Looking to Make Money Moves? Where to Invest $1,000 Right Now

This article is provided for informational purposes only and should not be construed as legal or investment advice. Always consult with a professional financial or investment advisor before making investment decisions.

When you've got $1,000 in your pocket, you can make a wide range of money moves. One of them is to invest that cash, so it starts growing. That $1,000 may crest $10,000 with wise investments and the right amount of time. 

This may leave you wondering where to invest $1,000 right now to make the most of it. Below, we'll cover all your investment options, including the pros and cons.

Where to invest $1,000 right now

There are many places to invest $1,000 right now. Let's look at a handful of options for your $1,000.

Pay off high-interest debt

Investing cash and watching your account grow from interest, stock price increases and dividends is exhilarating, but high-interest debt can easily offset and even exceed your investment gains. 

As of February 9, 2022, the average credit card interest rate is 16.13%, whereas the average returns in the stock market are about 10% per year. This means your interest will likely outpace most of your investments, negating any gains. 

You can shift the balance by using your $1,000 to pay down or pay off your debt, giving you a clean slate to develop a firm investment strategy. 

If $1,000 isn't enough to pay off all your debt, pay off as much as you can and use the debt avalanche or debt snowball method to pay off the rest. With the debt paid off, you’ll have more disposable income to quickly grow a new $1,000 fund to invest in. 

Pros:

• Fresh, debt-free start

• Grow your disposable income

• No more interest charges

• No more worrying about monthly payments

Cons:

• Won't earn you money

• May take a long time if you have a lot of debt

Fund your Roth individual retirement account (IRA)

With $1,000 in hand, you can put this cash in a tax-advantaged retirement account. Usually, your employer-sponsored 401(k) is the first stop for investments, thanks to its immediate tax advantages and potential employer matches. 

However, these are employer-sponsored accounts you can usually only fund through payroll deductions — you generally can't write a check to your 401(k). This rule has some exceptions, like those with a self-employed 401(k) or a Roth 401(k). 

However, a Roth IRA is your account that you can fund as you please. You can send your IRA servicer a $1,000 check and let it handle the rest. While you won't get an immediate tax break, the withdrawals you make in retirement will be tax-free. 

On average, a Roth IRA delivers annual returns of 7% to 10%. So, if you left that $1,000 in the Roth IRA for 30 years, it could be worth $7,612 to $17,449.

Pros:

• Simple, hands-off investing

• Funds grow tax-free

• Can make tax-free withdrawals in retirement

• Diversified by default

Cons:

• Limited control over investment strategy

• Limited investment opportunities

Invest in mutual funds

Diversification is critical in any investment strategy. But, for a beginning investor, it can be difficult. This is where mutual funds help. 

Instead of buying individual stocks, you can open a brokerage account and buy into a mutual fund, including multiple stocks and other investment types. As the overall portfolio grows, so does your investment. 

Since mutual funds involve multiple stocks and other investment types, they significantly reduce the risk of losing all your money on a bad investment. But keep in mind they don't fully eliminate this risk. 

Mutual funds can also be index funds that track a specific stock market index, such as the Fidelity Zero Large Cap Index and the Shelton NASDAQ-100 Index Direct. 

Pros:

• Automatic diversification

• A relatively hands-off investment strategy

• Grows as a fund instead of individual stocks

Cons:

• No control over individual stocks

• Limited investment options

• Cannot trade live

Invest in exchange-traded funds (ETFs)

ETFs, like mutual funds, are a collection of stocks and other investments placed into one portfolio you can invest in using a brokerage account. Like mutual funds, this diversified portfolio helps mitigate — but not eliminate — risk through built-in diversification.

The key difference between ETFs and mutual funds is that ETFs' prices will change throughout a typical trading day. The price changes along with the stocks within the portfolio, and investors can buy an ETF at any time at its current market value. 

On the other hand, a mutual fund is only available for purchase after the trading hours close. The fund's price is based on the value of its contained assets at closing — the value of the stocks and other investments within the portfolio. 

ETFs also include index funds, such as the Vanguard S&P 500 ETF Trust and Vanguard Total Stock Market ETF.

Pros: 

• Automatic diversification

• Allows for live trading or a hands-off strategy

• Grows as a fund instead of individual stocks

Cons:

• No control over individual stocks

• Limited investment options

• Can lose value quickly in just a day

Invest in individual stocks

You can also open a brokerage account and start investing in individual stocks. This is a riskier investment strategy and requires thorough research to choose the right stocks. 

However, with the risk also comes the potential for huge rewards, as one stock's surging share price can make a huge impact on your overall portfolio. 

Brokerages can range from high-touch personalized service to low-touch robo-advisors. Of course, the high-touch route will cost you the most money. In some cases, though, you can get a robo-advisor account for cheap or even free.  

Because there's so much risk to your personal finances, you should always get advice from an investment advisor or financial advisor before getting into the stock market.

Invest in real estate investment trusts (REITs) 

REITs own or manage real estate property that produces income. REITs have a broad scope in the real estate industry. Some own properties themselves, while others back mortgages other people use to buy properties with. 

There are five main types of REITs to consider buying through your brokerage account:

• Retail REITs: These investments are in retail establishments, like shopping malls or standalone retail locations. These REITs make money from the rent they collect from tenants. 

• Residential REITs: These are investments into multi-family apartments and manufactured housing. These REITs make money from the rent they collect from tenants. 

• Healthcare REITs: These investments are in medical real estate, such as hospitals, nursing homes, medical centers and retirement homes. These REITs make money from healthcare-associated fees paid by insurance plans and self-pay patients.  

• Office REITs: These are investments into office buildings. These REITs make money from the rent they collect from tenants. 

• Mortgage REITs: These REITs invest in mortgages and include big names like Fannie Mae and Freddie Mac. 

Pros: 

• Offer built-in diversification within the real estate space

• Relatively high returns — averaged 11.25% in 2020

Cons:

• Investment in one industry

• May have to rely on tenants making their rent payments to profit

• Have the potential for huge, sudden losses

Invest in cryptocurrency

Cryptocurrency — crypto for short — is a relative newcomer to the world of investing. What once included just Bitcoin now has dozens of different currencies with various risks. While much crypto is backed solely by its value, leading to volatility in its pricing, others have backing in reality. 

These reality-backed cryptos are called stablecoins and often are backed by a fiat currency, like the U.S. dollar. While stablecoins sound like a safer alternative, their issue is there is little reward in them.

Pros:​

• High reward potential

• Many options and new ones always emerging

• Relatively easy to understand and start investing

• Often unrecoverable if stolen by hackers

Cons:

• May be highly volatile

• No tangible asset

Always seek an investment professional's advice

Wall Street is a tricky place, so no matter what investment strategy you choose for your $1,000, always seek an investment professional's advice before jumping in. They can assess your goals, look over stock valuations and projections and determine the best option for you. 

They can also find the best stocks and other investments for your amount of money and goals. 

Where should you invest $1,000 right now? Start with debt

If you've got $1,000 burning a hole in your pocket, investing it is a wise decision. However, check your debt first before jumping into mutual funds, ETFs, REITs or individual stocks. If you have high-interest debt, like a credit card, the interest can offset any investment returns. 

Help yourself by using that $1,000 toward paying off your debt first, then shift to investing in one of the many investment options outlined above. But remember to speak with an investment professional first to create an investment strategy that suits your needs. 

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