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$1,000 in any one of these ways (or more of them!) can make a significant difference in your life – financially or otherwise.
What To Invest 2000 Dollars In
A thousand dollars may be pocket change or a rounding error to millionaires and billionaires, but it’s a significant sum to the rest of us. Any amount of money we can save should be put to good use.
Smart Things You Can Do With $1,000 Right Now
Here are 15 examples of smart things you can do with $1,000. Depending on your particular situation, some may be more valuable to you than others.
First things first. If you have significant debt, especially high-interest debt such as that typically charged on credit cards, you should make paying it off a priority. (If you don’t have high-interest debt, consider making an extra payment or two on your mortgage or student loan debt.) If you owe $2,000 or $25,000, apply $1,000 to your debt Make a big difference in your finances your health. If the interest rate is 25%, you can avoid paying $250 in interest – every year!
It is dangerous to live without emergency funds available. Most of us should have about three to nine months of living expenses covered and available in case the unthinkable happens, like job loss or expensive medical expenses. If your bank account is usually close to empty, putting $1,000 into it can put a buffer between you and overdraft fees. Meeting certain minimum limits may give you other benefits or avoid other fees.
Keep the money in an IRA. A traditional IRA contribution will withdraw your taxable income, while a Roth IRA offers tax-free withdrawals in retirement. The 2017 IRA contribution limit is $5,500 for most people and $6,500 for those age 60 or older. A single $1,000 investment won’t ensure a comfortable retirement, but it can certainly help you secure one — especially if you’re still young. Check how strong it can be in different periods with different average annual growth rates:
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Investing in an inexpensive broad market index fund, such as one based on the S&P 500, will give you market returns that will be excellent. It can be hard to beat this, but if you want to try, you can invest in one or more individual companies that you think will grow at an above-average rate over the next few decades. They won’t always perform as expected, but if you research your candidates well and then each company that invests in you tracks their progress, you have a better chance of performing. Here, for example, are some popular companies’ 15-year growth rates — plus they’ve changed $1,000 over that time:
Open or fund a 529 plan account for youth. You can invest a lot of money in them where the funds will grow on a tax basis. Contributions are often unlimited until the account balance reaches several million dollars — although taking the maximum contribution allowed for tax-free annual gifts (currently $14,000) can trigger taxes. Distributions for college-related expenses are tax-free.
You and your children may be surprised at how much wealth they can build through investing. Image source: Getty Images
If you can commit $1,000 to help your kids invest, it can pay off quickly in the long run. You open a capital account for them at a local brokerage house and then study and invest together in several companies. Our book, The Motley Fool Investing Guide for Teens, can help too (and it costs less than $1,000). Discuss companies and how they grow and face challenges. Have your child choose several companies they are interested in watching and/or investing in — possibilities include Activision Blizzard, Apple, Boeing, Chipotle Mexican Grill, Disney, Hasbro, Netflix, Nike, Starbucks, Target, Under Armor, or VF Body.
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If someone is financially dependent on you, you need life insurance. Term policies are usually a better deal than whole life. You may also need other insurance, such as renter’s insurance or an umbrella policy to cover major claims against you. It’s also smart to regularly review your homeowner’s policy to make sure that it still covers you for the right amount. And an annual call to a bunch of different auto and home insurance companies can help you get a better rate, which can save you hundreds of dollars a year.
Most of us should have many necessary documents ready and prepared. These include a will, a power of attorney, a living will, and a health care proxy. Hire an attorney to help you with these and any other estate planning issues, such as setting up a trust.
Another good thing you can do with $1,000 is to do a financial audit. Find a good financial planner (perhaps a certified financial planner or CFP) and let them evaluate your financial situation and make recommendations. Like Fee Advisors, which you can find at www.napfa.org.
You can make yourself more valuable in the workplace and more marketable in your career by adding a few new skills or professional certifications to your resume — or a new language you’ve picked up.
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Studies have shown that spending money on experiences rather than material things leads to a sense of well-being. After all, experiences create memories that can be cherished for a long time. Travel is a great way to gain experience, but you can also spend $1,000 on music or golf lessons or tickets to some of the best shows, maybe even through memberships.
The benefits of travel are legion as it can increase creativity, increase appreciation of differences, help you better understand your country or other parts of the world and the people who live there. With $1,000, you may be able to visit Europe, travel by car, enjoy a cruise or take a scenic train ride.
You don’t have to spend $50,000 to remodel your home to make it more fun. You might be surprised how much you can accomplish with just $1,000. Maybe add some new kitchen backsplash and cabinet handles to the kitchen. Replace an old piece of furniture or two or get new porch furniture. Give one or more rooms a fresh coat of paint or get a bunch of new replacement windows. There are many possibilities.
If you’re looking to improve your lifestyle a little, $1,000 can often go a long way. For example, you can buy a bike to get to and from work, saving money and getting ready. Cycling is also good just for fun.
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$1,000 can help you be healthier in other ways, too. You can hire a personal trainer for a set of sessions to start a new exercise routine, or join a Community Supported Agriculture (CSA) program for locally grown fresh produce, supporting local farmers. And eat more nutritiously.
After all, one good thing to do with $1,000 is to give it away. No matter how much you think you need, there are millions of people who do. Billions of people around the world, including millions in the United States, are trying to survive on a few dollars a day. You can find top candidates for your donation on sites like CharityNavigator.org, Give.org, CharityWatch.org, and GiveWell.org.
Don’t let an extra $1,000 slip through your hands, spend it in impressive ways you barely remember. Think a little about how to spend it. Putting your $1,000 into one or more of the ways above can improve or improve your life – or the lives of others.
Selena Maranjian owns shares in Activision Blizzard, Apple, Boeing, Chipotle Mexican Grill, Costco Wholesale, Netflix, Starbucks, VF and Walt Disney. Motley’s owns and recommends shares of Activision Blizzard, Apple, Chipotle Mexican Grill, Hasbro, Netflix, Nike, Starbucks, Under Armor (C Shares) and Walt Disney. The Motley Fool recommends Costco Wholesale, Lowe’s and PepsiCo. Motley has a disclosure policy.
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Calculates the average return of all stock recommendations since the inception of the stock advisor service in February 2002. Deadline until 11/24/2022.
Since 2002, time-weighted returns have been calculated. Volatility profiles based on three-year calculations of the standard deviation of service investment returns.
1 Growth stocks below 76% that could grow 76% in 2023, according to Wall Street. This Social Security chart shows how the average retiree could add up to $11,500 to their annual benefits.
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