How to invest 1000 dollars – The typical rules DON’T apply

I remember the days of wondering how to invest 1000 dollars.

If that’s you now, hopefully, you’re right out of school, and you’re working overtime, around time and in-between time in the last year to save some extra cash, but it likely seems that you haven’t gotten very far. You look at your bank account and think your hard work hasn’t been worth crap.

You managed to save $1000, but you want to start saving faster. Is there anything that will help to jumpstart your efforts so that you don’t need to work so hard for so little?

Good news! You can use your saved money to achieve exactly that! With $1000 there is no point in “investing it” in the traditional passive investment stuff. The payout will be horrible. Oh, you made a 10% return on your $1000 this year. Congrats, you can buy a sandwich and some pants.

Horrible! 

A personal vendetta – Why learning how to invest $1000 is special

See, this is a vendetta I have. People base their investing knowledge on rich people. If you only have $1000, you are not rich…at all. You have a different set of rules you need to follow UNTIL you are rich.

We need something better and that something better than “normal investing” is improving you.

I like to think we are building a rocket ship to your millionaire status. With your $1000 you are far from a millionaire. Right now you are not a rocket. You have no fuel or wings. You’re learning how to invest 1000 dollars is building a launchpad for your future self. 

Right now, you are just a cement truck of glory!

So how do you build a launch pad? We will do 3 things to set you up for future success. 

how-to-invest-infographic

And *drumroll* the three biggest tips on how to invest 1000 dollars and come out on top are:

1- Invest IN YOURSELF (500%/yr)

Using some of the time you spent grinding pizza delivery hours to get a certification instead. Develop a new trade or attend a class that enhances your skillset. That is at the top of my list of how to invest 1000 dollars.

how-to-invest-1000-dollars-in-yourself

Why you’ll benefit:

  1. You can add security to your job. If things start to go south where you work, you made yourself a better asset and will prove to be more essential to the company.
  2. You’ll have a great sense of accomplishment by taking your next step toward being above average.
  3. It increases your possibility of landing you a new job for a big pay raise.
  4. You could position yourself quit the corporate world entirely by doing your own thing! Or better yet, learn how to invest in real estate.

The numbers:

I consider this a 500%/year return or $5000/year raise* by investing $1000 a shrewd step toward the good life. You won’t find those results on a Dow Jones report.

*A 5% raise on a $100,000/year income or 10% on $50,000/yr is an easily achievable jump.

Your employer may not be good at giving raises, but if you make yourself a better employee and give your boss the right initiative, you can earn a lot more or get yourself ready to find a newer (higher-paying) job.

2 – Learn how to invest $1000 in stocks to crush your fears (10%)

Like so many others who have never invested, a tank of piranhas comes to mind when you imagine your first attempt at investing.

I’m going to help you get past that fear of not knowing how to invest 1000 dollars, so that you can jump in piranha free. You can skip the blunders and get on the road to retiring before you reach your 30s, which is when I was able to retire.

how-to-invest-1000-dollars-in-stocks

And the step you need to take: Getting an early investing start with little risk. This way you’ll avoid serious roadblocks when you have serious money due to a lack of experience by investing now while you have very little.

Why an early start helps:

Here is something I have seen countless times. I mentor people who email me. Almost everyone I mentor suffered from this. 

Not knowing how to actually buy a stock or ETF creates gigantic setbacks for people. 

They get overwhelmed with all the buttons and options and they put it off. One week turns to 4, which turns to 4 months, which turns to years of money just sitting around

Starting now, when you barely care if you lose 5% – it’s only $50 – that overwhelming feeling will be suppressed.

I will be honest, you won’t see enough change that can allow you to pay off your student loans with your returns, but once you have a significantly larger income, it is very important to know what to do with your money to maximize your investments and not hit a roadblock. You will have bigger and better things to do then than set up your investing account. 

The sooner you begin to learn how to invest correctly, the more prepared AND MOTIVATED you will be for being wealthy.

A good starting point:

I recommend starting with an ETF index fund (like VOO). It’s simple, safe, takes little time and secretly beats every other investment around. 

Learn about this simple investing method.

Experiencing huge returns on your investments once you see a spike in your income is an education well worth your time and effort.

The numbers:

Investing in a 100% stock ETF should net you a 10% annual return. That sounds great until you realize that’s $100. But that’s ok. This is for education and motivation.

Don’t invest more than $1000 into stocks until you have a lot of money. My other recommendations are way better. Get this 1 investment and watch it. That’s all.

3 – Pay down high-interest debt (25%-100%)

People harp on about paying down high interest debt. It’s the root of all personal finance evil. 

Well, eradicating high-interest debt such as credit cards or payday loans is a way to boost your savings. A 25% interest on your card is really only costing you $20/month though. It’s not great but it’s not that bad.

So then why should you pay it off? 

how-to-invest-1000-dollars-in-debt

High-interest debt is bad for you BECAUSE it ruins your credit. That $25/month isn’t going to break your bank. But if you want to make it big you’ll need good credit soon.

Trust me. Good credit basically gives you money. You can get better rental home loans (oh yeah that’s coming), you can get better student loan refinancing deals. It’s great. 

You need to pay off your credit card debt to access…MORE credit later.

Why you’ll benefit:

When you get rid of those interest payments, that’s some more money back into your pockets. Many high-interest debts have an average interest rate of 25%. When you pay that debt off, you aren’t making some other guy rich (25% returns are really amazing!). 

More importantly by paying off that debt you are setting yourself up to be able to BE that guy who can hand out money, once you also get that raise we talked about.

Good credit, investing knowledge and a good income. A recipe for success if I’ve ever seen one.

The numbers:

A $1,000 payday loan with a hefty 25% interest rate costs you an extra $761 if you pay it off in 5 years. Do you catch my drift?

Not only are you keeping that money in your pockets, but it boosts your credit score which brings in MORE money. In the long run, you pay an average of $6,000 more for an auto loan with poor credit and $3000 more with moderate credit than a person with excellent credit.

So by paying off your card, you will net thousands in return. In effect you are helping the you 1 year from now make some sweet moves.

I can go on for hours on this topic, but I think I’ve helped you understand how to invest 1000 dollars and get the most return from it to help you get on the best road to wealth.

TL;DR – How to invest 1000 dollars

  • Invest in your brain to gain new skills and certifications that will lead to more income
  • Learn the stock market just to get the feel for it 
  • Paying down your debt to boost your credit.

And what about you? Have you made a better investment with $1000?



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