Five creative ways to invest $1,000

Five creative ways to invest a small amount of money outside of the stock market.

  • 9 August 2019

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    Disclaimer: Teachers Mutual Bank is not an investment advisor. Always consult your financial advisor before making any decisions.

    $1,000 might not seem like a lot to invest, but with a little hard work it’s possible to turn that into something more substantial. For most of us, the security and guaranteed return of a term deposit or bonus interest account are too hard to pass up. But if you’re prepared to take a risk, even an educated one, there are some creative ways to earn a decent return on your money outside of the stock market. Here are five of them.

    Paying off existing debt

    This might seem like a strange place to start, but it can be hard to find money to invest when you’re nursing considerable debt. And if your credit cards are maxed out or you’re paying off a personal loan, nothing you invest will generate more interest than your debt is taking from you. Even if you manage to scrape enough money together to invest, the high-interest repayment you make each month can cancel any profit you make. It makes sense to look at debt as a negative investment. It might not be as fun as booking a new holiday or buying the latest mountain bike, but using your $1,000 to decrease the amount of debt you have will make it much easier to invest in the future.

    Peer to peer lending

    Peer-to-peer lending (P2P) has only been around since 2012 in Australia. P2P lets you cut out the financial institution as intermediary and lend money directly to another individual. Basically, you and a bunch of other people get to participate in a loan relationship just like a bank, earning a percentage of the interest repayments on the loan – depending on how much you contribute to the overall amount. Investors are generally attracted to P2P because of the higher returns on offer. According to the federal government’s Moneysmart website, always check ASIC Connect to make sure the lending platform is registered.

    Small business

    So, you have a business idea that you think could make a lot of money and are passionate about making it happen. Or maybe you’ve heard about an exciting new startup and have a chance to get in on the ground floor. Investing your $1,000 could be a great way to go. Whether it’s creating an online course around specialised knowledge that you’ve accumulated, starting your own eBay store to sell local produce, or supporting a great product that you’ve been introduced to, getting involved in a successful small business can be a fantastic way to invest.

    Tip

    With statistics showing that nearly one in three small businesses fail, start out by only investing a third of your money. If the venture fails, you haven’t lost everything and can start again with the valuable lessons you’ve learnt. And if things go well, you’ll still have around $600 to help expand your new small business!

    Invest in a money-making course

    Jim Rohn, the American business philosopher and author of 7 Strategies for Wealth and Happiness, famously said: “Formal education will make you a living; self-education will make you a fortune!” While you might not be able to put a dollar value on it, it's widely agreed that there’s no better investment than yourself. And if you’re serious about investing, why not educate yourself about money? There is no shortage of money-making courses available online. But not all courses are created equal, so don’t fall for the razzle-dazzle of some self-proclaimed guru. Do your research to make sure you find the right course for you.

    Real Estate

    How can you invest in property with as little as $1,000? A Real Estate Investment Trust (REIT) is a company that typically owns a portfolio of properties, ranging from office and apartment buildings to warehouses, shopping centres and hotels. Some REITs will accept money from many smaller investors, pooling this into a single real estate investment. You can often get started in an REIT with as little as $500, allowing you to diversify your investment across a mini-portfolio. Fees are generally quite low too, so if you’re looking for a quick and hassle-free way to invest in real estate, an REIT could be a great way to start.

    A pot of gold at the end of the rainbow

    No matter how you choose to invest your $1,000, the most important thing is that you are investing. Starting small is a great way to learn the potential pitfalls of investing, but as with any investment, always do your research so that you are in a strong position to make the best possible decision you can. Come up with a long-term plan, and stick to it. With hard work and a little luck, you could add a couple of zeroes to your initial investment in time.

     

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