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Investing 1.000 Euros smartly - what are the options?




You can already invest money wisely with just a thousand euros. This article shows how this works and how a portfolio can look with 1,000 Euros with the following topics:

  • The possibilities of investing "small" money

  • Debts take precedence over investments

  • Example allocation with 1,000 euros

  • Saving and little risk

  • What are Exchange Traded Funds?

  • 3+1 investment tips

  • Shares as an investment

  • Is crowdinvesting an alternative?

  • Conclusion


WAYS OF INVESTING "SMALL" MONEY


It is a stroke of luck but not improbable that you will suddenly have a small sum of money at your disposal. Perhaps through a refund on your income tax return or through an inheritance, or perhaps monetary gifts on special occasions such as birthdays: Suddenly you are holding 1000 euros in your hand and thinking about what you can do with this sum. Of course, you can spend the money on consumer goods and fuel consumption. But you can also consider whether you can make even more money out of the amount by investing the 1000 euros.



DEBT COMES BEFORE INVESTMENT


When considering how to use your 1000 euros profitably, it is important to remember the well-known principle of investing: Debt repayment comes before new investment. In other words, you should be free of debt before investing any money. As a rule, debts are more costly than the return you can achieve with an investment. No debts? Then it is important to check the second principle of investing money: Do you really don't need the money for the investment? How can you check this? Here, too, a principle can be applied. For sudden emergencies, you should always have about two to three net monthly incomes at your disposal. If this is the case for you even without the 1,000 euros, then you can continue to consider which investment is best for you.



SAVE AND LITTLE RISK


Even if you have found that you don't need the 1000 euros, they do not have to be risked without consideration. Little risk is involved in saving in the form of savings books, fixed-term deposits and overnight money. With this form of investment, the money is often available at short notice and there is no risk of loss. On the other hand, returns are not or hardly to be expected due to the low interest rates.



WHAT ARE EXCHANGE TRADED FUNDS?


If you don't want to save money, you will quickly come across the abbreviation ETF during your research. This stands for Exchange Traded Funds. They are comparable to an index on a stock exchange, such as the DAX. The advantage of this form of investment is the elimination of management fees, since ETFs are not administered by a manager. The return on this investment is determined by the development of the market and not by individual shares. ETFs are a good way to invest your 1000 euros and put them to work.


 

Investment Tip 1: Diversification

"If you diversify, you won't slip" is one of the most widespread "wisdoms" about investing money. Spreading one's capital across different investments, i.e. diversification, is one of the basic rules of investing money. The available money should not be invested in a single share or property, but should be spread as widely as possible.

Investment Tip 2: Flexibility

Investment tip 3: Risk-return ratio

Investment Tip 4: Costs and Fees

 

SHARES AS AN INVESTMENT


With both ETFs and shares as a form of investment, you should always be aware that these investments also involve risks. Here, too, a principle: the higher the possible return, the higher is usually the risk of loss. For an investment in shares, a sum of 1000 euros is the minimum amount. For amounts below this limit, share investments makes little sense. This is also due to the costs incurred by ordering the shares. For the rather smaller sum, it is worthwhile to set up a savings plan. In this way, the amount invested is gradually increased without incurring further transaction costs. With the help of equity funds, the risk of the deposit can be divided and minimised in this way. This also avoids the problem that the investment sum of 1000 euros can at best be invested in one share. Of course, investing in one share does not involve any risk diversification and is therefore very risky.



IS CROWDINVESTING AN ALTERNATIVE?


Crowdinvesting often offers even higher returns than ETFs and shares. The principle behind this form of investment is simple: several (mostly private) investors join forces to finance a project. Ideally, these projects generate a return that accrues to the investor. Such projects can be start-ups, i.e. company foundations, but also loans to private individuals and the like. The mediation between investor and project takes place via corresponding internet platforms, which usually also check the seriousness and sometimes also the creditworthiness of the projects. The advantage: With an investment of 1000 euros you can participate in numerous projects. The potential returns are usually higher than with shares, ETFs and savings books. A special form of crowdinvesting is real estate crowdinvesting. Such projects can yield interest of up to 7%. On the other hand, the risk that the project fails and the investment is lost is correspondingly high.



CONCLUSION


Unexpected things often happen. If you suddenly have 1000 euros in your hand, you are spoilt for choice as to what to do with it. If you want to invest the 1,000 euros and earn a return with this sum, you can certainly do so by saving, for example with overnight money and a savings account. Somewhat riskier is investing in shares. However, it should be noted that the costs for this investment are quite high and the profit must be correspondingly high. ETFs offer the best alternative, as there are no management costs with this form of investment. Crowdinvesting is lucrative but risky.

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