The Best Ways to Invest $1,000 Now

Date: November 15, 2016      Publication: Bottom Line Personal      Source:  Brian J. Kurtz, Assured Investment Planners...Ken Tumin, Benz, Sizemore, CFA, Krueger, CEO,      Print:

What if you have a spare $1,000? Perhaps the money is a tax refund…a lottery win…an inheritance…or some other windfall.

How about not spending the money but investing it instead? Don’t let the fact that it’s “just” $1,000 stop you. There are a number of especially smart things to do with a thousand (or a few thousand) bucks whether you want to save up for a special purchase…add to your nest egg…or even invest the money as a gift for your kids or grandchildren. To help our readers choose what to do with their next thousand, Bottom Line Personal spoke with five investment ­experts. The right investment choice for you will depend, in part, on when you might need to draw on the money and what your risk tolerance is…

Get 3.5% on a Savings Bond

Surprisingly, you (or your gift recipient) can double the $1,000 in 20 years with a US savings bond. That’s because Series EE bonds will pay a guaranteed 3.5% annual return. The catch is that the money must stay in the savings bond for 20 years to be a good investment—if it is redeemed early, it will pay only 0.1% annually. But that 3.5% is much better than what you can get on a 20-year US Treasury Bond, which currently yields about 2.2%. You can buy and sell EE bonds through an online account at You generally can’t redeem in the first year, and if you redeem in the first five years, you forfeit three months’ interest.


Brian J. Kurtz is an estate-­planning specialist with Assured Investment Planners, Troy, Michigan, and author of Getting the Most Out of Your Savings Bonds.

Get 2% on a CD

Yields on CDs are so low right now that you need to choose one with a term of several years to get a decent rate. But early-withdrawal penalties are not nearly as harsh as with the savings bond described earlier. Best long-term CDs (you can join either of the credit unions below with a $5 donation to a specified ­charity)…

Garden Savings Federal Credit Union 5-year CD, 2.28%, $500 minimum (

Elements Fi­nancial Federal Credit Union Rate ­Climbers 54-Month Certificate, 2%, $1,000 minimum ( You are allowed to bump up the rate once during the 54 months if the credit union lifts its rates on CDs with a similar term.

You can purchase a CD for a minor through a custodial account in the child’s name and maintain control until the ­minor becomes an adult—typically between age 18 and 21, depending on which state you live in.


Ken Tumin is founder of, which monitors interest rates and ­various developments at about 14,000 banks and credit unions.

Invest in A Fund

A mutual fund or an exchange-traded fund (ETF) does not, of course, offer a guaranteed return as a bond or a CD does. But a fund can offer the potential of much greater returns. Most ETFs passively track a relatively fixed index of investments. That may limit their potential returns, but ETFs do tend to have lower operating expenses than actively managed mutual funds, and they tend to be more “tax efficient”—meaning that they tend not to generate taxable capital gains until they are sold.

Best index fund for $1,000…

Vanguard Total World Stock ETF (VT) tracks stocks worldwide and offers the widest diversification of any stock fund. Because it is an ETF, there is no set minimum investment and the annual expense ratio is a low 0.14%. This ETF trades commission-free at Vanguard (

If you want to rely on a professional fund manager rather than an index to determine the fund’s investments, consider a mutual fund rather than an ETF. The following two mutual funds require minimum initial investments of just $1,000, and they have gold-star ratings from analysts at ­Morningstar Inc., which means that they have a good chance of outperforming other funds in their categories. You can open an account directly with the fund companies or purchase the funds without a transaction fee at or


Best actively managed mutual funds for $1,000…

Oakmark Fund (OAKMX) invests in bargain-priced stocks of large companies (

FMI Common Stock Fund (FMIMX) invests in reasonably priced small and midsize companies with growth potential (

Best fund to buy for kids and teens…

Schwab Total Stock Market Index Fund (SWTSX) tracks an index that reflects the performance of the entire US stock market, including many companies that children can relate to such as Facebook and Walt Disney. Most mutual funds require an initial investment of $2,500 or more, but you can get into this one with as little as $100. The annual expense ratio is an ultralow 0.09%. For minors, you need to open a custodial account (no fee) at Schwab first (


Christine Benz is director of personal finance at Morningstar Inc., Chicago, which tracks 530,000 investment offerings.

Buy Shares of a Stock

A few discount brokerages let you open online accounts and trade stocks with $1,000—or even less—including,, ­ and Trading fees range from $7 to $10 per transaction.

My favorite $1,000 stock investments… 

Apple (AAPL). The iPhone and iPad maker can generate tens of billions of dollars a year just from upgrading its existing products. That kind of cash flow gives the company the opportunity to develop new, blockbuster products and services. Recent share price: $117.63.

Tiffany & Co. (TIF) is expanding internationally and balancing its upscale image with more affordable jewelry. ­Recent share price: $72.65.


My favorite $1,000 (or less) stock investments for kids or teens…

Hasbro (HAS). The world’s third-largest toy maker has iconic brands including Monopoly and Scrabble as well as lucrative licensing agreements with movie franchises including Spider-Man and Transformers. Recent price: $76.16.

Nike (NKE) dominates the global market for athletic footwear and apparel. Recent share price: $51.62.

Charles Sizemore, CFA, is chief investment officer of Sizemore Capital Management, Dallas, and coauthor of Boom or Bust: Understanding and Profiting from a Changing Consumer Economy.

Get Free Management from a Robo-Adviser is an investment company that will set up and oversee a $1,000 diversified portfolio of five to 10 ETFs for you based on an online questionnaire that you fill out to assess your investment goals and risk tolerance. The portfolio is “managed” by software—what the ­industry calls a “robo-­adviser”—not by a human. But the software is quite sophisticated and should be able to keep your portfolio risk right about where you want it. There’s no fee for accounts of up to $10,000 other than the underlying expense ratios of the ETFs.

Pam Krueger is CEO of, an online service that matches investors with registered financial advisers, and cohost of MoneyTrack, a personal-finance program that airs on public television stations.