plain English for you:

Life Insurance Jargon Definition

Premium

The amount of money you have to pay each month (aka your bill)

Term

Specific time frame

Level

Your premium (aka your cost) will not change, even if you become unhealthy down the road

Level term life insurance is the cheapest and simplest type of life insurance, which is why it often makes sense to purchase for young professionals and millennials.

Why?

Because young professionals and millennials are typically:

  • At their healthiest (so premiums are lower)
  • Don’t have $1000’s to spend on expensive whole life policies

Keep in mind that if you are a young professional and at the beginning of your career, your income might increase significantly over the next few years, which you may want to factor into the equation.

Most millennials I see apply for $1,000,000.

A $1,000,000 life insurance policy could cost you anywhere between $14 to $30+ a month, depending on your health.

Even if you’re not ready to buy a life insurance policy yet, I highly recommend that you run a free quote with Policygenius 👇

Policygenius is one of the best online life insurance marketplaces that matches you with the best life insurance company.

With Policygenius, you can run free quotes, compare prices, and ultimately talk to a representative to determine how you can move forward.

Recommended reading: How Much Life Insurance Do You Need

fiona smith the millennial money woman

The Bottom Line:

If you are young, have kids (or plan to have kids), have a partner who depends on your income, or if you have a lot of debt, then you should consider purchasing level term life insurance. Level term life insurance is the cheapest and simplest type of life insurance. The younger you are, the lower your premiums will be.

Invest in Your 401(k)

4. Invest in Your 401(k)

Fiona's Rating
5/5
401(k)

Risk Level

Low Risk

Who Should Do It

Anyone who has access to a 401(k) and an employer matching contribution

Why It Makes Sense

Earn free money when you contribute to your 401(k) plan and your employer makes a matching contribution

How to Start

1. If you have access to an employer-sponsored 401(k) plan, start making regular contributions

2. Research how much you have to contribute to earn the full employer match (call your HR department if necessary)

Best Resource

Another one of my favorite 1000 dollar investment ideas is to put your cash to work in your 401(k).

In fact, 401(k)’s are retirement plans that can help you become a millionaire.

As of 2021, a whopping 412,000 401(k) plans reached a balance of $1 million or more.

Talk about building wealth!

A record-breaking 412,000 people became 401(k) millionaires in 2021

Source: CNBC

Of course, it also helps that the 2021 markets have been doing really well, which surely was another contributing factor for the increase in 401(k) balances.

However, the point is that you can build significant wealth in your 401(k).

In other words, if you have access to a 401(k) plan through your work, then the first thing you want to do is to:

  • Call your HR (human resources) department 
  • Ask how much your employer matching contribution is, if any

Why am I so focused on an employer matching contribution?

Because employer matching contributions is virtually like free money for you.

Does the definition sound confusing?

Here’s a real-life example:

401(k) Example

Salary

$50,000

Your Annual 401k Contributions

$2,000

Your Contribution Percentage of Salary

4%

Employer Matching Contribution

Employer will match 50% of your contributions, up to 6% of your salary

What this Means

Employers will contribute up to 3% of your salary total

Maximum Annual Employer Contribution to your 401(k)

$1,500

In the example above, you just earned a “free” $1,500 from your employer – just because you made a contribution to your 401(k) plan that was over 3% of your salary.

We just spent some time talking about the importance of making a contribution to your 401(k) – especially if your employer offers a matching contribution.

Now, what?

The next step is investing in your 401(k).

In general, you’ll want to consider your risk tolerance (aka your comfort level with how much money you plan to invest in the stock market) and your age.

Below is an example of investment allocations:

Investment Allocations Example

What if you’re not 100% comfortable with picking your own stocks?

One option is to open an account with Blooom 👇

Blooom is your robo advisor when it comes to investing in your 401(k).

All you have to do is connect Blooom with your 401(k) account, (and there are instructions on how to do that).

Then you’ll have to answer a few questions, and from there, Blooom will help manage your investments and keep you on track to meet your goals.

The Blooom Strategy

Some things that Blooom can do for you include:

  • Analyze the market
  • Pick and place trades
  • Create a financial plan
  • Do the research for you
  • Rebalance your portfolio
  • Alert you in case of withdrawals
  • Customize your own investment strategy

However you decide to approach investing in your 401(k), just make sure to start contributing early – and take advantage of any matching employer contributions.

That’s free money for you.

fiona smith the millennial money woman

The Bottom Line:

A best way to invest $1000, after investing in yourself, might arguably be investing in your 401(k) plan. If you invest at least up to the employer matching contribution, then you can earn free money (which could be $1,000’s, depending on your arrangement with your employer).

Invest in Yourself

5. Invest in Yourself

Fiona's Rating
5/5
Investing in Yourself

Risk Level

Low Risk

Who Should Do It

Everyone

Why It Makes Sense

The more you learn, the more you earn

How to Start

- Read a book

- Take an online course

- Connect with a mentor

Best Resource

In my opinion, you can never go wrong with investing in yourself.

In fact, I believe one of the best investments is investing in yourself.

When you invest in yourself, you’ll earn the highest ROI.

And don’t just take it from me.

96% of self-made millionaires invest in themselves by reading every single day to:

  • Improve their career
  • Improve their education
  • Focus on self-improvement
96% of self-made millionaires read daily for self-improvement

Source: Kiplinger

You don’t have to be smart, and you don’t even have to go to college to become successful.

What you do need, however, is:

  • Focus
  • Discipline 
  • Consistency 
  • Commitment
  • Determination

Never stop learning, because the universe never stops teaching.

Are you ready to take on the next step and grow your skillset?

Then check out one of the world’s leading education platforms, Udemy 👇

You can take Udemy courses ranging from:

  • Music
  • Python
  • Marketing
  • Web Development
  • Personal Development

My favorite course is probably the MBA course, which you can buy for just over $100 versus spending $100,000’s, if you attended a university.

If you’ve ever heard of Eminem’s song, “Lose Yourself,” then you might have remembered the last line of the song, which is “you can do anything you set your mind to.”

And Eminem is right.

If you want to build your skills and your income, then look around you, because the resources and the tools are all there for you.

Now, it’s just up to you to go and get them.

fiona smith the millennial money woman

The Bottom Line:

You can never go wrong by investing in yourself. Buy books, learn a new skill, talk to different people, sign-up for an online course. Just never stop learning.

Invest in Low-Cost Index Funds

6. Invest in Low-Cost Index Funds

Fiona's Rating
5/5
Low-Cost Index Funds

Risk Level

Medium Risk

Who Should Do It

Anyone who is interested in building long term wealth without day trading

Why It Makes Sense

- Proven results

- Reduces your stress level

- Passive investing approach

How to Start

1. Open a brokerage account

2. Link your bank account to your brokerage account

3. Transfer money to your brokerage account

4. Start investing in low-cost index funds

Best Resource

Believe it or not, investing doesn’t have to be sexy.

In fact, studies have proven time and time again that investing in passive, low-cost index funds is how you can build long-term wealth.

Take a look at this picture, comparing the net performance of hedge funds versus a low-cost index fund (the S&P 500).

SP500 vs Dow Jones vs HFRX

Source: SL Advisors

While hedge funds might boast they outperform the market, that information tends to be misleading.

Why?

Because hedge funds charge astronomical fees.

Only after the roughly 22% in fees (2% + 20%) is paid out to the hedge fund, do you see your net return.

If you’re looking for the cheapest index fund options, then below are some of my favorites that I’ve used personally:

Fund Name Expense Ratio

Fidelity ZERO Large Cap Index

0.000%

Vanguard S&P 500 ETF

0.030%

Schwab S&P 500 Index Fund

0.020%

SPDR S&P 500 ETF Trust

0.095%

Take a look at how cheap these investments are versus what you would be paying if you hired a hedge fund: 

  • Index fund expenses: 0% to 0.095%
  • Hedge fund expenses: 17% to 22% +

So how do you start investing in low-cost index funds?

By opening a free investment account with the popular platform M1 Finance 👇

M1 Finance is a robo-advisor with more than 6,000 stocks and funds to choose from to build your own, customized portfolio.

Here’s some fast facts about M1:

  • Fees: 0%
  • Account minimum: $100 for regular accounts
  • Account minimum: $500 for retirement accounts

If you’re ready to invest your $1000 or at minimum an amount greater than $100, then you might want to check out M1 Finance

fiona smith the millennial money woman

The Bottom Line:

Investing in low-cost index funds is a strategy that is likely more suitable for those who want to build wealth over the next few decades. It’s a proven strategy, and it’s what I’m doing myself.

Invest in Real Estate Crowdfunding

7. Invest in Real Estate Crowdfunding

Fiona's Rating
4/5
Real Estate Crowdfunding

Risk Level

Medium/high Risk

Who Should Do It

- You want to diversify your investment

- You want to earn a passive income stream

- You want to protect yourself against inflation

Why It Makes Sense

Real estate crowdfunding could help you earn a high return, passive income, and diversify your portfolio

How to Start

1. Open an account

2. Transfer money

3. Select your investments

Best Resource

Real estate investments are often left to the exclusive, high-roller club.

These are the guys that have $100,000’s or $1,000,000’s to spend on property deals.

However, real estate crowdfunding platforms like Fundrise have made it accessible to everyone, not just the top 1%.

Oftentimes, you play the role of the bank by lending out your money – and you know how much money banks can make.

In fact, Fundrise claims that you can earn an annualized return between 7.31% to 16.11%.

Check out the chart below:

graph of risk adjusted return potential of bonds vs private real estate vs publicly traded reits vs stocks

This chart illustrates how private real estate deals with platforms like Fundrise, have a relatively low risk for relatively high returns.

Not only do you earn a passive income stream from rents paid, but you can also earn a profit through property appreciation, once the real estate is sold in the future.

Of course, the trade-off is locking up your money for a long time.

Below are a few additional pros and cons for real estate crowdfunding:

Real Estate Crowdfunding Pros Real Estate Crowdfunding Cons

Invest in individual properties without having to manage the properties

Higher risk

You can diversify your portfolio

Illiquid

High-profit potential

You may not see profits until years after you originally invested

Potential for passive income

Many real estate deals are typically restricted to accredited investors

Keep in mind that investing in real estate is one of the top strategies used by the wealthy.

Now you can too, for as little as $10, with Fundrise 👇

Fundrise typically invests your money in:

  • Apartments
  • Commercial
  • Single-family

As with all higher-return / higher-risk investments, make sure you do your research before you financially commit.

Recommended Reading: Fundrise Review

fiona smith the millennial money woman

The Bottom Line:

One of the best ways to invest $1000 could be through real estate crowdfunding platforms. You play the role of the bank and in return, you can expect (but are not guaranteed) high return rates and your initial investment paid back.

Invest in Your Legacy

8. Invest in Your Legacy

Fiona's Rating
5/5
Your Legacy

Risk Level

Low Risk

Who Should Do It

Everyone

Why It Makes Sense

Protect yourself, your estate, money, and your loved ones by putting a plan in place

How to Start

Draft your basic estate documents online

Best Resource

One of the most overlooked investments is your legacy.

While no one likes talking about their own mortality, it’s necessary to set up a plan now, because life will throw us curveballs, as we know it.

Even millionaires are lacking in the estate planning department, with only 62% of millionaires having created an estate plan.

62% of Millionaires have created an estate plan

Source: CNBC

So what actually is an estate plan?

Some examples of estate planning could include:

  • Drafting or updating a Will
  • Designating your life insurance beneficiaries
  • Preparing how your assets are to be distributed
  • Listing who will receive your favorite watch and jewelry

Why is estate planning so critical?

Here are some reasons why estate planning might be the best way to invest $1000:

  • Peace of mind
  • Minimize taxes for your beneficiaries
  • Protect your kids by designating a guardian
  • Protect yourself in the event of a health situation
  • Prevent family drama by clearly specifying which items you want which beneficiary to receive

Below are some of the most important estate documents that everyone should draft – even if you’re not a millionaire yet:

  • Will
  • Living Will
  • Guardianship Documents
  • Durable Power of Attorney

…And here is what these foreign terms mean in plain English:

Estate Planning Term What it Means

Will

Document that specifies where you want your assets (like your car, your bank accounts, etc.) to go upon your passing

Living Will

Communicates your end-of-life wishes, especially when you are mentally incapacitated (e.g., whether you want to be kept alive artificially)

Guardianship Document

Designates guardians for your children. This document is typically found in a Will

Durable Power of Attorney

Designates an individual (whom you trust) to step in and make decisions on your behalf in any aspect of your life – from finances, to family, etc.

Durable Power of Attorney for Health Care

Designates an individual to take care of you in the case you become mentally incapacitated (might be someone different from your Durable Power of Attorney)

If you designate individuals to take care of you, it is typically a good idea to have a conversation with them before you sign your estate documents.

In very rare instances, the people who you want to take care of you may not actually want to be put in that position (like making medical decisions on your behalf).

Believe me when I say that estate planning is necessary.

If you haven’t started drafting your basic estate documents yet, then check out Trust & Will 👇

Trust & Will is going to ask you a few questions about your family and financial situation so that it can automatically draft your customized estate documents.

If your estate is still relatively simple, then you might want to check out Trust & Will.

fiona smith the millennial money woman

The Bottom Line:

If you are ever wondering, “What should I do with 1000 dollars,” and you haven’t started or you haven’t checked over your estate documents in a long time, then it’s probably a good investment to draft basic estate documents like Wills, Living Wills, etc. Not only will estate documents protect you, but they will also protect your loved ones and your legacy.

Invest in Your Budget

9. Invest in Your Budget

Fiona's Rating
5/5
Budgeting

Risk Level

Low Risk

Who Should Do It

Everyone

Why It Makes Sense

- Track your income

- Track your expenses

- Improves your financial situation

How to Start

- Use Excel

- Use YNAB

Best Resource

Believe it or not, budgeting can make or break your financial future.

If your goal is to:

  • Pay off debt
  • Build an emergency fund
  • Save enough money for retirement

…Then a budget will probably be one of the best tools you can have in your financial toolkit.

Here’s what I like about budgets: 

  • They tell you how much you’re earning
  • They tell you how much you’re spending
  • They tell you how much you are spending on certain things

There are some basic budgeting rules of thumb that you should probably know:

Budgeting Rules

Monthly housing debt

< 28% of gross monthly income

Total monthly consumer debt

< 20% of net monthly income

Total monthly debt payments

< 36% of gross monthly income

Retirement & savings

>  20% of gross monthly income

Examples of monthly consumer debt include:

  • Lines of credit
  • Cash advances
  • Credit card debt

Examples of monthly debt include:

  • Car loan payments
  • Mortgage payments
  • Credit card payments
  • Student loan obligations

While these rules of thumb are of course not set in stone, and things always tend to vary, they are a good starting point if you’re just starting out your budget.

Now, there are several ways that you can start the budgeting process.

Some of these include:

  • Mint
  • Excel spreadsheet
  • You Need a Budget

My favorite is the Excel spreadsheet, but not everyone is an Excel nerd like I am 😁

So, if that’s the case, you can always consider using Mint (which is free), or you can consider downloading YNAB (which is also free to download) 👇

YNAB is a really good budgeting tool, if you’re just starting to get an oversight of your financial picture.

It’s visual, and it actually shows colors, like red, if you’ve already overspent on 1 goal.

There is a learning curve with YNAB, but this tool can help you save a lot of money – especially if you have no idea what’s going on, in your financial life.

Below are some stats with YNAB:

  • First time YNABers say they’ve saved $600+ in their first 2 months
  • First time YNABers say they’ve saved $6,000+ in their first 12 months

Recommended Reading: YNAB Review

fiona smith the millennial money woman

The Bottom Line:

One of the best ways to invest $1000 is to build a budget to understand how much you are spending relative to how much you are saving. A budget is like a roadmap and it can help you get closer to your financial goals.

Invest in Repairing Your Credit

10. Invest in Repairing Your Credit

Fiona's Rating
5/5
Repairing Your Credit

Risk Level

Low Risk

Who Should Do It

Anyone with a FICO® credit score less than 700

Why It Makes Sense

The higher your credit score, the more money you save

How to Start

1. Research the best credit repair companies

2. Connect with your favorite one

3. Determine the steps you need to take to repair your credit

Best Resource

If you’re wondering how to invest $1000 and make more money down the road, then you might want to consider increasing your credit score.

Your credit score is based on several factors, including:

  • Payment history
  • How much debt you have
  • The number of credit inquiries 
  • Length of time your accounts are open
  • The number of times you close credit cards
  • The number of times you open credit cards

You would have an acceptable (but not great) FICO® credit score with a minimum of 670.

FICO score ranges

It’s important to keep a high credit score because you can save money in the long run.

Benefits of a high credit score:

  • Lower car insurance rates
  • Increase negotiating power
  • Lower interest rates on loans
  • Lower interest rates on credit cards
  • Improved chances for loan approval

As you can see, there are many benefits that come with a higher credit score – specifically, a higher credit score helps you save money. 

So how can you start repairing and increasing your credit score?

Believe it or not, there are some companies that specialize in credit repair and can help you boost your credit score, like Credit Saint 👇

Credit Saint has been nationally recognized as one of the leading credit repair companies.

The key is to chip away at your debt and follow the plan that the credit repair company creates for you, and chances are, you’ll start seeing progress.

fiona smith the millennial money woman

The Bottom Line:

Believe it or not, your credit score can help you save hundreds of dollars – as long as it’s a high credit score. If you have a low credit score, then it might be time to start investing your $1,000 in credit repair companies. Credit repair companies utilize strategies to help increase your credit score, and thus, save you money in the long run.

Invest in Crypto

11. Invest in Cryptocurrency

Fiona's Rating
3.5/5
Cryptocurrency

Risk Level

High Risk

Who Should Do It

If you have “fun money” and can withstand the volatility of the cryptocurrency markets

Why It Makes Sense

You can make a lot of money in a short period of time.

You can also lose a lot of money in a short period of time.

How to Start

1. Open an account

2. Transfer your money

3. Start trading

Best Resource

If you’re wondering how to invest $1000 and you:

  • Don’t have debt
  • Have life insurance
  • Have a solid emergency fund
  • Are investing in your retirement
  • Are already investing in the stock market

…Maybe now is the time to consider investing in cryptocurrency.

Here’s my full disclosure:

I wasn’t a major fan of investing in cryptocurrency until I learned more about it.

Now, I’m slowly getting used to the idea of investing in a digital currency and am getting more comfortable seeing the market value fluctuate so much.

That being said, take a look at some of the pros and cons of investing in cryptocurrency:

Crypto Pros Crypto Cons

Massive profit potential

Extremely volatile

Hedge against inflation

Unregulated

Improved liquidity

Hard to understand

I’d say my biggest concern with cryptocurrency is that it’s relatively new, so crypto doesn’t really have a solid track record yet.

That being said, there certainly are cryptocurrency millionaires and other success stories, which show that a cryptocurrency investment could create massive amounts of wealth for you.

So, if you’re willing and comfortable to invest in something risky, then you may want to check out Coinbase 👇

I really like Coinbase, it’s super easy to use, and you get a free $5 worth of bitcoin when you sign up.

However, Coinbase charges relatively high fees and the customer service is not exactly the best.

My mom even signed up to Coinbase the other day and is trading cryptocurrency!

Recommended Reading: Coinbase Review

Invest in a Roth IRA

12. Invest in a Roth IRA

Fiona's Rating
4/5
Roth IRA

Risk Level

Medium Risk

Who Should Do It

If you have earned income and expect to be in a higher tax bracket during retirement

Why It Makes Sense

Pay taxes on your Roth IRA contributions today (because you will likely be in a lower tax bracket during retirement)

How to Start

1. Open an account

2. Transfer your money

3. Start investing

Best Resource

Roth IRAs are a great way to invest for your retirement – on a tax-advantaged basis.

That means you pay taxes on your contributions today in exchange for not having to pay taxes on your withdrawals (and any investment profits) during retirement.

Keep in mind that you can withdraw your contributions to your Roth IRA at any time without taxes or penalties (since you already paid taxes on your contributions).

There are some exceptions to this rule, but I won’t go into the nitty-gritty for the sake of this blog post.

Related: How Does a Roth IRA Work

You would qualify to contribute to a Roth IRA if you:

  • Have earned income
  • Are 18 years or older
  • Don’t earn too much money (there are income restrictions)
  • If you are under 50, you can contribute up to a maximum of $6,000
  • If you are 50 or older, you can contribute up to a maximum of $7,000

Make sure you understand the difference between contributions and investment profits.

Contributions Investment Profits

Any amount of money that you contribute yourself to your Roth IRA

Any investment earnings you make as a result of investing your contributions

There are much stricter guidelines when it comes to withdrawing investment profits – and typically if you withdraw investment profits before age 59.5, you may incur taxes and/or penalties.

Now, if you’re ready to pull the trigger and invest into a Roth IRA, you may want to consider opening a Roth IRA with M1 Finance 👇

M1 Finance offers customized investment portfolios (also known as “pies”).

The minimum investment with a M1 Finance Roth IRA is $500, and the platform charges $0 in trading fees or money management fees.

Below is an example of how M1 Finance’s custom pies will look for you:

m1 finance "the pie"

You’ll be able to select your investments from 6,000+ stocks and funds.

fiona smith the millennial money woman

The Bottom Line:

A Roth IRA is a great tax-advantaged investment account that can help you prepare for retirement. If you’re a young professional who is just beginning in your career path, then Roth IRAs are likely one of the best retirement accounts to stash and grow your cash.

Invest in Your Local Businesses

13. Invest in Your Local Businesses

Fiona's Rating
4/5
Local Businesses

Risk Level

Medium Risk

Who Should Do It

Anyone who already has a solid financial plan in place and is looking to diversify their investments

Why It Makes Sense

- Earn passive income

- Diversify your portfolio

- Support your local community

- Protect yourself against inflation

How to Start

1. Open a free account

2. Link your bank account & transfer money

3. Start investing in local businesses

4. Never pay a cent in management fees

Best Resource

Assuming your financial plan is solid, another good way to invest $1,000 is to invest in your local businesses.

You can start investing in small business ventures for as little as $100 with Mainvest 👇

Mainvest offers investment opportunities around the country.

Mainvest earns its money from the businesses that are on the platform.

Some business examples that you’ll find on Mainvest include:

  • Bars
  • Farms
  • Restaurants
  • Hobby stores
  • Dispensary stores
  • Brewing companies

Note that Mainvest focuses on brick-and-mortar businesses, which means that you’ll invest in only tangible businesses and not in non-tangible companies like software start-ups.

Mainvest Map

Here’s why you might want to consider investing in small businesses:

The amount of income you can earn with your Mainvest investment really depends on the individual business contract you have.

Thankfully, Mainvest is transparent with their data, so you can see how much money you can earn just by browsing their website:

Mainvest Data

The amount of money you can earn is based on the revenue share number.

Some businesses may decide to pay investors more from their earnings, while some businesses elect to pay less – that’s completely up to the individual business.

For example, if you invested $100 in a business, then the business may elect to pay you back 2x your original investment.

The maximum amount of money you might ever earn is $200.

Nevertheless, I think diversifying your investments and supporting your local community can be a way to get ahead financially.

Recommended Reading: Mainvest Review

fiona smith the millennial money woman

The Bottom Line:

Investing in small businesses is a good way to diversify your portfolio, support your local community, and earn a passive income stream. Thanks to modern FinTech platforms like Mainvest, you can do this with as little as $100.

Invest in Fine Art

14. Invest in Fine Art

Fiona's Rating
4/5
Fine Art

Risk Level

Medium Risk

Who Should Do It

- You have a solid financial plan

- You want to diversify your investments

- You want to earn a high return

Why It Makes Sense

Fine art has seen stable returns for the past few decades – often north of 100%

How to Start

1. Open a free account

2. Complete a phone interview

3. Start investing in fine art

Best Resource

Typically, the world of fine art investing is exclusively available to the high-rollers.

Now, you might be wondering: 

How can the average Joe partake in high-end art investing?

Enter Masterworks 👇

Masterworks is the world’s first fine art investing platform that makes this type of alternative investment available to everyone.

Just a few years ago, fine art paintings were only available to the ultra-wealthy.

Not anymore.

Take a look at this $128 million art painting by Jean-Michel Basquiat – which is available for people like you and me to invest in.

Masterworks Jean-Michel Basquiat Painting

Why fine art investing?

One of my top reasons is that fine art does not have a correlation with the stock market.

So when the stock market goes down, your fine art investment will either go up or stay stable.

graph of comtemporary art correlation factor 1995-2020

This correlation chart shows that when the stock market goes down (which is portrayed by the red S&P 500 Total Return bar), the contemporary art market does not go up or down.

Markets, based on the graph, that are influenced by the stock market include:

  • Gold
  • US housing
  • Global equities

The economic environment does not appear to influence the value of artwork, so an art investment could preserve your overall net worth in a recession.

Not only that but typically speaking, fine art also provides high returns: 13.6%.

In general, your money will be locked up between 7 to 10+ years before you see a profit (which is when Masterworks sells the paintings).

Recommended Reading: Masterworks review

fiona smith the millennial money woman

The Bottom Line:

If you’re looking to diversify your investments and if you want to potentially outperform the stock market, then one investment idea could be fine art. Fine art typically protects you against inflation and stock market volatility. Plus, returns from fine art investments can be over 100%.

Start a Side Hustle

15. Start a Side Hustle

Fiona's Rating
5/5
Side Hustle

Risk Level

Low/medium Risk

Who Should Do It

Anyone who wants to earn a little extra money

Why It Makes Sense

- Build a passive income stream

- Could earn a full-time income stream

How to Start

1. Think about your passion

2. Ask a mentor for some guidance

3. Do your research on side hustle opportunities

If you’re thinking about what to do with a thousand dollars, then I highly suggest you consider starting a side hustle.

A side hustle is something that can transform your life (it sure did for me).

Below are some reasons for and against a side hustle:

Pros Cons

Earn extra income

Can be exhausting

Increase your experience & knowledge

Added stress

Evolve into full-time income

You won’t see immediate results

Flexibility

You have to put in a lot of hard work

Your income is unlimited

Your employer may not allow you to have side income

As long as you’re allowed to have a side hustle at work, for me, the pros outweigh the cons by far.

Side hustles can change your life for the better because you can:

  • Learn new skills
  • Build an income stream
  • Potentially become self-employed
  • Expand your professional network

Especially after COVID hit the world and after the Great Resignation took shape, about 45% of Americans (70 million people) who are still working also maintain a side hustle.

45% of Americans have a side hustle

Source: Bankrate

And, believe it or not, you can make money with side hustles that can have a serious, positive impact on your life.

Check out these side hustle statistics below:

Side Hustle Statistics 2021

Depending on the niche you are in, you could even transform your side hustle into a potential full-time job.

The opportunities are endless.

Are you ready to start your side hustle?

My very first income-generating side hustle was my social media account (go figure!).

It cost me virtually nothing to start and within less than 12 months, I was making $1,000’s each month… and you can too.

Related: How to Make Money on Twitter

Here’s when the social media side hustle might be right for you:

  • You love writing
  • You’re good with technology
  • You want to build a 6-figure business
  • You enjoy connecting with your audience
  • You like working from home (or anywhere other than an office)

When I first started my social media journey, I had no idea what I was doing… and then I found the Create 24/7 Content Creation Guide, which transformed my journey 👇

Wherever your journey takes you, just make sure you put in the hard work now.

You’ll reap the benefits later.

fiona smith the millennial money woman

The Bottom Line:

Virtually anyone can start a side hustle and start earning a little extra money. Imagine what you can do with 1000 dollars if you invested your cash in a side hustle idea (like becoming a social media influencer) and then getting paid $100’s if not $1,000’s of dollars each month. That’s what happened to me, and that can happen to you as well.

Build a Diversified Portfolio


The 2 keys to wealth include: 

  • Investing for the long-term
  • Building a diversified portfolio

We’ll explore why long-term investing is critical in the next section, but for now, I want to take some time to explain why a diversified approach could be the best option for you.

If you’re a nervous investor who doesn’t like seeing the value of your investment portfolio fluctuate (ie, you don’t want it to swing up and down), then a diversified portfolio is very likely the best approach for you.

Take a look at how investing in the stock market – specifically using a diversified approach – can lower your risk and volatility:

Single Stock Versus Index Volatility

Source: S&P

Here’s a quick breakdown of what you can see in the image above:

Diversified Portfolio [S&P 500] Undiversified Portfolio [1 Stock]

Much less volatility & more stable, consistent returns over 26 years

More volatile and returns are not as consistent as a diversified approach

I should mention, however, that a diversified portfolio may not provide as high of a return as undiversified portfolios (remember, the more risk, the more potential reward).

Some additional things to consider, when wondering what to with 1000 dollars, is to diversify your asset classes.

Some examples of asset classes include:

  • Cash
  • Currency
  • Real estate 
  • Stock market
  • Alternative investments 

Why do most investment advisors (and keep in mind, I’m not an investment advisor), recommend diversifying?

In case 1 asset class goes down in value (like stocks), another asset class holds its value or increases in value (like fine art or real estate).

Focus on the Long-Term & Start Now


Since we already discussed the idea of diversifying your portfolio in the previous section, let’s focus on the importance of investing for the long-term and starting now.

Here’s what I mean by long-term investing:

Term Definition

Long-Term Investing

You stay invested for 30+ years without making withdrawals

If you’re in your:

  • 20’s
  • 30’s
  • 40’s
  • 50’s

…Or even if you’re in your 60’s, just before retirement, I would highly encourage you to start investing now and start investing for the long term.

Why should you invest for the long term?

I’ve listed several pros and cons below:

Long Term Investing Pros Long Term Investing Cons

Takes advantage of compounding interest

You won’t see immediate results

Decreases volatility

You reduce your liquidity because you’re not withdrawing money for decades

Utilizes the power of dollar cost averaging

Dollar cost averaging might not take immediate advantage of market lows or highs

If you’re patient and focused on the long-term, then you can weather the highs and the lows of the stock market.

Based on historical performance, the stock market has increased in value after a decline.

So while it’s inevitable that you’ll see lows in the stock market, you’ll also very likely see highs after the lows.

You just have to weather the storm.

If you think passively and if you don’t follow the stock market every day (I’d suggest checking in every month or quarter), you’ll likely be much less:

  • Stressed
  • Anxious
  • Nervous
  • Inclined to withdraw money

A key to successful investing is thinking passively.

Remember to stick with your investment strategy (yes, even if the markets are going down) and focus on the long term.

fiona smith the millennial money woman

The Bottom Line:

If you’re wondering what to do with $1000, then invest now, invest for the long-term (30+ years), and invest without monitoring the stock market every day (or even every week).

FAQs

If you’re looking to invest $1,000, then you may want to consider some of the following suggestions:

  • Roth IRA
  • Cryptocurrency
  • The stock market
  • Term life insurance
  • Emergency savings fund
  • Real estate crowdfunding
  • High-interest credit card debt

These are just some of the ways you can optimize a $1,000 investment. 

If you want a quick return on your money, then you’ll likely incur a higher risk when you invest your $1,000. 

Here’s how you can invest 1000 dollars for a quick return:

  • Start day trading
  • Invest in a single stock
  • Invest in your education
  • Consider flipping real estate
  • Invest with real estate crowdfunding
  • Store your cryptocurrency with BlockFi
  • Start trading cryptocurrency with Coinbase

If you’re prepared to live with more risk in exchange for a quick return, then you should consider the strategies listed above.

It’s important to understand that doubling $1,000 will very likely take time and patience. 

Below are strategies you could use to potentially double your $1,000:

  • Invest in cryptocurrency
  • Invest in your education
  • Invest in your own business
  • Invest in real estate for a passive income
  • Invest in your 401k to receive the employer matching contribution

If you want to know how you can double your money since yesterday, I’m going to warn you that there are going to be a lot of risks involved and you may lose your money. 

If you’re a beginner and have a spare $1,000 to invest, there are several ways you could invest your cash to optimize your return. 

Some of those strategies include:

  • Invest in your education
  • Pay off high-interest debt 
  • Increase your emergency savings fund
  • Invest in real estate crowdfunding apps
  • Invest in cryptocurrency by opening an account with Coinbase
  • Invest in the stock market by opening an account with M1 Finance

There are many options you can pursue to invest your $1,000 – these are simply just some ideas.

Closing Thoughts


Before you receive an unexpected chunk of money – like a $1000 bonus – it’s a good idea to create a plan, so you know exactly what to with 1000 dollars.

Remember that most people go broke – or at minimum never invest their extra money – after coming into unexpected cash.

Don’t be like the average individual.

An effective way to optimize your money could be to:

  • Understand your short term financial goals
  • Understand your long term financial goals
  • Create an according game plan 

Once you have your game plan in place, all you need is to implement the 1000 dollar investment ideas that I suggested in this article.

Your bank accounts will thank me later.

What would you do with an extra $1,000? Let me know in the comments below.

Fiona Smith
Fiona Smith
Fiona Smith is the founder of The Millennial Money Woman. She holds her Master of Science Degree in Personal Financial Planning, has advised decamillionaires for 6 years in the corporate wealth management sector and has co-founded a local non-profit community teaching financial literacy. She is the author of the personal finance book How to Get Rich from Nothing and her work is featured on Forbes and FinCon.

2 thoughts on “How to Invest 1000 Dollars: 15 NEW Strategies for 2022”

  1. It’s quite amazing just how easy it is to make risk-free returns when all you have to do is pay high interest rate debt. Instead of earning 5 – 10% on the stock market through risky investments, you can earn that completely and utterly risk free by paying off debt, how great is that?!

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