BEST WAYS TO INVEST 1000 DOLLARS IN 2020 Absolute best way to invest 1000 dollars today. What should you do with that kind of money to make the best possible return in the future? These are my take on the best investments 2019.
1. Invest in yourself. First and foremost the best investment you can ever do in your lifetime will be in yourself. Sure, trading or investing in the stock market is a great way to create returns, but you first and foremost need to find a way to create that initial capital to capitalise from the returns you can make. There is not really a point to invest 100 dollars in to an index fund that will provide you will 8-10% yearly which is the average the s&p500 has been able to return yearly in the past. Instead you should focus on becoming more valuable as a person and create more capital. Once you start making enough money to cover your basic needs and finding yourself making more than what you spend. This is the right time to start investing your money in to different ventures. But the first and most important is to use that 100 dollars to spend on knowledge, take a course, find a mentor, learn a new skill that can make you money later in life. A good valuable skill today that pays a lot is becoming a software engineer and you do not need to go to university for that, you can learn from home using the internet, a few great sources with great information will be youtube and google. If you started to invest 500 dollars a month between the ages of 25 and 65 you will end up with over 1.1m. But if you started at lets say 35 to 65 you would end up with 540k. That is a big difference. Now 1.1m is not going to be enough to retire with in 40 years. But if you can get to 1m as fast as possible, your potential returns with an index fund at 10% yearly would lead to 100k profits per year, that is more like it. This money will be enough for you to move to a cheaper country abroad and become financially free. There is a problem though, the market can crash and you will be unable to capitalise on these returns, this is when your passion comes in to work, because then you do not need to think so much about making a lot of money, simply covering your basics need will be enough. The years that your investments are making great profits you can proceed to take a percentage out of that and use it to spend on things you like. A good rule of thumb is taking out 1/3 of the profits generated. So if your returns are 12% for the year, whit draw 4% and let the rest of the profits work for you to capitalise on compound interest. The key thing is to save as much as possible early on, to be able to generate enough capital to live on investments.
2. The Stock market: If you have been keeping up with the stock market twists you might have heard rumours and people talking about a correction is on it’s way. And of course this is always true with any market. But if you are only going to be in it for the short run this is not something I recommend. But if you are serious about building long term wealth I highly suggest that you start investing in the stock market. Make sure that they are well diversified and cover different markets and sectors. Emotions can truly hinder a good investment plan in different markets that is why It is highly recommend to put your money in to index funds. A great way to invest is to use a dollar cost averaging strategy. This will eliminate the urge to “find the right time” to buy, instead you will invest the same amount every month. This will make sure that you buy in to the markets no matter the conditions and in the end you will average out a great return. It is better to invest now, instead of waiting to time the markets. Because it is impossible to time the markets in the long run. It is better to save on a monthly basis and get a better average in the long run.
3. Pay off your debts: Since when does paying off debt have anything to do with investing? It has a lot to do with it in fact. Think of it this way; if you have high-interest credit card debt, you’re paying someone interest on that debt. Every little extra you throw at that debt the less interest you’ll have to pay in the long-run and the quicker you’ll become debt-free.
If you currently have credit card debt and are paying 15 percent or more in interest, you want to lower that rate as soon as possible.
I want to show you why it is so important for you to pay off your debts. First of all, when you carry a lot of debt, the payments on that debt tie up a big chunk of your income. For example, imagine if you have a 30- year mortgage for 200k at 4,5% interest. That payment on that mortgage will eat up 1k a month of your income every month. And half of that will go towards interest only. So you are not building equity. If you can find a way to pay off that debt early you will have an additional 1k more a month.
*Not Financial Advice ;)
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