It’s tempting when you find yourself with a thousand dollars to just go spend it on that big “toy” you’ve had your eye on for a while. As hard as it is, though, you’ll be better off in the long term if you play it smart. Here are some of the smartest things that you can do with that thousand dollars:
1. Save It!
Open up a high yield compound interest savings account with your bank. Better yet, shop around to find the bank that will offer you the best interest rate and deposit the money there. For the highest interest rates look at Money Market accounts instead of plain savings accounts. This way your money will earn money. Then, the money your money earns will earn even more money. It will earn even more money if you continue to add a few dollars to that savings account every month.
2. Invest It!
Yes, the stock market is risky but investing even a portion of that thousand dollars can pay off in a big way if you make smart investing choices. Ken Fisher, popularly read as the Fisher Investments Forbes contributor, recommends buying into Johnson & Johnson, Amazon.com and a few others. But don’t put the entire thousand into a single company. Break it up over several different stocks. Better yet, invest in stocks, bonds and mutual funds. This way even if a part of your investment portfolio tanks, you’ll have the other parts of your portfolio to balance it out.
3. Pay Down Debts
This probably feels like the most boring option of all. Still, putting that thousand dollars toward existing debt can help reduce the money that you will pay out for those bills exponentially over time. You’ll most likely wind up saving more than the thousand dollars that you spent paying everything down. Start with the account that has the highest interest rate and then go from there.
4. Do A Little Bit Of Everything
Why not save some, invest some and put some toward your existing debt? This way you increase your chances of making money in the future while also decreasing the amount of money that you will pay over time on your bills. The easiest way to do this is to simply divide the thousand dollars equally between these goals. Of course, depending on your proclivities you might want to put more into savings than you do into investing or debt payments—just to protect yourself in the future.
There are a lot of different things that you can do with a thousand dollars. Given today’s economy, however, we think that these are the smartest decisions you can make.