If invested right you can double this $1000 in seven years. What's up guys I'm
Rose and if you've never invested before and you want a super beginner-friendly
video to break down some of your investing options, then this video was
made for you. I'm gonna show you ten ways to invest $1,000 and I'll walk you
through each tip step-by-step so that you'll actually be able to start putting
your money to work after watching this video.
The first way you can invest your $1,000 is to invest it in an index fund.
An index is a tool that quickly tells you how the stock market is doing. There are
lots of indexes out there like the Dow Nasdaq and a bunch of others but let's
use the S&P 500 as an example because it's the most widely used stock market
index. The S&P 500 is a sample set of the 500 largest companies all rolled up into
one easy to read average price. So if you wanted to know how the US stock market
performs in 2018, rather than looking up all 500 stocks
individually you can just look up where the S&P where the S&P 500 started the
year and end of the year and that would tell you how the stock market did in
2018. Although there's a lot more than 500 stocks in the United States there's
actually three thousand six hundred and seventy one the S&P 500 is a pretty
accurate barometer of how the overall US stock market is doing because it has the
500 largest US stocks. So back to index funds. An index fund is an investment
vehicle that mirrors in index. Remember the S&P 500 index - it's just the
calculated average of 500 different stock prices so you can't invest in the
S&P 500 it's just a number but you can invest in an SP 500 index fund. When you
invest in an S&P 500 index fund you immediately become a part owner in each
of the 500 companies in that index. And if the S&P 500 index goes up 5% your
investment in the index fund also goes up 5% if the SMP 500 goes down 5% your
investment also goes down 5%. There's two really good reasons to invest in an
index fund. The first reason is that you get safety in numbers - with an index fund
you don't have to know how to pick stocks because the S&P 500 consists of
500 widely diversified stocks across different industries sectors and you
don't have to be a genius to benefit from the wealth creating capabilities of
the stock market. All you have to do to get on that long-term upward trend is to
invest in an index fund. So if you're not interested in researching individual
stocks then you have to rely on safety in numbers. This strategy is also
known as diversification and it works because although not all stocks go up
over the long term, the overall market does go up over the long term. The second
reason is that index funds offer automatic reinvestment. This is really
convenient. Once you make your initial one thousand dollar investment you'll
probably want to keep adding to your nest egg, so what you can do is set up
automatic monthly contributions from your bank account and the index fund
will reinvest this additional cash back into the fund every single month at no
additional cost, so you can literally just set it and forget it.
Because everything is done for you. There's a few good S&P 500 index funds
out there and it doesn't really matter which one you get - they all track the S&P
500 very closely and they're all very low-cost. So here are two you can Google
to jump start your research. SWPPX and FXAIX. The second way to invest your $1,000
is to invest in an ETF. ETF stands for exchange-traded funds, and they're very
similar to index funds. Just like index funds ETFs track an
index and the only difference is in how they're traded. For example, SPY is an S&P
500 ETF that is the exact equivalent of the FXAIX (an S&P 500 index fund - the
one that I just mentioned) and both of them are pooled investment vehicles that
give you easy access to a large selection of stocks so you get access to
hundreds and thousands of different stocks all with one easy purchase. But
with the index fund you can only buy and sell your shares
once a day, and with the ETF you can buy and sell anytime the stock market is
open because it trades just like a stock. Some people prefer ETFs because they like
being able to buy and sell their shares whenever they want and but however a big
downside to ETF is that they don't offer automatic reinvestment so if you want to
keep adding to your portfolio every month with an ETF you'd have to buy more
shares of that ETF every month without additional money otherwise your cash
will just sit there and will probably incur commissions and
fees so if you just want something to set it and forget it and it'll just
automatically automatically get reinvested every month then you should
just go with index funds. The third way to invest your $1,000 is to invest using
a robo advisor app. Now there's a lot of these new apps out there and they make
it super convenient for you to invest. Some of them are Stash Betterment
Acorns Ellevest Wealthfront and the best part is none of them really have any
investment minimums so with $1,000 you're definitely good to go.
These apps make it super easy - you hook up your bank, transfer over some money and boom your money gets invested in one of their
cookie cutter portfolios that are professionally designed. Out of all the
apps I love Acorns - it has a really cute
easy-to-use user interface and it has this feature where you can link up your
credit card or debit card and it'll round up every purchase you make and
invest that spare change into your portfolio so if you really have a hard
time saving any money then this could be a good way to just get started all these
apps essentially do the same thing they'll just ask you some basic
questions about your age your financial goals and your time horizon and then
based on your answers they create an investor profile for you and they'll put
your money into a prepackaged portfolio tailored to your investor profile these
prepackaged portfolios combine a handful of ETFs that will give you well-rounded
exposure to a variety of stocks and bonds it's important to note that acorns
gives you and other apps like acorns give you very little control over your
portfolio so you only get to choose between their prepackaged portfolios and
you can't just buy whatever individual stock you want so it's the same with all
the apps you're basically giving up control in exchange for convenience and
simplicity so if you want to put your money to work and not have to think
about it too much and you really don't want to take the time to learn to do it
on your own then definitely consider investing with
one of these apps the fourth way to invest is to invest in stocks using the
magic formula now if you're more of the DIY type you might prefer investing in
individual stocks and you probably know this but the stock market right now is
that all-time highs and it's been making record highs and highs and has been on
the longest bull run in history so that makes people nervous because nobody
wants to be that person who buys in at the very top and then everything crashes
so at this point in the cycle you want to be really careful and it's hard to
find good bargains out there so what's a girl to do luckily there's a solution
and it's called magic formula investing based on two simple financial metrics
earnings yield and return on capital the magic formula filters through the
thousands of companies you could invest in and it shows you only the stocks that
are priced cheaply relative to their earnings potential the idea is that if
you're buying good companies for cheap then your risk is super low because
there isn't much room for the stock price to go any lower so it's the magic
formula is a really handy stock screener so that you only get the good deals and
not the really expensive ones that are the first to crash if you want to learn
more about the strategy then check out this little book the little book that
build beats the market it's only like 150 pages long and as
written by a really smart fund manager named Joel Greenblatt he explains the
whole strategy step by step and it's all written in plain English I read it in
one day and I highly recommend it the fifth thing you can do with your money
is to invest it in the money market maybe you're not ready to invest in the
stock market yet maybe you just want to park your cash somewhere until you
decide what you want to do with it then consider putting it into what is called
a money market fund the money market is a place to park your cash short-term and
earn a decent yield of about two to three percent when you invest in the
money market you're lending your cash to short-term borrowers meaning loans with
maturities around three to six months and it's a very safe place to keep cash
because there's hardly any interest rate risk and generally very little credit
risk so I don't know about you but earning two to three percent on my money
is way better than my savings account which I don't know of any savings
account that pays very much they're pretty much close to zero the money
market is where huge companies like Apple and Berkshire Hathaway and a bunch
of individual investors like you and me invest their extra cash when they have
extra cash reserves and while 3% is it much it at least helps your cash keep up
with inflation so if you ever need the cash you can just get your cash out of
your money market fund the next day but meanwhile the money isn't just sitting
there doing nothing so it's a really good option although there's different
ways to invest in the money market I think money market funds are the best
way for individuals to access it because they're low costs and diversified so
that will maximize your return while reducing your credit risk some popular
low-cost money market funds that you can look into to jumpstart your research are
FDL XX & v MF X X these are both big funds that invest in a mix of US
government securities the sixth thing you can do is to invest in building up
your emergency fund I know this is really boring personal finance advice
but it's actually really important for investing having an emergency fund gives
you a cushion so that you're never forced to sell your investments just to
pay for an unforeseen expense you need to have this cash cushion because you
never know what the markets gonna do and the last thing you want is to have to
sell them at the worst possible time after a dip in the market just to come
up with some cash because if you do have to sell your investments during a
downturn just to come up with cash then you won't be invested in the market
anymore when it recovers so you'll just lose and lock in those losses so since
investing success is all about the long-term and staying in it for the
long-term never want to tie up cash that you need
for short-term stuff in the stock market because the stock market is a long-term
place it's not a short-term place so a good rule of thumb is to have about
three months worth of expenses in your emergency fund but I know that's a lot
so 1,000 even just $1,000 makes a great starter emergency fund and then you can
always add a little bit to it every month until you have enough to cover you
no matter what happens number seven another way to invest your
$1,000 is to try out one of those real estate crowdfunding platforms
traditionally real estate requires a good amount of capital but thanks to
crowdfunding technology now you can invest in real estate with just a
thousand dollars or even less fundrise is a platform that crowdsources funds
online from small investors and it uses that money to buy investment property
all over the US what I like about fundrise and real estate investments in
general is that they offer a balance of dividends and growth real estate
generates steady income from rents but it also appreciates in value and since
I'm young I definitely want growth and the dividends are just a bonus because I
can either reinvest them right back into the fund or spend it on other things the
minimum investment at fundrise is only $500 and the whole onboarding process is
super easy before you make an investment you can see the photos and addresses of
the projects that your money will be invested in you can review the
financials and you can even drive by to look at the properties and you can check
it out in person tip number eight another way to invest your $1,000 its
invested in a REIT or a real estate investment trust this is another way to
invest in real estate similar to crowdfunding but it's actually a reed is
a stock it's a stock in a company that owns income producing real estate REITs
trade on an exchange just like stocks so they trade on the same exchange as where
Apple and Microsoft and all these big companies that you know about trade but
its ownership in a company that owns real estate and it's a good way to start
dipping your toes into real estate because it's obviously a lot cheaper to
buy one share of a REIT than it is to buy an entire property and because of
their focus on income producing properties they're pretty good for
people who are looking for dividends but also want a little bit of growth as well
let's have a look at SPG or Simon Property Group this is a well known REIT
that owns commercial properties all over the United States and their dividend
yield right now is about four and a half percent that means on a $1,000
investment you'll get a dividend check for $45 every year the biggest
difference between REITs and crowd one platforms like fun rise is the
transparency and the type of properties owned since reeds are publicly traded
companies they have much stricter requirements for financial reporting
also REITs are required to focus on income producing properties whereas fund
rise deals are allowed to be a little more speculative and growth focused
number nine you can invest in paying down debt okay I know this isn't really
an investment in the traditional sense but when you get rid of debt those
monthly payments can go towards building up your investments instead of going
towards debt I used to have six figures student debt and my monthly payments
were almost a thousand dollars so before I got serious about getting out of debt
I literally had zero investments zero money to put towards investments but now
that most of its paid off I have an extra like eight hundred dollars every
month to save and invest and that's when my investment portfolio really took off
on a standard student loan at 6% interest reducing your principal by
$1,000 frees up ten dollars of extra cash flow a month you can then automate
a ten dollar transfer into your investment account every month and boom
you're on your way to building up some really good investment habits and to
building up your nest egg so if debt is preventing you from being
able to consistently put away money towards your savings and investments
then the best way to invest your $1000 might be to start paying down your debt
last but not least the ultimate investment is investing in yourself
Einstein once said we can't solve problems by using the same kind of
thinking we used when we created them in other words the person who has 1 million
dollars in the bank is not the same person as the one who has $100 in the
bank so to go from A to B you literally need to become a different person and
think differently I've invested tens of thousands of dollars in personal
development programs meditation retreats workshops online courses coaches you
mean it and it's so worth it if I hadn't done that I probably never would have
gone out of debt or even started taking action on any of my investing goals when
you invest in yourself then you upgrade your mental software so that you can
think differently think bigger and break through any of the invisible and
subconscious barriers that you've you bet you have in your life right now I'll
link below to some of the programs that have made a big difference in my life so
you can check them out if you're interested if you liked this video hit
that subscribe button below and to share this video with your friends so we can
open up the conversation around money and build a sisterhood of financially
savvy empowered women always remember to go after your dreams unapologetically
and to live life on your terms now anyone else's your terms Cheers