How to Invest $1,000
When considering how to invest $1,000, focus on building a foundation for investing success.
First, make sure your short-term needs are covered. Create an emergency fund that covers three to six months of living expenses, just in case. Place it in an easy-to-access account, like an interest-bearing checking or savings account, or a money market savings account. For slightly higher potential growth, you can consider a money market fund. They're considered a relatively low-risk investment, but can lose value.
How to Invest $1,000
So you have $1,000 to invest and want to know how to get started?
You might be thinking this is a chance to pick up stock in a company you like.
Each company is unique, so before buying any stocks check out the underlying company’s industry position, growth rate, growth potential, income, revenue, competitors and management structure to see whether it works for your goals.
Then to actually purchase the stock you’ll need to open a brokerage account and buy your shares using the stock's ticker.
But if you don't have the time or inclination to do that kind of research, or you don’t want to risk your money by investing in a single company’s fortunes, then investing in a diversified fund is probably your best bet.
Diversified funds are a mix of stocks, bonds, and other investments.
Index funds, mutual funds, ETFs, and some robo-advised offers are all examples of diversified funds.
These can help you spread your money across various markets, so the fate of your portfolio doesn’t hinge on the performance of a single company or asset.
There are lots of ways to go about this.
Funds can be aggressive—which means higher risk and therefore higher returns and losses —or more conservative.
They can give you broad access to the stock market, or focus on particular sectors, like tech or energy.
So before you buy anything, think about what you want to accomplish with your investment.
And once you’ve picked your fund, keep investing.
Even small contributions, made regularly, will likely add up over time.
Finally, remember that setting realistic goals and making a financial plan to achieve them are the basic keys to investing.
Next, consider your long-term investing goals.
- If you're investing for retirement, consider tax-advantaged retirement accounts like a 401(k) or an IRA.
- For college expenses, a 529 plan, Education Savings Account (ESA) or custodial account might be right for you.
- For everything else, a traditional brokerage account is the most versatile option.
What are you investing for? Are you saving for retirement or a down payment on a house? We recommend that investors have a financial plan to help spell out goals, set priorities and lay out concrete steps to get there. Having a plan helps you remember why you’re investing, what you’re investing for, when you’ll need the money and how much risk you want to take on.
Select the appropriate account.
Once you've identified your goal, it’s time to select an account. There are many types of investment accounts, but here are some of the common ones—organized by goal.
A range of goals
A brokerage account can help you save and invest for a broad range of goals.
Schwab One® Brokerage Account
Allows you to invest in everything from stocks and bonds to mutual funds, ETFs, and more.
Tax-advantaged accounts can help you save and invest for educational expenses.
529 College Savings Plan
Allows you to save for college and qualified distributions are tax-free.
Choose your investments as part of a diversified portfolio.
Once your account is open, you'll want to select investments to build a Tooltip . Here’s how to create one:
StepDetermine your asset allocation.
Asset allocation is the way you divide your money among groups of similar investments or "asset classes." The three main asset classes are Tooltip , Tooltip and Tooltip . In general, if you're a conservative investor looking for income and stability, you may want to hold more bonds than stocks. But if you're a long-term investor looking for high-growth potential and less concerned about immediate income, you may want to invest more aggressively by holding more stocks. See our model portfolios for sample asset allocation plans.
StepDiversify within asset classes.
Stocks and bonds can be broken down further into different types. For example, you can invest in stocks that represent large companies (large-cap), small companies (small-cap), international companies and everything in between.
StepDiversify within sectors.
You can break down your investments even further. For example, with large-cap stocks, you can invest in different sectors (like technology, health care and communications). Within each sector, you can also invest in different industries. For example, within the health care sector, you could consider pharmaceuticals, biotechnology or equipment industries.
If you prefer not to build a Tooltip on your own, a good place to start with $1,000 to invest is a diversified index Tooltip or Tooltip (ETF). Funds are baskets of stocks, bonds and other assets that can give you exposure to the broad market or specific sections. Funds that track indexes tend to be fairly inexpensive, which can make them an attractive option.
Once you've started, remember to keep up the momentum. $1,000 invested is a great start, so now it's time to develop a plan to keep it going. Find a way to make regular contributions to your account, like setting up automatic monthly transfers (or at any regular interval). Small amounts add up over time. As you get into the habit, you'll set the foundation to grow your wealth.
Take the next step
Take the next step.
We can help.