Best Way To Invest 40000 Dollars To Make Money

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When you have $1,000 or less to invest, your options might seem limited. When the stock market crashes or is volatile like it recently is, those choices might even seem bleaker. The good news is some of the wealthiest investors in the world started somewhere. And although it doesn't get a whole lot of publicity, there are numerous options available for your small amount of money. Let's dive into our guide on how to invest 1000 dollars and make your money grow.

Step 1: Make Sure Your Finances Are in Good Shape

Investment Goals

Before we get into the investment options, it's important to realize there are some caveats to investing when you're just starting.

Make sure you've checked off your other financial goals before investing money into the stock market. Here are some points to consider first. You can read more in our how to invest guide:

Little Consumer Debt — You should be relatively debt-free.
Diversify — For the amount you are starting to invest, aim for as much diversification as you can so you minimize the possibility of being wiped out by a single investment.
Fees Matter — Watch out for fees. You should not pay more than 1% in investment fees annually.
Create Regular Savings — $1,000 should be your starting point only — have a plan to make regular monthly contributions.

If your finances are in good shape, and you've completed this financial checklist, let's move on to where to start investing your money.

Step 2: Start Investing Your Spare Change with Acorns

Spare Change

You don't have to begin with large amounts when first starting. In fact, with Acorns, you can start investing and make money with little money.

Acorns is a somewhat unique investing app that takes your spare change from every purchase you make. When you buy your favorite chicken burrito at Chipotle for $6.50 Acorns will round up to $7.00 and invest $0.50 from your checking account. Acorns can do this with every purchase you make. As you can imagine, this can start adding up very quickly.

It's an easy and painless way to start investing with very little money. We recommend Acorns as one of the best microsavings services.

Acorns makes the service simple and does the investing heavy lifting for you. They have three plans available that cost $1, $3 or $5 a month in fees (depending on your plan).

Step 3: Plan for Retirement Using Betterment

Retirement

Acorns is great for someone just starting and setting your money away for a rainy day. But what about planning for retirement? If you are ready to get more serious, then you are better off with Betterment. Just like Acorns, we recommend Betterment as one of the best robo advisors to invest with.

Betterment determines your risk tolerance and then builds a portfolio of exchange-traded funds (ETFs) that are consistent with that tolerance. The entire service is automated, which means you invest your money and let the platform handle it for you. There's no trading and no rebalancing; Betterment does it all for you.

There's also no account minimum with Betterment. There is a 0.25% fee on the account balance per year. This will enable you to accumulate a steadily larger balance without having to pay ridiculously high fees.

Betterment is the perfect retirement account since it offers a combination of professional management, diversification, low fees, and no account minimum. Check out our Betterment review to find out all the services the robo advisor offers.

Step 4: Feeling More Confident? Try M1 Finance

If you're more adventurous when it comes to investing, M1 Finance could be the best choice for you. M1 is based on creating mini-mutual funds or, as they call them, 'pies'. But these aren't your grandfather's mutual funds. The pies are unconventional conglomerations of up to 100 ETFs and stocks.

The Motif is typically based on a very narrow concept, such as solar heating in China or organic restaurants. The platform has more than 2,000 ETFs to choose from with hundreds of pre-made pies. If you are feeling more adventurous, you can create your own.

The service is free to use and you can sign up to M1 Finance via this link. The beauty of M1 Finance is that for minimal fees, you can have a diversified portfolio with a mix of up to 100 funds.

Step 5. Invest in Real Estate With Little Money

Real Estate

I bet you never thought real estate was an option with only $1,000. There is an investment product called a REIT (which stands for "real estate investment trust"). It's similar to a mutual fund except, instead of stocks and bonds, the assets are income-producing real estate properties (office buildings, apartment buildings, single-family homes, etc.). Investors can invest in REITs and own and profit from real estate without the hassle of managing it.

Fundrise took the REIT and put it online, calling it an "eREIT." Investing in an eREIT doesn't require a middleman, which saves you fees when compared to traditional REITs. You need only $1,000 with Fundrise's eREIT. Read our comprehensive Fundrise review.

Step 6: Open a Traditional or Roth IRA at an Online Broker

comparing retirement accounts - IRA

Betterment and Motif aren't the only options available with retirement accounts. Both services make investments easy and cost-efficient for someone with just $1,000 to invest.

If you want to do it yourself, you will need to open an account with an online brokerage firm. We've done the research already and have a list of the online brokerage firms you can use to get started.

When you open a Traditional or Roth IRA, there are typically no account minimums required. You can open an account and begin investing money once you have a sufficient amount available that you feel comfortable to invest.

You can open an IRA at several brokerage firms. For example, you can open an IRA at E*TRADE with no minimum account balance. And there are plenty of other firms that will allow you to do the same thing.

Once you have at least $1,000 in an IRA, you can consider investing in diversified funds. For example, the Vanguard Target Retirement Funds not only has a $1,000 minimum balance requirement, but you purchase the fund based upon the expected year of retirement. Assets within that fund will be consistent with your retirement time horizon.

To sweeten the deal, we have a list of all of the available IRA promotions. In some cases, you can not only get free trades but cold hard cash. Not a bad return on your money without risking a cent in the stock market.

Step 7: Buy U.S. Treasury Securities

Company Stock

If you are a more conservative investor, you can invest in U.S. Treasury securities through Treasury Direct. They might be boring, but boring is sometimes good. You can invest in a variety of U.S. government securities with as little as $100.

Treasury investments available include:

Bills (maturities of less than one year)
Notes (maturities from two to 10 years)
Bonds (maturities of 30 years)
Treasury Inflation-Protected Securities, or TIPS (maturities of five, 10 or 30 years)

TIPS are particularly interesting because not only do they pay regular interest, but they also make periodic additions to your principal to cover inflation. The adjustments are based on upward changes in the Consumer Price Index (CPI). You can earn interest tax-deferred while owning them and tax-free if used for higher education.

Step 8: Open a Taxable Account

You can also invest in a variety of brokerage accounts. With $1,000, your investment options will still be limited, but opening an account is an excellent way to start. And there are plenty of options if you choose to go this route.

With Ally Invest , you can open an account with no minimum balance. Stock and ETF trades are free. More advanced trades like options trading and mutual fund trades could cost you a significant amount, so it's best to stick to simple trades until you have more money. These accounts are best used for buying stock in one or two companies that have consistent investment performances.
Another option is public.com. The platform has zero commission fees and an easy-to-use investing app. You can buy slices of a share, instead of buying a whole share of a company, making investing more affordable. The interface is straightforward and easy to navigate, so you can learn the ins and outs of investing without navigating complicated charts and software.
If you're looking for a pay-as-you-can option,consider Aspiration . Not only do they offer a sustainable investment option but you get to decide how much you pay them for managing your account.

Step 9. Open A Bank CD

Bank Money

If putting your money into investments that risk losing the principal is something you're not comfortable with, you can always opt to keep your money in your bank. Though right now, the returns are small, they're the best places to start building a nest egg. If nothing else, you'll never lose money on the investments you make. We recommend 1-year CDs as the best bang for your buck.

Step 10. Invest in Blue-chip Art with Masterworks

If you've already invested in stocks or are looking for something other than the stock market to invest in, there are plenty of alternatives out there. You can invest in a crowdfunding platform, where money is pooled together from various investors to give to a company or individual. Masterworks does not have specific minimum investment amounts. Minimums vary depending on the specific investment offerings available at the time of investment.

Masterworks is a unique company that facilitates investments in fractional shares of fine artworks. Investing in fine art does come with some risk and you will have to pay fees. But if you're looking to diversify your investment portfolio, fine art could be an option. And with Masterworks you can get started with a limited initial investment.

Final Thoughts

Beginning an investment portfolio is a significant step, whether it's with a million dollars or just starting $1,000. That first step is to getting started, even if it involves a relatively small amount of money. Once you start the investment process, the combination of regular contributions plus investment returns will ensure a prosperous future.

You don't need to wait until you have many thousands of dollars before taking the first step. Use these options to get started investing with as little as $1,000 today.