- If you are investing your first $ 1,000 for maximum growth, try investing money in a Roth IRA.
- Financial planners also recommend choosing index funds or stocks for dividend growth.
- To increase your earnings, spend that money learning a skill that makes you more valuable.
- Read more articles from Personal Finance Insider.
A friend recently asked me a question I wasn’t so sure I knew how to answer. They had just set aside their first piece of cash and wanted to invest it in something. After years debt repayment, learning solid financial advice and sticking to a budget, this was their big goal.
I still am novice in investing. I have only been investing in stocks and funds for less than two years and have only recently entered into a dedicated relationship with my retirement account.
Here are some tips from financial advisors on the four best ways to invest your first $ 1,000.
1. Select a diversified index fund
If you want to invest in the market but don’t want to buy individual stocks, financial planner Kenny Senour recommends investing in cheap, highly diversified index fund.
“Fees are usually much higher in funds with active management, so starting with diverse, cheap costs
it can help you stretch your first $ 1,000 investment in the long run, “says Senour.” Make sure that any index fund aligns with your long-term goal and time horizon (when you will need the money) for your first $ 1,000. “
2. Finance the Roth IRA
While you might want to invest that cash in something with current returns that you can take advantage of, Senour recommends that you consider oa Roth IRA.
“Using a Roth IRA for retirement savings can be ideal,” says Senour. “Earnings from underlying investments on the account grow tax-free, as long as you wait until age 59 and 1/2 and the Roth IRA is initially funded for more than five years.”
3. Go with dividend growth stocks
Watch out dividend growth stock, which are shares that pay dividends and which have grown significantly in the past for a number of years. According to Jonathan P. Bednar, II, financial planner, dividend growth stock are a smart way to make money now or take advantage of those dividends to reinvest.
“I’m looking for companies that have been raising dividends for more than 25 years, involving reinvesting dividends and letting the company take on the hard work,” Bednar says.
4. Invest in your career
While it might sound like alternative advice to talk to a financial expert, Tony Grenier, a financial planner, recommends taking your first $ 1,000 and using the money to enroll in a class that can increase the value of your career.
“You can enroll in data analytics or even content writing courses to diversify your skills and then take on newer tasks at work,” Grenier says. “You can also enroll in classes that teach your hobbies like creating a craft, which you can sell later.”