9 cash moves to earn now – if you have $ 1000 in your account
With an economy still burned by the pandemic and low-income groups feeling the brunt of the burn, the prospect of having money to spare might seem like something out of a fairy tale. But suppose you have a little more money. Not enough to say, buy a house or pay for college, but enough to make an immediate difference – like $ 1,000. What would be the best way to put this amount of money to good use?
Financial experts will surely advise you not to take this “excess” cash as an excuse to spend. “If you end up with an extra $ 1,000, don’t consider it ‘extra’ and be frivolous with it,” said Michael Foguth, founder of Foguth Financial Group. “That $ 1,000 can be used in a number of ways to help you reach your financial goals.”
Money experts will likely encourage you to spend $ 1,000 on debt repayment to “keep those high interest payments from getting out of hand,” said Daniel Hampel, COO at PARCO.
But paying off the debt isn’t the only smart move you can make if you find yourself honored with a big spare. Read on to learn about other savvy maneuvers financial experts recommend to get the most out of $ 1,000.
Last updated: May 19, 2021
Create an emergency fund
“Keeping money aside in a bank account might not be the most exciting thing you can do, but it is one of the most important,” said Matt Hylland, financial planner at Arnold and Mote Wealth Management.
“If 2020 has taught us anything, expect the unexpected. Creating an emergency fund can help you prepare for unforeseen expenses or lost income that would otherwise have ruined your financial plan. bank or check out a money market account, but don’t worry too much about funding the highest yield just yet. The main value of the emergency fund is not to generate interest, it helps you sleep better knowing that you have a safety net you are avoiding high interest rate debts like personal loans or credit cards, when the unexpected happens. “
Open a high yield savings account
If you are starting an emergency fund, consider putting your money in a high yield savings account.
“High-yield savings accounts are a great low-risk option for receiving interest on your money while still having access to it in an emergency,” said Chris Holder, financial advisor, CEO and founder of $ 100. of dollars. “I recommend shopping around to see which banks offer the highest interest rates – Barclays, Goldman Sachs, HSBC, and American Express all offer high yield accounts. The difference between a regular savings account and a yield account High usually does not have withdrawal slots – everything is done electronically. There is normally no minimum balance and no fees. Rather than earning minimum interest by sitting in a regular savings account, a high yield can generate interest rates of up to 2.25%. “
Make the necessary repairs
If you have no debt to pay off and have an emergency fund in place, take a look around your house (or car) and think about what you postponed to upgrade or replace. .
“If you’ve postponed the necessary repairs, this might be a great time to get them done,” Hampel said. “For some, that could mean fixing leaking insulation. For others, it could mean getting a set of much-needed new tires on your car. Either way, these preventative maintenance activities can save you a lot of money. Money on the road In reference to the old adage, “a point in time saves new,” making necessary repairs, such as replacing old tires, could prevent a winter accident and improve your fuel economy. “
Read more: Here’s how to reduce auto repair costs
Open a Roth IRA
Another smart move to make with $ 1,000 is to open a Roth IRA. Sammy Azzouz, CFP, president of Heritage finance and blogger The Boston Advisor explains that it can serve as both a foundation for retirement savings and emergency funds.
“The Roth IRA is a great retirement vehicle because its income increases tax-free and you never have to make withdrawals,” Azzouz said. “However, if you have an emergency and need cash before retirement, your Roth IRA contributions can be withdrawn without taxes or penalties. The contribution limit is $ 6,000, or $ 7,000 if you are 50 or older. more.”
Double your money with 401 (k) employer matching
“If you haven’t reached your maximum annual employer benefit, put your $ 1,000 contribution into your 401 (k),” Holder said. “Most employers equal between .50 cents on a full dollar, so you could easily turn your $ 1,000 to $ 1,500 to $ 2,000.”
Start an online business
“Any financial advisor will tell you, second income streams are the best way to reach six and seven figure goals,” Holder said. “Start by using your money to set up an online or LLC business. Some examples: Affiliate marketing programs are a great option, as well as offering content creation and social media management. Deposit a small deposit for your business bank account, website and even get professional photos to get you started. “
Enter the stock market
Financial advisers generally don’t advise playing the stock market with $ 1,000 if your savings are low or you don’t have a cushy retirement plan in action. But if you’re really looking to get into Wall Street stock, consider an exchange-traded fund (ETF).
“Putting your money in an ETF (essentially a basket of securities in a fund versus a stock per se) that tracks the S&P 500 as long-term historical percentages show may have only a small return on investment at short term, but it’s a great long term investment, ”Holder said.
Hire a financial coach
“Even the best of the best know they need someone to teach them wisdom, observe and change their behaviors, and hold them accountable,” said Jeremy Keil, CFP, CFA, a retirement-focused financial planner with Keil financial partners and host of the Retirement Revealed blog and podcast.
“You don’t necessarily have the time to learn everything there is to know about finances; it’s hard to criticize or even see your own financial mistakes and it helps to have someone keep you on track. right path to achieving the goals you create for yourself. A financial coach can be profitable with less stress and hopefully even more money. “
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