Penny-Wise: 6 Great Ways to Make $1,000 Work for You

When it comes to making sound, substantial, and ultimately profitable investments, $1,000 doesn’t sound like much to begin with. In fact, most people wouldn’t think that there are viable ways to get yourself started on the road to tangible wealth with such a seemingly paltry sum. The reality is, even with as little as this, you can get yourself solidly on the right financial path, as long as you know how.

Let’s take a look at some great ways to get yourself started on your journey to financial freedom with only $1,000 while covering some great pointers on how to maximize the efficiency and ultimate success of your investing forays.

Become a Lender

You can decide to beat the banks at their own game by becoming a lender in your own right. By loaning out your money to others who might have a pressing use for it, you can earn some money as interest on your part, all without going throughout the trouble of making investment decisions on your own. Peer-to-peer lending, as it has come to be known, is rapidly gaining popularity as a viable method of growing your money. There are plenty of platforms out there that bring willing lenders and potential borrowers together such as Lending Club.

Put your money in your Kid’s College Fund

A college education is one of the biggest gifts you can give to your children, but the sad reality is that college doesn’t come cheap, and many struggle to come up with the cash when the college years come around. To safeguard their future college ambitions for their children, many middle-class parents choose to put their money in college saving plans (529 funds). Starting with 1000 dollars in such a plan is a great way to start off, as saving will get easier once you’ve got yourself used to stashing away the cash. The first step is always the hardest, but it pays off in the end.

Get a Roth IRA Started

The Roth IRA is a massively popular investment vehicle across the country. The Roth IRA is designed to help people save for their retirement. One of the most appealing elements of the Roth IRA is the fact that it offers you a tax break on the money you will withdraw from the fund upon your retirement, rather than give you an up-front tax break when you’re putting the money in. It might not sound like much of a difference, but it counts for a lot when you need every dollar you can get. Besides this, the Roth IRA offers us a lot more flexibility and leeway with our money than the employer-provided retirement savings schemes we’re used to do.

Get into Online Trading

Should you be the type of person that likes to get their own hands dirty when it comes to wealth creation, then taking a stab at online trading might be right up your alley. For greatest success here, it’s usually advisable to have some basic knowledge about trading in the financial markets, but it isn’t an insurmountable barrier to overcome. You could, in fact, take the opportunity to learn the ropes as you go along here. Try out investment options such as ETFs (exchange-traded funds), as they are relatively lower-priced and offer wider ranges of diversification, which is always a good thing for beginners.

Pay Off your Debts

It might not seem like the type of suggestion you were hoping to find on such a list, but paying off outstanding debt can be considered an incredibly effective way to ensure your future financial stability. Debt accumulates interest when let outstanding, and over-stayed debt may harmfully affect your credit rating, therefore making it harder for you to access credit facilities in the future. The debt-free individual is often more financially secure than the one encumbered with debt. Always remember that debt is often more expensive than an investment is profitable. That’s how they get you.

Diversify your Funds

One of the biggest mistakes we make with our money is keeping it all in one place. Many of us are prone to forget the age-old exhortation not to keep all our eggs in one basket. Like we mentioned earlier on, one of the best ways to achieve diversification in your investments is through the purchase of ETFs, which make the process of spreading out much easier.