Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?



How to Invest $1,000 Safely

By  +Follow December 25, 2013 8:00AM
Tickers Mentioned:

One of the best tips a novice investor can get is probably to simply expect moderate returns and to be happy with a lack of volatility. For those investors with a great deal of money to burn, perhaps riskier investments might make sense, but if $1,000 represents a significant chunk of the savings for you or your family, the tortoise approach to investing is probably the wisest course of action. Starry eyed dreams of massive returns is precisely what drove investors into the arms of Bernie Madoff or led them to think the sub-prime mortgage market was the way to go. So, for the investor interested in steady, slow, but most importantly safe returns, here are some simple, very broad, very general pointers that can help get you started.

Bitcoins and Highly Leverage Hedge Funds

Just kidding. Wanted to make sure you were paying attention. These would fall into the opposite category of high risk/high reward. If you have $1,000 you can afford to lose, maybe it's worth doing some research, playing a hunch, and seeing if you can make money where MF Global's (MFGLQ) Jon Corzine failed. However, more likely than not, you don't have the time, knowledge, money, or access to information that the people who play these markets professionally have, so it's probably not worth it in the long run.

Mutual Funds

Ah, here's something simple. Mutual funds are investment vehicles specifically designed for the consumer. In essence, mutual funds pool the funds of many different investors to buy a portfolio of equities, bonds, and money market instruments. Most mutual funds are typically geared towards being very low risk, providing the average small-time investor an avenue to invest their savings that will garner a better rate of return than a savings account while having lower risk for collapse. Because of the pooled money, mutual funds can feature a diversified portfolio that would be difficult to assemble for any individual investor. In fact, most have specific rules, dictated by securities laws, limiting just how much exposure they can have to any one stock or bond.

Picking a mutual fund can be tricky, but most have ample data of the fund's historical performance.

Think of a mutual fund like long-term parking for your car at the airport. It isn't necessarily the most economical place to park your car, but you can feel confident that your car won't get broken into. If you're primarily concerned in your car being where you left it when you get back, long-term parking is the way to go, and mutual funds are a relatively safe place to park your car...er, savings.


Exchange-Traded Funds are very similar to mutual funds in that they're a collection of assets pooled together to provide a chance for an investor with limited funds to diversify their portfolio. Investing in any individual stock means taking a chance on a specific company, which can be risky. Just ask anyone who put their money into JC Penney (JCP) last year. However, ETFs are a portfolio of investments designed to mimic the performance of a particular index or sector. This allows an investor to make fairly broad, fairly general bets about the economy without having to do the meticulous research required to find specific companies to invest in and also mitigates the risks of investing in individual stocks.

There are a dizzying array of ETFs available, including those that speculate on commodities futures, currencies, and specific sectors and sub-sectors (have a particularly strong feeling about the future of companies specializing in wind power? Well the First Trust ISE Global Wind Energy Index Fund ($FAN) and the PowerShares Global Wind Energy Portfolio ($PWND) are both specific to the segment!), but the casual investor should most likely avoid these specific ETFs. Broad, index-based ETFs like the SPDR S&P 500 ETF ($SPY) are fairly safe bets over a long enough period of time. The S&P 500 Index has returned 13.5 percent annually over the past 50 years against 11.8 percent for the average mutual fund. Of course, this is no guarantee. Anyone who thinks that 50 straight years of growth means that there's no chance that things can change should ask anyone who was heavily invested in home prices continuing to increase in 2007. However, betting on the S&P continuing to increase at a similar rate over a long enough period of time is still a reasonable bet.

Blue Chips with Strong Dividends

Once again, investing in specific stocks presents an extra level of risk that isn't as present in ETFs or mutual funds. Namely, you've pinned your hopes on one company rather than dozens (or hundreds) and who knows what might happen. However, there are certain massive corporations that have reached a point of relative inertia that makes it hard to see them completely collapsing. While they probably won't offer big upward moves in share value either, they are safer than companies with smaller market capitalization (a number reached by multiplying the total number of outstanding shares by the price per share) and offer a major benefit: dividends.

Dividends are how major companies with little room left to grow bolster their share price, essentially paying profits back to shareholders in cash. These companies are typically in industries with a set demand for their product and a history of performance, like food makers or telecommunications companies. Dividends are typically expressed as a "yield," which is essentially what percentage of your investment will be paid back in the form of a dividend over the course of the year (dividends are typically paid in four quarterly installments, but occationally come in the monthly or annual variety). Any dividend yield of over 5 percent is a strong return on investment, and this can further be bolstered by rising share prices over time.

What's more, dividends can also allow an investor to continue making money even if the share price drops. If you intend to hold a stock for years, as you would for a retirement account, a downturn in share value over four or five years is suddenly a lot easier to stomach if you're still making a consistent dividend income during that time. And you can hold the stock long enough that you have a much better chance of taking advantage of the upswing that's often around the corner for those who are patient.

Dividends aren't certain, companies can and have changed them, but they can offer a path to increasing returns on a longer term investment horizon for anyone willing to take on a little more risk.


No investment is completely safe, and even the lowest risk bets can ultimately prove a mistake. But any investor willing to forgo dreams of miracle stock-picking and crushing the market can find a number of simple, relatively safe investment vehicles that, with patience, can offer solid returns more often than not.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Please state any and all relevant disclosures pertaining to the article you are submitting. If none, put "None".

Liked What You Read? Join Equities.com and Connect With Your Favorite Financial Experts FOR FREE! Members of Equities.com gain access to our leading financial news and content, active social investment community, proprietary research tools including the 2014 Small-Cap Stars, E.V.A. reports and more.

Results for SPY
1 Dec 15 08:23:07
$SPY Inside bar 30 min chart, above the value zone https://t.co/ohBAQ8zlP5
1 Dec 15 08:22:27
@jordan0618 hope you got that one $spy $es_f #es_f long
Shaun Barber
1 Dec 15 08:22:25
RT @StockTwits: THIS is the TRILLION DOLLAR question. And it's just been updated. From @JBL73: https://t.co/WveYHTE5rd $SPY $VIX https://…
MicroCap King
1 Dec 15 08:22:08
RT @StockTwits: THIS is the TRILLION DOLLAR question. And it's just been updated. From @JBL73: https://t.co/WveYHTE5rd $SPY $VIX https://…
1 Dec 15 08:20:39
$SPY got volume? we'll sell it 4 ya! https://t.co/ReyC6d5uEo
1 Dec 15 08:20:32
Bought 1.0 Lots $USDCAD 1.33683 >Autotrade your account with my trades. Email me to find out how. $FB, $SPY, $NFLX, $AMZN $GOOGL $BAC <
1 Dec 15 08:19:26
$SPY lower high, which is: bullish haha.
1 Dec 15 08:19:19
RT @ stockguy22 "#Futures dipping back intraday .. all Look toppy on daily and 5min charts on #ES_F #TF_F as well as $IWM $SPY"
Gerasimos Tsimaras
1 Dec 15 08:18:39
How to trade #Draghi #NFP Be prepared. https://t.co/ZqpXE3xWsa $STUDY #Daytrader $VIX $SPY $EURUSD #Trading $DAX https://t.co/Kaxbqii3UW
1 Dec 15 08:18:17
$SPY $SPY $Oil prices struggle for direction as OPEC meeting draws near https://t.co/pdfm7LDAGu
Gerasimos Tsimaras
1 Dec 15 08:18:02
$DAX $FDAX $SPY $EURUSD $STUDY #daytrader #trading $VIX $DXY $USDJPY $GBPUSD #DAX $SPX $ES_F https://t.co/pLFL2aibYx https://t.co/P5ypkHcoWO
1 Dec 15 08:17:31
$SPY $Oil prices struggle for direction as OPEC meeting draws near https://t.co/FEGgO59LcW
Khalid Rahman
1 Dec 15 08:17:29
$SPY intraday lower high in play, but can we close the day below yesterdays low 208.50, or around 207.40? $SPX $ES_F
1 Dec 15 08:16:25
BLOCK TRADE: $SPY 500,977 shares @ $208.53 [11:16:23]
Angel Dan
1 Dec 15 08:15:39
Lets have $SPY close above 210.00 cmoon..
James F Bowen III
1 Dec 15 08:15:10
$SPY I'll be your Huckleberry Bot Dec (18) 204's put's 1.33 @lizNNP @DeweyKnows @Nut_Crazy @CamilleHurn @ultrashort1 https://t.co/DM4wyLCgjP
Brian Betz, CFP®
1 Dec 15 08:15:02
Lots of green out there. $SPY https://t.co/dFMcGXCWzP
Vic Scherer
1 Dec 15 08:14:56
Lots of "inside." $spy (from Market Stats) https://t.co/mItFuEGoEv
Hedge Fund of One
1 Dec 15 08:14:27
$IWM under-performing $SPY $QQQ $DIA again today.
1 Dec 15 08:14:12
RT @Futures_Alerts: $spy * RSI: #ZN_F hourly RSI14 alert: 76.079 https://t.co/vVtVL4haVC
Phoenix Rising
1 Dec 15 08:14:08
RT @_TradeFollowers: Resistance calculated from Twitter stream is still 2100 and 2120 for $SPX. $SPY https://t.co/13Z2j35yt5
1 Dec 15 08:13:47
$spy * RSI: #ZN_F hourly RSI14 alert: 76.079 https://t.co/vVtVL4haVC
Ross Cameron
1 Dec 15 08:13:19
Make $200 a Day Trading Stocks | Get on the Fast Track https://t.co/HHK6lGNnCB #Trading #Stocks $SPY $DIA $QQQ $USO https://t.co/PLOCjxKCu8
1 Dec 15 08:12:54
bulls need/want it to hold here $es_f $spy 90-91 area, not getting a signal but not bad place for long with stop
Tim Artz
1 Dec 15 08:12:52
Chris Ciovacco
1 Dec 15 08:10:57
RT @daytrend: Stats are 2 to 1 green. $spy
The Lowe Group
1 Dec 15 08:10:34
RT @LeutholdGroup: #Stock market conditions weaker than headline numbers suggest. Leuthold’s Ramsey w/ @ScarletFu https://t.co/rMfFXtPH8g @…
1 Dec 15 08:10:32
1 Dec 15 08:10:28
$SPY decision time. I'm still in the boat that we see much lower. Today's high will remain for quite some time IMO.
1 Dec 15 08:09:41
RT @stockguy22: #Futures dipping back intraday .. all Look toppy on daily and 5min charts on #ES_F #TF_F as well as $IWM $SPY
1 Dec 15 08:09:35
#Futures dipping back intraday .. all Look toppy on daily and 5min charts on #ES_F #TF_F as well as $IWM $SPY
1 Dec 15 08:09:14
OPTIONS TRADERS CO-OP: Re: my earlier post about $QQQ and $SPY, https://t.co/bRVmWNgWaw
1 Dec 15 08:09:11
TalkMarkets Recap
1 Dec 15 08:09:02
A Time to Short the SPDR S&P Retail ETF $JWN $SPY $XRT https://t.co/4pXRVJyAKs
1 Dec 15 08:08:49
RT @jmthurow94: ISM Manufacturing just went into a RECESSION!! $SPY $VTI https://t.co/Yy29jK0ZBG
Market Dominate
1 Dec 15 08:08:21
RT @Liquid_Trader: $SPY~ I will look to cover a small portion of this short as it looks to test the 196 range lows.
Mark Soberman
1 Dec 15 08:08:05
$SPY support at 209.80 209.50 and 209.00. Resistance at 210.37 210.50 and 211.00. VWAP at 209.78
Mike Rykse
1 Dec 15 08:08:05
$SPY support at 209.80 209.50 and 209.00. Resistance at 210.37 210.50 and 211.00. VWAP at 209.78
1 Dec 15 08:07:49
RT @StockTwits: THIS is the TRILLION DOLLAR question. And it's just been updated. From @JBL73: https://t.co/WveYHTE5rd $SPY $VIX https://…
1 Dec 15 08:07:25
$SPY $NYA 30 min self explanatory https://t.co/9dns1fGgKO though activity has come to a screeching halt B/S programs https://t.co/VAb5XmNS1p
Vic Scherer
1 Dec 15 08:07:23
Stats are 2 to 1 green. $spy
Party Pants
1 Dec 15 08:06:49
RT @DayTradersGroup: our $TSLA Dec15 230.00 calls now 10.35 from our entry at 8.65 $AMZN $NFLX $FB $AAPL $SPY $QQQ Sign up 2 be alerted en…
Vic Scherer
1 Dec 15 08:06:41
Market Stats at 11:06 am ET $SPY $ES_F $IWM https://t.co/52OKl4vewZ
1 Dec 15 08:06:21
ETF Daytrade
1 Dec 15 08:04:00
NOW in our Site, Dec 1 #Intraday $DJIA $SPX $NDX $RUT $DIA $SPY $QQQ $IWM $UDOW $UPRO $TQQQ $TNA $SDOW $SPXU $SQQQ $TZA, compare accuracy.
Frank The Tank
1 Dec 15 08:03:33
RT @DayTradersGroup: The time of maximum pessimism is the BEST time to BUY & the time of maximum optimism is the best time to SELL $SPY $FB…
Trade Followers
1 Dec 15 08:03:13
Resistance calculated from Twitter stream is still 2100 and 2120 for $SPX. $SPY https://t.co/13Z2j35yt5
David de los Angeles
1 Dec 15 08:02:47
Commented on: "Fed Policy: Unsafe At Any Speed?" https://t.co/SLqecZhM5i $SPY $SH $SSO $SDS
Nigam Arora
1 Dec 15 08:02:35
Shane Leonard, CFA
1 Dec 15 08:02:24
RT @stockflare: "Grantham’s crystal ball will make you cry" @shaneleonard121 #stocks #bonds @Medium $SPY https://t.co/2ne7N1WpjG https://t.…
By  +Follow December 25, 2013 8:00AM



blog comments powered by Disqus

 Today's Must Reads

What Crowdfunding Leaders Are Saying About the SEC’s Approval of Title III

How the Drug Price Scrutiny is Affecting Pharma Stocks

8 More Tips for Choosing the Right Crowdfunding Platform

Will the Post-Smartphone Era Bring Wearable Drones?

3 Cloud Stocks That Pay Dividends


Small-cap stocks offer investors many benefits, ranging from higher growth potential to overlooked value opportuni... in Equities.com's Hangs on LockerDome

About us

Equities.com is an advanced financial data portal and social network designed to connect self-directed investors with the world’s most innovative startup and small cap companies. Through our in-depth coverage of small cap markets, comprehensive research and stock valuation reports, state of the art issuer products, and world class events, Equities.com provides the social tools and insight that drive tomorrow’s investment relationships and opportunities.

Market Data powered by QuoteMedia.
Copyright © QuoteMedia. Data delayed 15 minutes unless otherwise indicated. Terms of Use.

Login or Register