Where to invest $1000 – my investment challenge

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Investment Challenge $1000 and me
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There are so many things to do with $1,000 – take a trip, buy some clothes, pay down debt, and investing, to name a few.  I am going to explore some investment options available for a $1,000, then track their progress over the next year to see how each has performed.

The $1,000 Investment Challenge

What are the investment options I’m reviewing?

I wanted to include a mix of investment options, from stocks to bonds to alternatives, that were all set on auto-pilot.  Additionally, I selected options that were no-cost for each contribution made into the investment.  I found some great options that you should consider for your next $1,000 of investments.

  • Lending Club – is a peer-to-peer lending platform that allows you to buy into people’s borrowing needs for as little as $25 a loan.  Technically, the minimum is $2,500 to start investing with Lending Club, but I’ve been investing with Lending Club for over a year and it is a good comparison to Prosper.
  • Prosper – is also a peer-to-peer lending platform, similar to LendingClub.  I wanted to include both to compare and contrast the options between them.
    • If you’re interested in opening an account with Prosper, please use my referral link.
  • Betterment – is tax-efficient way to invest built upon a low-cost portfolio of ETFs and index funds chosen based upon your timeframe, risk tolerance, and other personal factors.
  • Sharebuilder – is a low-cost investment option that allows you to invest in select mutual funds without any transaction costs, with no minimum to open an account.
    • If you’re interested in opening an account with Sharebuilder, please use my referral link and code “50TRADE” to receive a $50 bonus after your first transaction.  Please see their site for more details.

How I’m investing for the $1,000 Challenge

Investment Challenge $1000 and meFor each option, I’ve invested $1,000 up-front on October 1st, 2014 in a specific investment or portfolio at each company, then I’ll be adding $100 a month on the 15th of each month to each account.  Originally, I was going to just invest the $1,000, but Betterment charges a $3 fee per month if your balance is below $10,000 and you aren’t investing a minimum of $100 a month.

Lending Club requires a minimum initial investment of $2,500, but because I already have an account with them, I’m setting my current balance as the baseline and will adjust returns and investments to ensure apples-to-apples comparisons with the other 3 opportunities.

Many of Sharebuilder’s options required a $2,500 or $3,000 minimum initial investment, so I searched through the options until I could find a suitable mutual fund that doesn’t charge fees and is based on a broad index of stocks and bonds, similar to what is known as a “balanced fund” where the manager will seek to the “right” balanced mixture of stocks and bonds based on how the economy is performing today and how they see it reacting to upcoming trends.

Conclusion

Each month, I will be taking a snapshot of my balances using a great new tool from Personal Capital and report back to you on the progress each investment is making.  I’m still waiting for my initial contributions to settle with the respective companies so that I can complete my investments.  If you’ve invested in any of these options before, I’d love to hear about your experiences.  Please leave a comment on this post or share your story so we can feature your experiences in a future blog post!

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