Let’s paint a picture. You are 18, just finished school, and have started to realise that everything is so bloody expensive. All of a sudden you realise that you need money to do the things you want to do and it creeps up your priority list.
You start reading up on personal finance, do a few google searches and sooner or later you will stumble across INVESTING.
No doubt you have heard the word used many times but if you were anything like me, you probably didn’t pay any attention to this. And that is perfectly fine.
Well, investing is the term given to exchanging something that is yours (usually time or money) in order to gain something.
Most people’s minds go straight to stocks and property. Whilst this absolutely is an investment, there are so many different types of investments that you could list them for days.
You invest your time in a relationship getting to know someone. You invest your money educating yourself so that you may be able to get a higher paying job in the future. And you may invest your money into stocks hoping that they increase in value.
There are many different ways to invest your time and money. Here is our list of 8 ways that you can invest $1000. Please note this is not financial advice, please do your own research before making investment decisions.
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Investing in stocks is probably one of the most well known types of investments. A stock is a company. The thought process behind investing in stocks is that you buy them, and over time the company grows and hence the value of their stock increases.
There are so many different types of ways that you can invest into the stock market that it can be overwhelming. There are individual stocks, ETFS, managed funds and quite frankly a lot more options.
The easiest way to invest into the stock market is to sign up to a brokerage platform such as Pearler where you can buy the stocks that you would like directly yourself.
Similar to investing in stocks people buy property with the hope that it will increase in value over time.
Why do they think it will do this? Probably because that it what it has done in the past. Whilst the past does not guarantee returns, it can be used to indicate what might happen in the future.
You might be thinking to yourself, how the hell am I meant to invest in property with only $1000?
Well there are a few different ways to do this. The first is through REITs (Real Estate Investment Trusts). You can purchase REITs from the stock market. A REIT is like a basket of properties. By buying one you will now receive a portion of the rental income from those properties.
The other way to invest in property with only a little bit of money is through Brickx.
A Brick is a tiny portion of a property. For example a property may be split into 1,000 bricks worth $1,000 each. You can buy one of these and own 1/1000 of that property.
Once you own that you will receive the rental income as well as receive capital growth.
WAIT! I know it’s a little cliche and a bit boring but please don’t skip this one.
For 99% of people, when they are picking an investment, the thing they focus on the most is ROI or return on investment.
We all want to invest in things that will give us the maximum gain right? Of course we do. When you give up something whether it be time or money, you want to ensure that you are getting the maximum return.
Some investments are easy to gauge returns. The stock market averages roughly 8%, property 7%, bonds 3% and so on.
Investing in your education is a little bit different as there is no average number that you can expect. But when you gain knowledge you also gain power.
Investing in your education is in my opinion the best investment that you can ever make – anyone that disputes this is just blatantly wrong.
Learning can truly change your life and open up so many doors that you never even knew existed. It doesn’t have to be a four year university degree, it can be as simple as investing $20 and buying a book on investing in the stock market.
I think I am reasonably smart, but I also acknowledge that there are people out there far, far brighter than I. But this is completely ok.
You don’t need to be the smartest person ever when you can buy a book or watch a video and learn everything they know on a particular subject in a few hours.
Don’t be fooled, investing in your own education is one of the best decisions you can ever make.
Most of us live busy lives. Every now and then it can be nice to invest in yourself. Spending money on yourself is a way of rewarding yourself for your hard work.
Whilst you may not get a financial return on this type of investment, you will likely get some level of satisfaction or joy from your purchase.
Whether its buying yourself a new pair of shoes or the latest iPhone, there are many ways in which you can invest in yourself.
Of course you want to do this one in moderation, you can’t go spending every pay check that you earn on clothes, however, investing in yourself every now and then is more than ok.
5. Into Your Savings Account
Sometimes when you aren’t 100% sure what to invest in, the best thing you can do is simply put your money into a high interest savings account.
Your money is insured and you can usually earn about 2% interest if you pick the right bank.
Now I completely understand 2% is nothing to write home about, but it is enough to prevent inflation from eating away at your money.
The best thing about this option is that it is super easy to do and gives you the ability to bide your time and decide what you want to do with that money in the future.
6. Emergency Fund
Creating an emergency fund is extremely important. It is often overlooked but having one set up can really save your ass if things go wrong.
If you don’t have one set up, then this should be your number one priority. Forget about any other type of investment until you have your emergency fund set up.
I know it isn’t as exciting as buying stocks or something else, but investing your money into creating an emergency fund is one of the best decisions that you can make.
7. Paying Down Debt
Most people have some sort of debt these days. Whether its a little bit of credit card debt, a car loan, a HECs debt or a mortgage, debt is very, very common these days.
Now there is good debt and bad debt, but that is a completely different matter. Having debt can significantly impact other aspects of your personal finances. For example, if you earn $1000 a week and have a mortgage, straight away a portion of your income is going straight towards paying off your mortgage.
Some of you might think what’s the big deal? Well, the first thing to understand is that most debt has interest attached to it. You are essentially paying to borrow money that isn’t yours. So, the longer it takes you to pay off that loan, the more debt you will pay.
The second part of this is that by having to allocate a portion of your income to paying down your debt, you are reducing your disposable income every week.
Investing your money into paying down your debt isn’t exactly glamorous, but becoming debt free definitely has its perks.
There are multiple different debt payoff strategies, but mathematically speaking, it often makes the most sense to start with the debt with the highest interest rate.
Ok guys, i’m not gonna lie, this one is down the bottom because it’s not one of my favourites.
It will be genuinely interesting to see what is happening in the cryptocurrency universe in 10 years. I have no doubt there are some crypto’s that have genuine real world uses and the potential to change the game. However…
I think about 95% of people who are currently invested in crypto couldn’t actually give a proper definition of what it is, how it works and how it benefits the world. What does this mean? It means they are effectively just gambling.
Now this isn’t to say that there aren’t thousands of people who have made an absolute bucket load from crypto, but with barely 10 years of historical data, no underlying value and no idea what the future holds, you are kidding yourself if you don’t think investing in crypto is high risk.
If you only have $1000 to your name, I wouldn’t be investing it into cryptocurrency.
But in saying that, if you have a substantial amount of money invested in other assets, maybe you would like to put a little bit into cryptocurrency to diversify and hedge your bets.
If you do want to purchaser cryptocurrency, I personally recommend using Swyftx, they are the crypto exchange that I use and I have had nothing but a positive experience with them.