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How to Invest $1,000 Now

5 easy, reasonably low-risk ways to put a grand to work

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#4 – Buy an ETF

how to invest etfIf you’re actively trading stocks with just $1,000, it’s very likely you’re paying more in fees than you are making in profits. For instance, if you make just two trades a month all year long and pay $10 a trade, you need a 24% annual return on your holdings just to break even! On the other hand, putting all your eggs in one basket via a single stock investment is a very risky proposition.

So if you have a small sum to invest, you’re better off relying on the diversification and know-how of an exchange-traded fund or ETF. Such an investment is a group of stocks similar to a mutual fund, only there’s no minimum investment to overcome. And in case you miss the fun of picking individual winners, there are hundreds of ETFs in all shapes and sizes — from funds that track gold to funds that track only financial stocks to funds that go up when a sector goes down! This way you can play a specific sector or strategy without the risk of putting all your cash into a single company or paying too much in trading fees.

Article printed from InvestorPlace Media, http://investorplace.com/2012/10/how-to-invest-1000-now/.

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