You have $1,000 saved and you’re trying to figure out what to do with it. It would be a significant amount of money to splurge and spend all at once — but is it enough to invest? The truth is, $1,000 is a great place to start investing and can make a difference in your financial health.
Below, CNBC Select suggests several ways you can invest $1,000 and explains how to decide which option may work best for you. Some investments might offer greater returns, but they also come with greater risk. If your financial safety net allows for this risk, such investments are worth considering. If not, you can use your $1,000 to correct that.
Subscribe to the CNBC Select Newsletter!
Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here.
1. Build an emergency fund
An emergency fund is crucial to your financial health. When you’re facing unexpected expenses, such as job loss, medical expenses or surprise home or car repairs, your emergency fund will keep you from straining your budget or going into debt.
Experts generally recommend having between three and six months’ worth of living expenses in your emergency fund. If you’re not quite there, $1,000 can go a long way.
A good place to park your emergency fund is a high-yield savings account. This way, you’ll get guaranteed returns in the form of compound interest. Some high-yield savings accounts are now offering around a 5% annual percentage yield (APY) — a return we haven’t seen since the 1990s. Plus, these accounts are usually FDIC-insured so they are virtually risk-free.
Here are a few high-yield savings accounts we recommend:
LendingClub High-Yield Savings
LendingClub Bank, N.A., Member FDIC
-
Annual Percentage Yield (APY)
-
Minimum balance
No minimum balance requirement after $100.00 to open the account
-
Monthly fee
-
Maximum transactions
-
Excessive transactions fee
-
Overdraft fees
-
Offer checking account?
-
Offer ATM card?
UFB Preferred Savings
UFB Preferred Savings is a Member FDIC.
-
Annual Percentage Yield (APY)
-
Minimum balance
-
Monthly fee
-
Maximum transactions
No max number of transactions; Max transfer amounts may apply
-
Excessive transactions fee
-
Overdraft fees
Overdraft fees may be charged, according to the terms, but a specific amount is not specified; overdraft protection service available
-
Offer checking account?
-
Offer ATM card?
Marcus by Goldman Sachs High Yield Online Savings
Goldman Sachs Bank USA is a Member FDIC.
-
Annual Percentage Yield (APY)
-
Minimum balance
-
Monthly fee
-
Maximum transactions
At this time, there is no limit to the number of withdrawals or transfers you can make from your online savings account
-
Excessive transactions fee
-
Overdraft fee
-
Offer checking account?
-
Offer ATM card?
2. Pay down debt
If you have credit card debt, paying it off should be your priority, especially in a high-rate environment.
Let’s say you have a $1,000 balance on a credit card with a 20% APR and only make a minimum payment of $25 each month. The balance will take you 67 months to pay off and you’ll lose $661 to interest. Or you could pay the whole balance off instead and not worry about interest charges at all.
If you owe considerably more, you may feel as though $1,000 would barely make a dent in your card debt. In that case, you may also want to look into a 0% APR credit card or debt consolidation loan to save on interest charges. The Wells Fargo Reflect® Card, for example, has a 0% intro APR for up to 21 months from account opening on purchases and qualifying balance transfers (then 17.74% to 29.74% variable APR).
Wells Fargo Reflect® Card
On Wells Fargo’s secure site
-
Rewards
-
Welcome bonus
-
Annual fee
-
Intro APR
0% intro APR for 18 months from account opening on purchases and qualifying balance transfers. Intro APR extension for 3 months with on-time minimum payments during the intro period. 17.74% to 29.74% variable APR thereafter
-
Regular APR
17.74% to 29.74% variable APR on purchases and balance transfers
-
Balance transfer fee
Introductory fee of 3% for 120 days from account opening, then up to 5% ($5 minimum)
-
Foreign transaction fee
-
Credit needed
3. Put it in a retirement plan
Another aspect of your financial life you want to cover is your retirement funds. If your employer offers a 401(k) match, you may be missing out if you’re not taking full advantage of it. Further, it’s good practice to save 15% of your annual income for retirement (including any contributions by your employer). If that seems like a lofty goal to you at the moment, contributing $1,000 can definitely make a difference.
If you don’t have an employer-sponsored retirement plan, you can always invest in an individual retirement account (IRA) instead. The IRA contribution limit for 2023 is $6,500, or $7,500 if you’re 50 or older.
CNBC Select picked Charles Schwab IRA as the best IRA account. If you’re just beginning to invest, Fidelity Investments IRA can be an excellent choice.
Charles Schwab
-
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for active investing through Schwab One® Brokerage Account. Automated investing through Schwab Intelligent Portfolios® requires a $5,000 minimum deposit
-
Fees
Fees may vary depending on the investment vehicle selected. Schwab One® Brokerage Account has no account fees, $0 commission fees for stock and ETF trades, $0 transaction fees for over 4,000 mutual funds and a $0.65 fee per options contract
-
Bonus
-
Investment vehicles
Robo-advisor: Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ IRA: Charles Schwab Traditional, Roth, Rollover, Inherited and Custodial IRAs; plus, a Personal Choice Retirement Account® (PCRA) Brokerage and trading: Schwab One® Brokerage Account, Brokerage Account + Specialized Platforms and Support for Trading, Schwab Global Account™ and Schwab Organization Account
-
Investment options
Stocks, bonds, mutual funds, CDs and ETFs
-
Educational resources
Extensive retirement planning tools
Fidelity Investments
-
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Fidelity Go account, but minimum $10 balance for robo-advisor to start investing. Minimum $25,000 balance for Fidelity Personalized Planning & Advice
-
Fees
Fees may vary depending on the investment vehicle selected. Zero commission fees for stock, ETF, options trades and some mutual funds; zero transaction fees for over 3,400 mutual funds; $0.65 per options contract. Fidelity Go is free for balances under $10,000 (after, $3 per month for balances between $10,000 and $49,999; 0.35% for balances over $50,000). Fidelity Personalized Planning & Advice has a 0.50% advisory fee
-
Bonus
-
Investment vehicles
Robo-advisor: Fidelity Go® and Fidelity® Personalized Planning & Advice IRA: Fidelity Investments Traditional, Roth and Rollover IRAs Brokerage and trading: Fidelity Investments Trading Other: Fidelity Investments 529 College Savings; Fidelity HSA®
-
Investment options
Stocks, bonds, ETFs, mutual funds, CDs, options and fractional shares
-
Educational resources
Extensive tools and industry-leading, in-depth research from 20-plus independent providers
4. Open a certificate of deposit (CD)
Let’s say your emergency fund is in good shape, you’re on track to contributing to your retirement plan and you have no high-interest debt. Yet, you’d rather not take on risk when it comes to your money.
In this case, you might want to look into certificates of deposit (CDs). This type of deposit account earns a fixed interest rate for a specific amount of time on the funds you deposit when you open an account. The term lengths typically range between three months and five years. Longer terms tend to come with higher APYs but with a traditional CD, you can’t withdraw your money before the end of the term. Otherwise, you’ll generally have to pay an early withdrawal penalty.
Interest rates on CDs are often higher than those on regular savings accounts. This means you might get better returns at the trade-off of no easy access to your cash until the maturity date. But if you already have an emergency fund parked in a more accessible account, putting extra money aside in a CD can be a good move.
At the time of writing, the following accounts are offering some of the best CD rates:
Synchrony Bank CD
Synchrony Bank is a Member FDIC.
-
Annual Percentage Yield (APY)
For 3-month CD: 2.25% APY; higher APYs may be available for longer terms, click Learn More for details
-
Minimum balance
-
Monthly fee
-
Early withdrawal penalty fee
For 3-month CD: 90 days interest, whether or not earned
APYs are subject to change at any time without notice. Offers apply to personal accounts only. Fees may reduce earnings. For CD accounts, a penalty may be imposed for early withdrawals. After maturity, if your CD rolls over, you will earn the offered rate of interest for your CD type in effect at that time.
CFG Community Bank CD
Capital Funding Group is a Member FDIC.
-
Annual Percentage Yield (APY)
For 3-year CD: 4.60% APY; higher APYs may be available for longer terms, click Learn More for details
-
Minimum balance
$500 to open and start earning interest
-
Monthly fee
-
Early withdrawal penalty fee
For 3-year CD: Subject to a penalty fee; Withdrawing within six days of account opening will cost you a 7-day interest penalty
Ally Bank High Yield CD
Ally Bank is a Member FDIC.
-
Annual Percentage Yield (APY)
For 5-year CD: 4.25% APY; higher APYs may be available for other terms, click Learn More for details
-
Minimum balance
-
Monthly fee
-
Early withdrawal penalty fee
For 5-year CD (or any CD that is 49 months or longer): Equal to 150 days of interest
5. Invest in money market funds
Kenneth Chavis IV, CFP and senior wealth manager at LourdMurray, suggests money market funds “for those who are not comfortable with investment risk but want to earn some interest on their money.”
Money market funds (MMFs) invest in lower-risk debt securities, such as U.S. Treasury bills and commercial paper, and are considered some of the safest investments. MMFs pay monthly dividends. The yield is typically close to or a little higher than on bank savings accounts. This is also a highly liquid option — you can withdraw the money you’ve invested at any time.
You can buy money market funds from a bank, fund provider such as Fidelity Investments or Vanguard or by opening a brokerage account.
Fidelity
-
Fees/commissions
$0 for stocks, ETFs, options and some mutual funds
-
Account minimum
-
Investment options
Stocks, bonds, fractional shares, ETFs, mutual funds, options
Vanguard
-
Fees/commissions
-
Account minimum
-
Investment options
Stocks, bonds, ETFs, mutual funds, options, CDs
6. Buy treasury bills
Speaking of Treasury bills, they’re also a low-risk investment since they’re backed by the government and give you a guaranteed return over a set period of time.
“You will get a nice guaranteed rate dependent on how long the maturity is (assuming you hold until maturity) and you will not owe state income tax on the interest,” Chavis says.
Since there’s a maturity period, this option provides less liquidity than money market funds. At the same time, the term can be very short — from just a few days to a year.
You can buy Treasury bills directly from the TreasuryDirect website or go through a broker like Charles Schwab or Fidelity.
Charles Schwab
-
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for active investing through Schwab One® Brokerage Account. Automated investing through Schwab Intelligent Portfolios® requires a $5,000 minimum deposit
-
Fees
Fees may vary depending on the investment vehicle selected. Schwab One® Brokerage Account has no account fees, $0 commission fees for stock and ETF trades, $0 transaction fees for over 4,000 mutual funds and a $0.65 fee per options contract
-
Bonus
-
Investment vehicles
Robo-advisor: Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ IRA: Charles Schwab Traditional, Roth, Rollover, Inherited and Custodial IRAs; plus, a Personal Choice Retirement Account® (PCRA) Brokerage and trading: Schwab One® Brokerage Account, Brokerage Account + Specialized Platforms and Support for Trading, Schwab Global Account™ and Schwab Organization Account
-
Investment options
Stocks, bonds, mutual funds, CDs and ETFs
-
Educational resources
Extensive retirement planning tools
7. Invest in stocks
If you don’t mind parting with your $1,000 for a while for a chance of higher returns (at higher risk), consider investing in the stock market.
Chavis suggests going with stock index funds. These investment funds follow a benchmark index, such as the Nasdaq 100 or the S&P 500. The money you put in such a fund is then invested in all the companies that make up the index, which allows for a more diverse portfolio than you’d get buying individual stocks.
“This is a great option for those with a long-time horizon,” Chavis says. “You will get good stock market diversification, low costs and likely no trade fees.”
You can invest in an index fund if you have a brokerage account, a traditional IRA or a Roth IRA.
Many of the best stock trading platforms don’t charge commission fees, including TD Ameritrade, Ally Invest, E*TRADE, Vanguard, Charles Schwab and Fidelity. Or if you want a simpler interface and trading platform, consider investing apps like Robinhood and Webull. Both apps also provide access to fractional shares which allow you to purchase a portion of a stock that’s less than one full share. Doing so can help you diversify your portfolio with less money.
Robinhood
On Robinhood’s secure site
-
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum required to open an account or to start investing
-
Fees
Fees may vary depending on the investment vehicle selected. Commission-free trading; regulatory transaction fees and trading activity fees may apply
-
Bonus
Robinhood will add 1 share of free stock to your brokerage account when you link your bank account and fulfill the conditions in your promotion (you’ll be able to keep the stock or sell it after 2 trading days)
-
Investment vehicles
-
Investment options
Stocks, ETFs, options trading, fractional shares, IPOs, plus certain cryptocurrencies through Robinhood Crypto (depending on where you live)
-
Educational resources
Webull
-
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum required to open an account or to start investing
-
Fees
Fees may vary depending on the investment vehicle selected. Commission-free trading; regulatory transaction fees and trading activity fees may apply
-
Bonus
Get 5 free stocks when you open and fund a new account: Sign up with Webull to get your 2 free stocks, each valued up to $300, and deposit any amount to receive 3 free stocks, each valued up to $3,000
-
Investment vehicles
Brokerage account: Webull commission-free investing IRA: Traditional, Roth, Rollover IRAs
-
Investment options
Stocks, ETFs, options trading, fractional shares, IPOs, ADRs, plus certain cryptocurrencies through Webull Crypto
-
Educational resources
8. Use a robo-advisor
If you’re interested in investing but want a more hands-off approach, you can use a robo-advisor which will automatically invest in several index funds and ETFs based on your goals and risk tolerance. These accounts typically have low or no minimum opening deposits and have much more affordable management advisory fees than traditional financial advisors. CNBC Select suggests Betterment and Wealthfront as our top picks for the best robo-advisors.
Betterment
-
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. For example, Betterment doesn’t require clients to maintain a minimum investment account balance, but there is a ACH deposit minimum of $10. Premium Investing requires a $100,000 minimum balance.
-
Fees
Fees may vary depending on the investment vehicle selected. For Betterment Digital Investing, 0.25% of your fund balance as an annual account fee; Premium Investing has a 0.40% annual fee
-
Bonus
Up to $5,000 managed free for a year with a qualifying deposit within 45 days of signup. Valid only for new individual investment accounts with Betterment LLC
-
Investment vehicles
-
Investment options
Stocks, bonds, ETFs and cash
-
Educational resources
Betterment offers retirement and other education materials
Terms apply. Does not apply to crypto asset portfolios.
Wealthfront
-
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. $500 minimum deposit for investment accounts
-
Fees
Fees may vary depending on the investment vehicle selected. Zero account, transfer, trading or commission fees (fund ratios may apply). Wealthfront annual management advisory fee is 0.25% of your account balance
-
Bonus
-
Investment vehicles
-
Investment options
Stocks, bonds, ETFs and cash. Additional asset classes to your portfolio include real estate, natural resources and dividend stocks
-
Educational resources
Offers free financial planning for college planning, retirement and homebuying
Compare investing resources
Bottom line
You don’t need to wait to have thousands of dollars to start investing. Even just $1,000 can go a long way if you make it benefit your financial well-being. Whether you’re at the very beginning of your financial journey, paying off debt and adding to your emergency fund or you’re ready to start investing in stocks, even a small initial contribution can help you lay the foundation for a prosperous future.
Catch up on CNBC Select’s in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
