Top 7 Investments For $1,000 In Savings

Struggling to save for a rainy day? You are in good company. According to a 2015 survey by GoBankingRates, 49% of Americans had no savings, and only 29% had a $1,000 or more in their savings account. So if you’re one of the few who have managed to save $1,000 or more, congratulations. But now what? Squirreling away those dollars was hard enough. Finding an easy, stress-free way to invest those savings is another challenge altogether.

So what should you do with your little nest egg?


Pay Your Consumer Debt First

Before we dive into what to do with your “extra” money, let’s make sure it is extra money. The average American household had $7.2k in credit card debt in 2015. If you are carrying any amount of consumer debt on a credit card, line of credit, or a payday loan, it is crucial you bring that debt to zero before you even think of investing. You are probably paying between 10% and 35% in interest on your debt, and, realistically, you’re only going to make between 0.5% and 10% interest on your savings. Trying to invest while carrying consumer debt will not reduce your debt or increase your wealth.

Pay your consumer debt first

Paying off debt offers the best return on your investment

Once you’ve reduced your debt to zero, then you’re ready to get serious about investing. Here are some investments that you can make today, even if you only have a $1,000 in savings.

Good Old-Fashioned Savings Accounts

Admittedly, today’s banks and financial institutions don’t offer very high returns on savings accounts, but it’s still more interest than you’ll make stuffing it under your mattress. Shop around; you can find accounts offering rates ranging from 0.5% to 4% on your money. Credit unions are a good place to start. Option 1 and Lake of Michigan, for instance, offer interest rates of 4% and 3%, respectively. Impressive for accounts that are insured by the National Credit Union Administration. The only catch is these rates only apply to the first $10k and $15k in the account; and you have to make a minimum number of purchases with your debit card every month to qualify.

Also, read >  Top 50 Credit Unions In The US

Compare Interest Rates

U.S. Savings Bonds

US Bonds are low risk investments

Government savings bonds have long been a reliable investment vehicle. Again, they offer low interest rates (painfully low), but they are backed by the full faith and credit of the United States government and are considered as risk-free as investments get. Certificates of deposit, or CDs, are a similarly boring but safe option for risk-averse investors.

Compare CDs

Employer Group Investment Plans

Give your HR department a call and ask them if your employer offers any group investing options. If they do have a plan set up, you can usually take advantage of lower brokerage fees and the use of a fund manager to help you pick the fund that best matches your investing timelines and goals. Also, you can arrange to have the money taken directly from your paycheck and whisked away into the plan; you won’t miss it, and the money will be growing consistently and quietly in the background. Finally, some employers offer a matching program, so every dollar that you invest in the plan will be matched to some degree by them. Read the small print on these offers. There may be some strings attached, such as a minimum time in the company or some sort of penalty if you transfer the money into another fund in the future.

Peer to Peer Lending

peer to peer lending as an investment for $5k

This is a relatively new investing option. It’s exactly what it sounds like. You put money into a pool, through websites like Lending Club and Prosper, and your money is used to offer loans to individuals. You make a return on your money that varies according to the terms of the loan/investment. To limit your losses, you can diversify your portfolio by lending only small amounts, like $25, to any one borrower. More and more investors are adding P2P investments to their portfolios. It is easy to see why. Since 2009, the return on investment for Lending Club and Prosper has ranged from 5% to 11% APR.

The ROI on peer-to-peer platforms


Invest in Yourself

invest-in-yourselfDon’t underestimate the financial benefits of investing in self-improvements. According to a 2015 study by Georgetown University, graduates with a bachelor’s degree earn an average of $61k a year over their career while those with a graduate degree earn an average of $78k a year. By taking extra courses in your field, you could qualify for promotions and raises you didn’t even realize existed. In some regions, just learning a second language can increase your chances of finding a better job or improve your starting salary. Also, by increasing your education you could become a specialist in your field, or become qualified to teach or train others. If you’re a consultant, you could potentially increase the rates clients are willing to pay by specializing in one particular area of study.

Also, read >  9 Things People Don’t Do With Their Retirement Accounts But Should

Increase Your Productivity

Invest in your health to increase your productivity

Improving your productivity may require you to work less not more. Studies have shown that a balanced diet, sleep, and regular exercise improve the performance of workers. So maybe the best place to invest your extra cash is on nutritious food, less overtime, a comfortable bed, a well-deserved vacation or exercise equipment. Taking care of your body is a long-term investment you cannot afford to skimp on. You can always make more money, but body donors are hard to come by.

Not inspired by these investments? Do you want to make your savings work a little harder? Interested in taking your investment skills to the next level? Although investing in the stock market can be risky in the short term, stocks have, historically, performed better than any other type of investment, including real estate and precious metals. Before you choose a brokerage to start investing in the stock market, read SuperMoney’s reviews on the top online brokerages and wealth management companies.

  • The duck

    Interesting. But there are investment plans out there that pay in 15% – 30% range that are very safe. The amounts needed to get started are even lower than the $1,000 nest egg. Some begin as low as $4.00 per share. The down side is a broker might be required but most do not. In order to find these jewels all you need is a PC and the will to sift through the pile of investments. Most are either closed end funds or MPLs. An MPL is (a Master Limited Partnership) and pays out all its profits to shareholders. Closed end funds are mutual funds. Checking on the longevity of these funds gives you a feel for the safety of each fund. The cost per share does tend to rise and fall with stock market prices and that creates a profit or loss od cash but at the same time produces income. I like these because if you do not need the money invested it tends to grow as you purchase more and more shares with the income provided. That becomes free money over time and creates wealth by buying when the shares are the cheapest and by cost averaging by buying at a consistent rate Like once a month or every 3 months or whatever works for the individual. Or even some have a REIT plan (reinvestment plan)where every time a dividend is paid you get more shares instead of a cash payout. You can sellout any time you wish or sell some and stay in. Far better I think as long as you do not need your cash at the ready.