Whether you are investing $3,000 for the first time or are here looking for new investment ides, let me say “Congratulations!” $3k is an awesome accomplishment.
In the investing world, $3,000 is the point that opens up many different options. This not only gives you access to more ways to grow your investment, but it also means more research to find the right investment for you.
This roundup will help you find that right investment or a mix of investments, along with how I would personally diversify my $3k.
Ways to Invest $3,000
Betterment has become the top robo-advisor in the USA. The platform makes investing stupid simple. You sign up, take a quick survey to gauge your level of investment risk, and then put money in. THAT’S IT!
They handle the investing for you from there. Diversifying your portfolio and making sure you avoid fees and taxes. It’s an awesome way for anyone to invest, who doesn’t want to deal with the research and time of investing.
Fundrise is an eREIT that is open to anyone that can invest at least $500. They invest in buying and selling real estate, mostly commercial, and you reap a portion of the rewards.
Most REITs (real estate investment trusts) require someone to have $1 million in assets to be a part, but Fundrise has made it so that almost anyone can get started.
Worthy presents a new way to get a low-risk investment with a decent interest rate. They take your deposited funds and invest them in loans to small businesses using secured loans (usually secured by business assets, like inventory). For the use of your money, they pay you a flat 5% interest for your money.
You can withdraw at any time and of all the loans they have issued, they have yet to have anyone default. If a loan were to default, the property would be sold off and Worthy would make back at least what they loaned to the original owner. That’s is as secure as you are going to get.
If you don’t have an emergency fund then putting a portion of your investment into savings is going to pay big dividends. Whenever I have had an emergency I have always been thankful that we have saved some money just for that rainy day
You don’t want to put the money in any old savings account. you could end up getting 0.1% interest with some banks. Your best bet is to look at a high yield savings account. The best current rates include:
They have some restrictions in that they only do their trading once a day and only offer trades on their select securities. That is a small price to pay for no fees.
If you want a more hands-on approach to investing and want to trade on the broader stock market, you are going to need a brokerage that gives you better tools and access to different options than M1 Finance.
Ally Invest has some of the lowest trading fees and top-notch tools for anyone wanting to do their own investing in individual stocks. Their fees are only $4.95 a trade which puts them at the bottom for a full-featured brokerage.
Retirement accounts allow you to save for retirement while receiving some tax advantages. The most common types of retirement accounts are:
If you are not investing for retirement in your employer-sponsored account, then you will need to pick somewhere to house your retirement account. For people looking to invest passively, you can open a retirement account with Betterment.
For more active investors, it is hard to ignore the low fees and range of investments with Ally Invest.
This might not seem like an investment, but let’s hash it out.
Debt is going to cost you interest each month, and if you have credit card debt it will cost you a lot of interest.
By paying off that debt you save yourself much more interest than you will earn with any of the other investment on this list. It is also an investment in your peace of mind.
Not having debt takes a ton of stress off your finances.
Mutual funds are a great way to invest your money. They have been around a long time so you can see how well a mutual fund has performed over the last 5, 10, or even 50 years.
Having $3,000 to invest makes it easy since most funds will let you in for that amount or a little less. If I were going to invest in a single fund then I would probably go with Vanguard mutual funds because of their super low fees.
If you want many more options then I would choose Ally Invest to purchase my funds because they will give you access to the Vanguard funds plus MANY more.
Crypto is a whole new way of investing. It works as a currency exchange, but the coins have real utility other than a means of exchange.
If you are going to get into buying cryptocurrency I recommend you do a lot of research to understand how it works. If you are ready to get started today then Coinbase is going to be the best exchange to get you started.
High-interest CDs are at the bottom of my list because you can get similar rates with a savings account and not have to lock your money in for any period of time.
This wasn’t always the case, but with this low-interest environment, CDs aren’t as good of an investment as they used to be. If you want to get into CD investing the best rates are:
How I Would Invest $3K
I am a big fan of planning out your investments before making a move. I just dropped a bunch of ideas on you, so to help you out, here is how I would invest my 3,000 dollars.
Fundrise > $750
Fundrise allows me to get into real estate investing without having to manage anything. My plan is to one day own a few rental homes, but I am not there yet.
Betterment > $750
I set my wife’s Roth IRA up with Betterment so that if anything were to happen to me, she would get the benefit of having them manage her investing for her.
Worthy Bonds > $750
Worthy is a new one for me, but the idea of getting a cool 5% with pretty much no worries of default is pretty amazing. There isn’t another platform that I have found that will get you that kind of rate on a secured investment.
On top of that their promise of liquidity is a huge deal, making it a great place for a short term investment. I don’t know of another place where you can invest in bonds without locking in for a specific period of time.
Ally Invest > $750
Making my own choices in stocks is something I enjoy. So placing a porting of my investment in my Ally Invest account makes sense for me.
With the three options above I have all the short term and long term investments out of the way. Picking my own stocks is where I can take more risk and potentially see a much larger return.
Investing 3,000 Dollars Final Thoughts
No matter which investment you choose there are two things you want to make sure you are doing.
The first is that you should only invest in what you understand. If I don’t understand something then I am out. You have to have that knowledge and comfort level so that you get the most return.
Second is that you want to get started right away. Even if you plopped all of your $3,000 into a high-interest savings account until you get comfortable with an investment mix, that’s better than your $3K making no interest.
So get busy at turning that $3,000 into a $10,000 investment or even more!