How to invest 1000 dollars
The best way to invest 1000 dollars is actually very simple. In this post we’ll give you three tips that apply to everyone, and then a few investing tips and an investment portfolio example depending on your age. You’ll be reading simple, time-tested advice on how to invest 1000 dollars.
Investment advice for everyone:
- Invest long-term.
- Invest at regular intervals.
- Stay invested & re-invest your dividends. Don’t try to time the market. Just stay invested and keep buying at regular intervals.
These three tips also echo Warren Buffett’s advice. The Oracle of Omaha says:
“You don’t wanna buy to hold for a year, you don’t wanna buy with the idea that you could sell it in two years or three years necessarily, to make money. You could lose money that way. Buy the S&P 500 for $10, $20, just keep buying the S&P 500 and forget about all the other nonsense that’s being sold to you. America is a powerful economic machine that, since 1776, it’s worked and it’s gonna keep working.”
You heard Buffett! If you only want to invest in one thing, and one thing only, invest in the S&P 500. But if you want to do more than just that, read below.
So you have $1,000 and you want to invest it. Here’s how to invest 1000 dollars, with a few investment portfolio examples
If you’re under 35: Invest in risk assets. Stay invested 30+ years.
Example portfolio for beginners:
- 20-100% S&P 500 ETF
- 20-100% Russell 2000 Small Cap Stock ETF
- 10-20% Low quality (CCC and below) high yield bond ETF
- 10-20% Emerging Markets ETF
- 10-50% Individual stocks depending on knowledge
Here’s why: The above are diversified, riskier investments that (with the exception of individual stocks) require no prior knowledge or research, because they have performed strongly over time in the past and since you’re under 35, you will stay invested for 30+ years, at which point you are nearly guaranteed to have strong gains. Not investing in risk at your age is actually riskier than investing in safer investments such as cash or bonds. Depending on your knowledge, individual stocks are also great investments because they are higher risk/reward long-term. When you’re young, invest in diversified risk and don’t waste time with bond investments. Picking one or a few of the stocks chosen by Warren Buffett is one place to start if you aren’t experienced but want to invest in individual stocks. You can also invest in Warren Buffett’s entire investment portfolio by purchasing stock of his fund Berkshire Hathaway.
If you’re between the ages of 35-45: Invest in moderate risk. Stay invested 20+ years.
- 50-100%: the good old S&P 500. Make an investment in the S&P 500.
- Selective investments in individual stocks depending on knowledge
Here’s why: The S&P 500 is a safe bet that still has a healthy amount of risk. Is it really safe? Yes, because you will stay invested for 20+ years, and the stock market has never returned less than a savings account in a 20 year period. And Warren Buffett recommends it! Invest in the S&P 500. As we mentioned above, picking one or a few of the stocks chosen by Warren Buffett is one place to start if you aren’t experienced but want to invest in individual stocks.
We have a Moderate Strategy on iBillionaire that invests in diversified stocks, bonds, individual stocks, and more that might suit you.
If you’re nearing retirement age (5-10 years away): Play it safe.
- 80-100%: Bonds (all maturities). Two diversified bond ETFs with low expense ratios are: Vanguard Total Bond Market ETF (BND), and Vanguard Short Term Bond ETF (BSV).
- 10-20%: S&P 500, depending on what percent of your investment you will need to withdraw each year after you retire. If you will need to withdraw it all in the first few years of retirement, investing in stocks might not be wise.
Here’s why: Because you will be retired in the near future, you will cash to fund your life. You cannot afford to (or perhaps you can, but you don’t want to) sell investments at a steep loss, which could happen in the near-term. Investing is still a good idea, because savings accounts likely do not offer interest rates higher than the bond market, and there’s no reason to miss out on potential gains, even at this stage in your life.
Once you have invested your $1,000, we recommend continuing to invest regularly in the same investments for the rest of your life, or until you learn more and can branch out into other investments. Even if it’s just $20 per month, keep investing!
At iBillionaire, new clients always ask us to recommend the best investments on iBillionaire. Below is the general advice we give to everyone when they ask for recommendations on what to invest in, independent of their age.
While we don’t make specific recommendations to our investors, our standard recommendation depends on your risk tolerance. High risk investors might consider our Growth Strategy, as well as investments in other strategies (we have many options, for example, Green Energy, Health & Fitness, FAANG) and individual stocks. Moderate risk investors might simply choose our Moderate Risk Strategy, or choose more of their own investments, for example, the Billionaire Mix Strategy diversified with small allocations to other strategies, individual stocks, the Gold Strategy and/or the Safe Haven Strategy. Conservative investors might find our Conservative Strategy the most appropriate. To everyone, we recommend investing for the long-term, ideally 20 or more years. We also highly recommend investing in whatever you choose at regular intervals in amounts you can afford.
Let’s delve deeper into why we recommend investing at regular intervals. If you’re asking how to invest 1000 dollars, we think it’s some of the best advice we can give you.
Why invest the same amount at regular intervals?
This is why: you not only make a habit of investing and grow the amount of money you will have in the future, you also take advantage of dollar-cost averaging. Dollar-cost averaging is what automatically happens when you invest the same amount at regular intervals (weekly or monthly for example). You automatically buy more when prices are low and less when prices are high. The total price you have spent investing, or the cost of investing, becomes an average in the end. Meaning, over the long-term, you will have invested at both market highs and market lows. You will have reaped the advantage of timing the market perfectly, and simultaneously limited the downside of investing at the worst time possible.
Do you want to keep learning about how to invest? Here’s a blog post we wrote about the basics of investment management.
PS – We are not fortune tellers, and investing is never guaranteed to make you money. Past returns are not indicative of future results.