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From Robo-Advisors to Trading Apps, 5 Smart Ways to Invest $1,000 And Start Growing Your Wealth

To many, the stock market is intimidating. But while investing can seem overwhelming, starting with a small amount will make it less daunting — and possibly set you on the path to growing your wealth. There is no minimum amount you need to trade in the stock market, and investing $1,000 is a good way to begin, suggest experts.

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More Blacks are getting involved in investing. In fact, 63 percent of Black Americans under 40 are investing for the first time, found a recent survey by Ariel-Schwab Black Investment.

Wait, What to do Before You Invest

Don’t pick a stock without thought and preparation. Investing money should be done carefully and take time.

“Read, study, simulate, and then study some more,” Al Hill, creator of the investing blog Tradingsim and stock trader of 18 years, told Finurah. You also have to decide what type of investing you want to go: Long-term, short-term.

The difference between short-term and long-term investments is how you use your stock. A stock will be a short-term investment if traded by a day trader who sells it within a few hours, according to The Street.com. When held in a 401(k) for several years, that same stock is considered a long-term investment.

Practice trading stocks on sites like TradingSim, where you can learn about trading stocks on paper without losing any of your real money, suggests Hill. 

5 Assets To Invest In with $1,000

1. Stocks are the capital raised by the issuing of shares of a company. When you buy a company’s stock, you’re purchasing a share of a stock or a piece of the corporation in the stock market. You can buy many stocks for under $1,000.

If you’re starting to invest, you can invest with free or low-cost trading apps. Apps like Robinhood let your buy stocks right on your mobile device. Established brokerage firms like TD Ameritrade also have free trading apps to buy stocks too. When you buy stocks on a trading app, you open an account. Then, you can search for a stock to buy. After you buy the shares of stock, you can keep track of the stock’s performance on the app.

2. ETF (exchange-traded fund) is a group of stocks that you can buy or sell through a brokerage firm on a stock exchange. For example, a tech ETF would trade similar to individual tech stocks. ETFs charge low-cost expense ratios, and that’s a percentage of your investment that covers a fund’s expenses. Just like stocks, you can buy many low-cost ETFs for $1,000 on a trading app.

3. Robo-advising is an option for investors who want to take a hands-off approach to investment. Robo-advisors are computerized investment managers that choose stocks for your investment. The low-cost advising systems usually charge a small annual management fee of 0.20-0.50 percent.

When you pick a robo-advisor like SoFi or Betterment, you fill out a questionnaire to determine your investment goals. Then, the robo-advisor picks stocks that are relevant to you. You can change the picks when you want, and you can monitor the portfolio’s performance on the robo-advisor’s website.

4. IRAs (individual retirement accounts) are retirement accounts to invest $1,000 if your employer doesn’t offer a 401(k) plan. Black Americans are less likely than white Americans to have retirement plans, according to the Ariel-Schwab Black Investment Survey. They can close the retirement wealth gap by opening an IRA.

Many brokerage accounts like Fidelity offer IRAs. Some firms charge a fee per transaction or a percentage of the $1,000 you invested. Traditional IRAs have tax-deductible contributions until you withdraw funds, but you can’t contribute to an IRA after you’re 70. In a Roth IRA, there’s no tax benefit to contributions, but you can make withdrawals without penalties. You can deposit up to $6,500 a year.

5. CDs (certificates of deposit) are an option if you don’t want to open a retirement account or invest in the stock market. A CD is a kind of higher-yield savings account you buy from your bank. You invest in the CD for a set period of time, from 28 days to as long as 10 years. Your back will pay you an interest rate for the term of the CD. Once the CD matures, you can withdraw the funds with interest.

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