Most people don’t have much money to invest. So, they have to be careful in what they do. Nothing is 100% guaranteed when investing into stocks for example. However, there are certain strategies people can follow to get themselves on the right path. The choices can be complicated, as they include mutual funds, stocks, bonds, securities and IRAs among other choices.
The first tactical choice, would be to put your hard earned $1,000 dollars into an online savings account. Your money would be sitting safe there and you would not want to lose any of it from any kind of unnecessary gamble. The choices for this are abundant. There are a lot of high-yield savings accounts available to choose from. These will provide you with a far better return on investment (ROI) then what you would get from a typical brick and mortar style bank.
One really nice advantage of doing this is, your money will be FDIC insured. This means deposits are insured up to $250,000 dollars per depositor. The program was set up back in 1933, to maintain public confidence and encourage stability within the financial system.
The worry of losing your money is now gone. You can also withdraw your investment at any time, which is also nice. The drawback is – opening an account like this will not get you a lot of interest on your return. Slowly you will accumulate a financial gain of some sort. The percentages will vary, depending upon how much you deposit. This option is for people who want to play it safe and who will get some kind of return with their $1000 dollars over time.
One thing else to consider, would be to create a balanced index fund. This mutual fund contains a stock component along with a bond component. Sometimes even a money market component, would be added to a single portfolio. Most of the time however, these funds focus upon both stocks and bonds. The end game goal here is to balance the holdings between both equity and debt, with the objective between for both growth and income.
There are many experts who think that buying Exchange Traded Funds (ETFs) is one of the best strategies to build up your wealth. Well, they are correct. This is an excellent approach to gaining a foothold to your future. ETFs have been around dating back to the early 1980’s. However, they have only come into their own within the last 10 years or so. The main difference between ETFs and other types of index funds is, ETFs do not attempt to outperform their corresponding index, but replicate the very performance.
Low fee index funds & mutual funds are another route to go. These can be obtained by using the services of what are called robo-advisors. The escentally act like extremely low-fee financial planners. A lot of the overhead costs have been waved and through the use of home grown technology by these companies people can simply set it and forget it.
The only thing they will worry about is how much money they are willing to let go. Because mutual funds and stock will be purchased on behalf of the investor. The systems used by these robo-advisors will automate the entire process for them through software by their system. Typically, the investor will select for a defined preset series of strategies. This can be adjusted by their interface and the investor can select how aggressive they want to be. Most of the time a set of suggestions will be enabled for the user to choose from. The entire process is straightforward by design.
Also, regarding Index Funds, they do not require corporate and financial analysis. This provides a very cost-effective way for individuals to acquire hundreds of stocks while avoiding thousands of dollars that are charged by brokerage companies. Their commissions usually can add up fast as this is one of their main ways to make money. Another interesting note is, index funds typically have the lowest mutual fund expense ratios. Regarding index funds, they work best when they are paired with long-term dollar cost averaging.
Don’t worry about making mistakes but of course try to avoid them. For anyone new, all of this can be very overwhelming. Start off with a clear plan of what it is you want to accomplish. Write down what you want to reach and think about ways to get there. With investing, it is best to establish a diversified portfolio of things, so you can flourish later with your investments. Grow your wealth right by having a clear mind and path forward.
For those individuals out there who are in some kind of debit, it would be wise to pay off if possible any kind of student loans or other expenses first, before investing your remaining $1000 dollars elsewhere. Saving, investing and living debt-free all go hand-in-hand. All three matter for your long-term financial health and welfare.