Youd like to learn how to invest $1,000.

Is this possible?

After all, dont many financial advisors have investing minimums? What if youre new to investing? Where do you start?

Yes, there are places you can invest $1,000. And, some of them are pretty nifty, as well.

But, its not enough to know some places to invest – you should learn some best investing practices. Ill teach you those along the way, too.

So grab your stash of cash, and lets look at some of the best ways to invest 1000 dollars!

1. Pick investments yourself using an online trading platform.

If youre the do-it-yourself type, and you have some investing knowhow, you might want to consider picking investments yourself using an online trading platform such as TD Ameritrade or E*TRADE.

There are many more discount brokers out there, so you might want to spend a little time researching them and seeing which discount broker is right for you. You can also use this guide in helping you choose the best online broker.

Tip: If youre going to be picking investments yourself using your $1,000, you might want to pick out some exchange-traded funds (ETFs). ETFs are known for their lows costs and diversification benefits.

2. Lend to those in need and earn some interest.

If you want to invest into the lives of others and earn some interest, theres a new craze thats both exciting and reasonable: peer-to-peer lending.

Peer-to-peer lending is the practice of lending to borrowers through an online service whose goal it is to bring borrowers and lenders together.

Lending Club is one such peer-to-peer lending service I tried out, and I found it to be very easy to use and reliable (see my Lending Club review).

As an investor with Lending Club, you can invest automatically using investment criteria. Alternatively, you can manually invest by browsing available loans and picking the ones you like. Its up to you!

Tip: Like any investment, make sure you choose notes that reflect your tolerance for risk. Some notes are riskier to invest in than others, and thankfully, you can see this information at Lending Clubs website.

3. Have a popular robo-advisor manage your money.

If youre not very skilled at investing on your own and youre hesitant to loan money out to particular people online, you might consider hiring a robo-advisor.

Robo-advisors are investment companies who create automated software designed to manage portfolios based on certain criteria. For example, when signing up for such a service, you might take a questionnaire to determine your risk tolerance level or investment goals.

Robo-advisors make investment management available to the masses, since they typically have very low (or nonexistent) account minimums.

Additionally, many robo-advisors have slick user interfaces to help you get relevant information about your investment performance, holdings, and more in a snap.

I interviewed Jon Stein, CEO of Betterment, a popular robo-advisor which grew from nothing to a $16+ billion dollar investment company in just under eleven years. Jon believes the markets represent the success of the global economy. Overall, he expects they will improve over an extended period of time. This view is reflected in Betterments software. Its set-it-and-almost-forget-it investing!

Tip: If youre ready to get a comprehensive, in-depth financial plan in place, youd probably do better to sit down with a financial planner. If you have your strategy largely in place, try out a robo-advisor. Its worth a look!

4. Invest in your kids college education.

Every parent wants their kids to be successful in life. One path to success is college.

But, theres a problem. Can you guess what it is? College is expensive and is showing no sign of slowing down.  Forbes contributor, Mike Patton, points out that college tuition has been increasing by a whopping 5.2% for the last 20 years.

If you want your kids to go to college, and you arent rolling in the dough right now, you should probably think about saving for their college education.

A 529 college savings plan is a great choice, as it has tax advantages that encourage individuals to save for college. These plans are sponsored by the states, so be sure to check out your states 529 college savings plan and see if it makes sense for you.

$1,000 is a great start in one of these plans, and depositing the money in such a plan will help you get the technical details of the account worked out so you can continue to contribute.

For example, you might be held back by the fear of the unknown. Making a decision to start saving for college today will make it much easier psychologically to invest tomorrow.

Tip: If youre going to contribute to your childrens college education, its wise to start as early as possible. The time horizon for college is usually short: a maximum of 18 years. If youre starting when your children are older, you have even less time. I cant stress enough . . . start as soon as possible. You need all the time in the markets you can get.

5. Pay down your debt.

You might find this investment strategy surprising. But think about it for a moment . . . .

Having debt is like the opposite of having an investment. The only difference is that holding onto debt is often more costly than investments are profitable.

For example, you might expect to achieve a 7% or 8% return in the stock market. With credit cards, you might pay in the double digits. Yikes.

Thats what makes paying down debt such a great investment idea. What youre really investing into is not having to pay lots and lots of interest.

This is also why some financial gurus recommend paying down non-mortgage debt before investing for retirement. Its that important.

And, $1,000 might make a big dent in your debt. But if it doesnt wipe it out, you should truly focus on paying off your debt as soon as possible.

Tip: Organize your debts. You may choose to organize them from lowest balance to highest balance, or from highest interest rate to lowest interest rate. The former makes sense from a behavioral standpoint and will give you some quick wins while the later will save you the most money.  If you still have good credit then you can take out a 0% balance transfer credit card and reduce your interest for 12-18 months while you pay it down.

6. Start a Roth IRA

The Roth IRA, my friends, is one of my most favorite investment vehicles.

Why? Because the Roth IRA allows you to get a tax break on the money you withdraw from the plan during retirement instead of getting a tax break when you put the money in (that means you get some tax-free money).

Thats a good thing for many, many people. The other reason is you have a lot of control over your money with a Roth IRA when compared to your employer-sponsored retirement account.

Those are two great reasons to start a Roth IRA. But lets not forget the main reason you should start one: its important to save for retirement!

You wont be getting a paycheck from your employer in retirement. No income. None. Thats obvious, but let it soak in for a moment. Youre going to have to rely on other income sources (like your fantastic Roth IRA) in order to survive.

Tip: Check out some of the best places to open a Roth IRA and start one today! Youll be glad you did.

7. Diversify your money

One of the worst mistakes financial advisors see is when clients dont diversify their money. Dont be like those clients. Be awesome and diversify your money.

And yes, you should diversify your $1,000. With ETFs, it doesnt cost much to diversify your money and make sure you dont ride the single-stock roller coaster.

You might be thinking, But Jeff, its only $1,000. Cant I buy some [insert favorite company here] shares?

Well, you could, but you sure wouldnt be setting yourself up for making smart investment decisions in the future. Be smart with your money even if its being smart with just a little bit of money. Practice now for the future.

Tip: As you build your portfolio over time, make sure to rebalance it as certain investments within the portfolio will rise and fall in value. Never be overweighted or underweighted in an area. Learn all you can about proper diversification and stick to those best practices.

Concluding Thoughts

Thank you for taking the time to read this article. You know what it means that you read this article? It means you care about doing the right thing with your money.

$1,000 might not be much to invest, but starting on the right foot now will lead to numerous rewards in the future. Just imagine how that one little act of investing $1,000 will grow into years and years of interest and sound financial choices.

And, dont forget the power of compound interest. Exponential growth of money is awesome, and you should take advantage of it as soon as possible.

While there are so many ways to invest your $1,000, just make sure you do so. Do some research before you invest, but dont drive yourself crazy considering all of the options. Make a reasonable, but timely choice. The last thing youd want to do is neglect investing at all because of information overwhelm.

Invest today for a better tomorrow.

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