Ways to invest $1,000 - First Approach

There are two approaches to investing $1000 or less: the mutual fund route or the stock route.

Investing In Mutual Funds

The first step to investing in mutual funds is to research and find a mutual fund that suits your interests. It also has to have a minimum investment which you can afford. Most mutual funds have $2500 minimum investments for regular accounts but some funds let you start with $1000 or less like Invesco funds ($1000) or the Pax World Fund ($250).

The next step is to decide what kind of account you want to open up. The options usually include custodial, joint, IRA, and regular accounts. Custodial accounts are what you would open up if you are a kid and want to invest or if you are a parent who wants to open up an account for their child. You might consider a joint account if you want the account in both you and your spouse's name. Individual Retirement Accounts (IRA's) are excellent ways to save for retirement with tax benefits but you should only open up one of these if you plan on using the money for retirement. Regular accounts are the standard type of account.

Once you have decided what fund you want to invest in and what type of account you want to open, all you have to do is fill out the forms and mail them in and relax as your money grows. Since your money is managed by professionals, you probably won't have to worry about it as much if the market takes a little dip. You can also check how your mutual fund is doing online by entering in its ticker symbol.