How to Invest $1000

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Andrew Hayward

Got a $1,000 you are looking to invest? A thousand dollars is a decent amount of cash for you to start out on your investment journey with. It’s large enough to allow a reasonable rate of growth for your investments before fees start biting into any potential gains. However, the world of investing is full of pitfalls and dangers that you have to learn to avoid in order to maximize the returns on your investments and for that reason it is strongly recommended that you conduct as much research as possible before taking the plunge. You may even consider using an independent financial advisor if you have larger amounts of money you want to invest.

In this guide on how to invest 1,000 dollars, I’ve done a lot of the leg work for you, comparing fees, historical returns, products and providers in order to provide you with the best possible solutions as well as an idea of how you can expect your money to grow.

Of course, different strokes for different folks as the saying goes so what works for one person may not work for others. So further below I have detailed the various options to suit individuals, depending on your stage in life, and how much access you require to your funds, for example.

See Also: Best Investment Apps

Questions you should ask yourself before you invest £1,000

If you have $1,000 burning a hole in your pocket and want to put it to the best possible use, then you may be considering what is the best investment to grow your money. There are several considerations to take into account, which I will explore in some detail throughout this article, however, before you even consider investing $1,000, you should first ask yourself the following four questions:

Do You Have Any Debt?

First and foremost, ask yourself whether you currently have any debt collecting interest. The interest you pay on the debt will often outweigh the gains you could earn from investing your cash. For that reason, I always recommend that you pay off any debt before you look to invest.

Can You Afford To Lose Your $1,000?

This may seem like an odd question, no one wants to lose money, but put simply investing is a risky business and whilst there are ways to mitigate your exposure with a truly diversified portfolio, there is still always a level of risk that remains and the value of your initial investment can do down as well as up. Therefore, you need to ask yourself whether you can afford to lose your money, and if not, you may be better off finding a savings account with a good interest rate. Refer to our guide to for information Saving Accounts with the best interest rates currently available.

How Long Can You Leave The Money Invested?

This is an important question, in order to ride out volatility in the stock market it is always recommended that you leave your money invested for a minimum of 5 years. Should you require access sooner, then investing may not be for you.

How to Invest $1,000

What is Your Investment Objective?

Knowing what you are investing for is the key to picking the right type of investment for you. Are you hoping to buy your first home or save towards your pension? Are you saving up for a holiday or a new car? Establish your long term and short-term objectives early on in the process in order to guarantee success.

Best Ways to Invest $1,000

Once you have established that you are ready to start your investment journey, you may be looking for the best or most lucrative investment for your $1,000. There are several vehicles that can help you along your journey and here I have outlined what I perceive to be the best ways to grow your investment.

Provider Account Type Cost Good for
Interactive Brokers Roth IRA Pricing varies but accounts subject to $10 monthly trading commission minimum (for those under 25 $3) Hands on investors
Merrill Roth IRA 0.45% annual fee for Merrill Guided Investing (other fees may apply) Good choice for long-term investors, those with an account with Bank of America
Fidelity Investments ETFs (Index Funds or Mutual Funds) Low pricing model, though check the small print One of the best overall financial service providers
Charles Schwab ETFs (Index Funds or Mutual Funds) Actual pricing information hard to calculate Highly managed accounts, automatic opt-ins for faster growth
SoFi Invest Roth IRA No account or management fees and very low fees on funds Low-cost robo-advisor that also offers access to real-life financial advisors
E*TRADE from Morgan Stanley Roth IRA $0 commissions for online stock, ETF and options trades Clear pricing model, wide range of investment choices

How to Invest $1,000 on the Stock Market

The above providers are both particularly good for their platforms, which can open up the world of investing to new and inexperienced investors. However, more seasoned investors may want to consider a platform that allows them to conduct trading by selecting their own shares from the NYSE and building their own portfolio. Therefore, we have outlined our recommendation for best investment platform for a ‘do it yourself’ trader.

interactive brokers logo

Best for Stock Selection: Interactive Brokers

Interactive Brokers offer their users one of the most comprehensive collections of shares to choose from, that lets you build your very own fully diversified portfolio. And thanks to its clear pricing model, which of course includes $0.00 fees for EFT trades on the LITE platform, Interactive Brokers is a great choice for those wanting a low cost and powerful trading tool.

Roth IRA

A Roth IRA is our go to recommendation for young investors, as with a Roth individual retirement account (IRA), you don’t pay taxes on earnings or withdrawals made in retirement. Which in practical terms means young investors can enjoy decades of tax-free growth and then tax-free income during retirement. The sooner young investors start building their nest-egg the better and a Roth IRA is a great tool in helping secure a financially stable and secure retirement.

The tax incentives for IRA’s and Roth IRA’s in particular are reason enough to invest, with individuals and couples who contribute eligible for the Saver’s Tax Credit, which can shave as much as $1,000 – $2,000 off your taxes.

If that wasn’t tempting enough then a recent study by Fidelity’s 2021 Retirement Analysis revealed that millennial Roth IRA accounts grew by 58% in the third quarter of 2021 vs. 2020.

Another incentive for young investors is that the withdrawal rules on these accounts are more flexible than with a traditional IRA, but any withdrawals made prior to hitting the retirement age 59½ will no longer be tax free. This withdrawal rule comes with one nice notable exception for first-time homeowners who can use as much as $10,000 of their Roth to buy, build, or rebuild a home.

There are many providers who can offer you a Roth IRA account, however, I have outlined our recommendations below:

Merrill Edge logo

Best overall Roth IRA: Merrill Edge

Merrill, aka Merrill Edge, not only represents excellent value but also an all-in-one stop for those wanting to for investors to manage their banking and brokerage needs under one roof. On top of which the Merrill Roth IRA was voted 2021’s “Best IRA account” by NerdWallet.

Fully integrated with its parent company Bank of America, Merrill is a great choice for investors of every level. With a wide range of services on offer, Merrill offers a comprehensive platform for helping investors secure their financial security.

Read more about IRA accounts.

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The next best way to grow your $1,000 quickly is to invest in your future by putting your money into an ETF. This method is recommended by experts as it’s a low-cost way of investing and provides diversified index funds. These are funds with low expense ratios, or fees, that are great for all investors. An S&P 500 index fund is a great place to start. This is a solid long-term bet as over time this strategy tends to generate higher returns.

There are a number of ETF providers who I have covered in more detail in my Guide to ETF Investing, however, below are our top-rated ETF platforms:

Fidelity Investments logo

Amongst the Best Low Cost: Fidelity Investments

For people who would like to start planning their financial security and are a little unsure as to how and where to start then Fidelity is an excellent port of call. This low-cost platform is packed with educational resources for new investors entering the market for the first time

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Your capital is at risk. Investments can go up and down in value, so you could get back less than you put in. Other fees apply. For more information, visit

Charles Schwab logo

Best overall experience and customer services: Charles Schwab

Charles Schwab is a pioneer in commission free stock and ETF trading, when you combine this its great customer service and solid returns it is an attractive package for investors of all backgrounds. Schwab charges $0 for stock and ETF trades and $0.65 per contract for options, when combined with the resources it offers customers it really is among one of the best priced offerings out there.

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Have you tried eToro?

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Your capital is at risk. Investments can go up and down in value, so you could get back less than you put in. Other fees apply. For more information, visit

Other Smart Ways to Invest $1,000

If investing in the stock market isn’t for you, then don’t worry, we’ve got you covered with several other ways you can make the most of $1,000.

Invest in Starting a Side Business

If you have an idea lurking in the back of your head and would love to get it off the ground, then this might be your opportunity. A 1,000 dollars investment can help turn dreams into reality and the potential income from a side business can do wonders for your personal finance. Best of all it is often possible to start a business with relatively modest cash-liquidity and if your idea takes off then you may well find yourself chasing investors away.

Invest in Your Education

Another great way to invest $1,000, and one that you may not have thought of straight away, would be to further your education and personal development. The return on your personal growth can often-times be immediate and long-lasting and as well as a potentially providing a boost to your career and earning prospects the sense of personal wealth and well-being is perhaps even more valuable.

Is it safer to put my $1,000 straight into a savings account?

Yes, if safety is your number one goal, then a savings account will guarantee that you will get back what you put in. However, I haven’t recommended this course of action within this article as with interest rates at an all-time low and the world gripped by inflationary concerns it could well happen that your money will actually fail to keep up with inflation and will end up losing value over time.

This is why I recommend that you invest your money. Whilst investing does carry some level of risk, there is always the option to select a cautious portfolio where the provider has taken steps to mitigate your exposure to risk.

Should you still not want to invest due to the associated risks, then please refer to my Guide to the Best Roth IRAs to discover where you can find the best rates available for your cash.

Please be aware that whilst I have taken every measure to ensure that the information within this article is accurate, this cannot be considered financial advice and should you require advice for your unique situation, you would be best to seek the services of a financial advisor.

FAQs about how to invest $1000

What is the best way to invest $1,000 for a millennial

If you have yet to buy your own home then definitely open a Roth IRA and start saving towards that. Even if you use some of that money to purchase a property, you will still have a nice little pot saved towards your pension.

What are the best ways to invest $1,000 for a boomer?

If you are over the age of 40, then get your $1,000 into a diversified investment portfolio to help you turn your acorn into an oak.

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