How To Invest Your First $1000 in 2023 (Step by Step)

 $1,000 is enough to start your entire empire. 

This is 100% the case. Look at most of the wealthiest people throughout history, and nearly all of them are self-made. It wasn’t their circumstances that gave them success. It was them going and getting it, studying, learning quickly along the way, strategizing, and working hard. 

One thing preventing new investors from getting started is the idea that they need a lot of money to begin investing. However, that’s actually backward thinking. You start from where you’re at today and you progress toward your goal. You want to invest to begin making money. So don’t put it off if you don’t feel you have enough money today, and you want to get ahead financially, you should start with whatever you have. 

The good news is that if you get going, you will learn as you go and continually improve your performance, which is the name of the game in all of this. 

How do you get started with $1,000? 

It’s way too easy to give the standard advice here and say it doesn’t matter as long as you start, or you only lose by not playing. However, the actual answer has more to do with where you’re at today and your current status. 

Suppose that you have $1,000 in a standard savings account, you’re almost standing still. If that’s the case, the inflation rate alone will overtake the interest that you’re getting from the bank on that account. Depending on your financial goals and resources, you can decide how you want to improve that performance way beyond what you’d get from a savings account. 

Ways To Develop and Build Your Investment Strategy For The Long Haul

  1. You need to consider what your financial goals are.

If you’re saving for a particular event or purchase, your approach is going to be different than if you’re looking to generate wealth for generations. 

The reason is that you may have a deadline or a short-term goal for the money. Maybe it’s that you have a wedding or a vacation or that you want to turn that $1,000 into $3,000. 

But on the other hand, if you’re building a retirement account for yourself or you want to think big picture for multi-generational wealth, you probably have a much longer timeline to both consider and to invest and get returns. 

My advice at this stage is legacy. Frankly, we even have a podcast with the name Legacy, the Health Wealth and Legacy podcast that we have on Spotify. 

But the point is, you know that legacy is the number one most important thing to me. So in this instance, I’m gonna say the same thing, thinking long-term and focusing on building wealth is my advice and my experience. This helps the focus to be on the big picture and the long run instead of the small things along the way and things that are actually very minute when you consider the overall market conditions over a long period of time. 

  1. Evaluate your risk tolerance and appetite for your investing.

Deciding how much risk to accept depends on your financial goals as well as your current resources and just generally your outlook and your personal disposition, who you are as a person, and how those risks affect you individually. But the reality is most often to reach aggressive financial goals and to get to those goals more quickly, you must accept a higher risk of your investment and the potential of even losing it a hundred percent. 

On the other hand, if you can’t handle the thought of losing your capital or you’re older and you actually don’t have the time to take a larger loss along the way, you should proceed much more conservatively, especially if you’re doing the investing on your own and not with a pro or someone that does this day in and day out. 

At this stage, it’s worth mentioning that stocks are gonna be among the riskiest investments overall, especially if you’re buying individual stocks, bonds, on the other hand, are far less likely to result in a loss, but you’re not really gonna grow your money as quickly as you could in other areas. 

Typically, the safer the investment, the less opportunity for profit you’re going to get. That’s why experts recommend spreading your assets across a wide spectrum of options to reduce the overall risk while still allowing the opportunity for growth. 

For me, real estate has always been and will likely always be the best wealth-building tool in my own personal strategy. I can say from my experience, the sooner you can invest in real estate, the larger the rewards, and if you do it properly, the diversification is amazing and hedges the risks significantly. 

  1.  Consider how much involvement you want to have

Well, with $1,000, you probably can’t afford a human advisor that’s gonna be super hands-on, but you can’t choose a mutual fund or a Robo advisor. Mutual funds often charge low fees and may even provide great returns. One of these options might work best if you prefer a hands-off approach, but index funds, for example, try to mirror the performance of a stock index, an entire index, like say the S and P 500. 

If you don’t feel comfortable choosing individual stocks, which most people shouldn’t because there’s a ton of work that goes into that and there’s a huge bigger risk also associated with that. Then I personally can recommend taking a look at ETFs or full indexes like the S and P 500.

Multiple experiences and studies show that this is a strategy for beginners and even most seasoned investors need to have index-wide protection and that kind of diversity in their portfolios. Some funds with robo-advisors offer a very low entry point for investors. If you start with that $1000 but have let’s say a hundred dollars more per month to be added to that account, you may save on administration fees as well because there might be specific deals with that fund or etc. So it’s worth looking into to save a few bucks on fees. 

  1. Diversify

It is definitely possible to take that $1,000 and invest in a random, inexpensive stock that you just have good feelings about, right? You just know it’s gonna work and there is a chance that you can watch your money multiply as if you had bought Microsoft right when it went public and took that ship straight to the moon. 

Unfortunately, it’s also possible that your $1,000 may disappear all together. I mean, let’s take crypto for example, which is gonna be the easiest example of hit or miss one year. Every Doge coin investor is a freaking genius getting thousands of percent returns on their investment, and literally the next year, the entire industry tanked completely and most coins went to zero.

So the point is, if you have limited resources, it’s better to spread the money around because that’s what it is. At the end of the day, if you’re putting all your eggs in one basket and there’s no diversification, oftentimes that’s a bet and speculation more than a strategy. 

Again, a mutual fund or an ETF,s or even a well-chosen REIT is typically going to offer more security and the potential for higher returns with often a great amount of diversification built into those investments.

  1. Don’t overlook real estate.

No, you probably can’t buy a rental property for a thousand bucks. However, you can use that $1,000 to get started in real estate if you want to. Can you use a thousand dollars for a down payment? Again, probably no. But on the other hand, even with that $1,000 you can buy into real estate-backed investments, you may be able to buy a share in a real estate syndication or join a tendency in a common investment group. You may be able to buy a share in a real estate syndication or even join a tendency in a common investment group. 

Additionally, there are real estate-focused mutual funds and REITs. These mutual funds and REITs expose you to real estate and you can learn some of the basics along the way while investing in groups that are then investing in real estate. But without a doubt, the number one way to invest in real estate is when you build up the capital to consider real estate funds and syndications

To me and in my investing career, these are literally the pinnacle of entering the real estate investment world and they’ve paid me the most along the way, hands down, the highest returns and the highest protection I have personally received. 

  1.  Don’t invest the rent money.

Never ever gamble with money that you can’t afford to lose because even the safest investments can go belly up if there’s a horrible turn of events. 

The reality is there’s no such thing as a 100% sure bet. However, there are things that are much more sure bets and safer bets than others, but it’s critical at this point, especially if you only have $1,000 to invest to not risk your financial stability as you pursue profits at this stage.

If you do have debt aside from maybe your mortgage or other essentials, make sure you are taking steps to minimize this debt along the way before you go and invest that thousand dollars elsewhere. Also, I recommend building an emergency fund with at least three months of expenses that you can live off of. This provides a cushion in case you need it and what it actually does on a bigger picture, it lets you be a more confident investor knowing that the timing of your investments do not have to pay off for you to make your bills. 

If there’s a huge crazy change in your life, like a loss of income or a global pandemic, which we went through or some other thing that you have not foreseen, your emergency fund is literally a lifesaver. 

  1. Take advantage of advantages.

That might seem obvious, but so many people are not even taking advantage of basic things that are sitting right in front of them. Things like maximizing contributions to your four company sponsored accounts. These are freebies. You gotta take advantage of those, especially if it’s company sponsored and they’re willing to match a portion of that for you  and just a reminder, you’re not gonna find very many options to beat. Create strategies like investing your pre-tax income into a 401k or similar offerings. Of course, this is not the best vehicle if you have that short term need like we talked about earlier, like a trip or a wedding or etc.

But for a long term goal like retirement especially, this is an amazing strategy that you can draw on with huge benefits to you. So in short, take advantage of any matching opportunities that your company may have for you. But again, for me personally, the goal is to get to real estate. One of the biggest advantages investing into real estate strategically is getting the multiple benefits that the asset class has for you along the way. This is gonna be different for each person, but here’s some of the top ones. Cash flexibility or even the tax benefits that go with a ton of different real estate investment options. 

So what I’m gonna do for you guys here is put up a link to a great discussion we posted outlining the top five considerations for investing into real estate today, as well as some of the best benefits that you can incur as well. It’s a short video, but it gives some really good insight for you onto the investment options that are available in the real estate world. So you can balance your investment decisions with some diversification and you can make the best choice for you.