How To Invest $1,000 To Buy Over 7,400 Stocks And Grow Your Money.
A triple threat portfolio built for diversification, capital gains and income.
Investing advisors usually require investing minimums, usually in the neighborhood of a few thousands or hundreds of thousands of dollars. But what if you only have $1,000 stashed away somewhere in a checking account collecting dust? Can you really buy over 7400 stocks with $1,000? Absolutely! Here's how.
[Related: How to invest $50. Here's what we recommend.]
How to buy 7400+ stocks with $1000 (Table)
|Fund Ticker||Fund Name||Number of Stocks||Allocation Percentage||Fund Category|
|IVV||iShares Core S&P 500 ETF||506||50||Large cap|
|FSMAX||Fidelity Extended Market Index Fund||3166||20||Mid-cap blend|
|FECGX||Fidelity Small Cap Growth Index Fund||1165||5||Small cap |
|IEFA||iShares Core MSCI EAFE ETF||2449||15||Foreign large blend|
|FREL||Fidelity MSCI Real Estate Index ETF||175||10||Real estate|
The table above shows how you can allocate $1000 to buy nearly 7500 stocks, using 5 low-cost index funds. Please note: Vanguard or Schwab equivalent index funds or exchange-traded funds (ETFs) will also get the job done. All funds have ultra-low expense ratios (see below). We recommend a mix of index funds and ETFs. ETFs allow you to buy or sell securities during regular trading day, and take advantage of instant stock market opportunities (i.e. buying low and selling high). Change the allocation percentages to fit your investment objective or risk tolerance.
Diversification, capital appreciation/growth
This portfolio is built for growth. It is essentially 100% stock equities. Besides growth, what makes this portfolio stands out is its inherent diversification. Your $1000 will give you a piece of large companies (IVV), medium-sized companies (FSMAX), smaller companies (FECGX), foreign companies (IEFA) and real estate companies (FREL).
...but wait, where's the income?
The really cool thing about this portfolio is that dividend income is built into each individual fund! Dividends are just profits that a company or mutual fund company shares with its shareholders. Here's dividend/income information for each fund.
1. iShares Core S&P 500 ETF (IVV)
Dividend yield: 1.84% or $6.751/share in 2019 | One-year return: 23.40% | Expense ratio: 0.04%
2. Fidelity Extended Market Index Fund (FSMAX): one of Fidelity's best mutual funds. As a mid-cap blend fund, you get both growth and value.
Dividend yield: 1.41%, or $2.797/share in 2019 | One-year return: 16.02% | Expense ratio: 0.05%
3. Fidelity Small-cap Growth Index Fund (FECGX): New small-cap growth index fund (7/11/2019). No dividend information available. Expense ratio: 0.05%
4. iShares Core MSCI EAFE ETF (IEFA)
Dividend yield: 3.25%, or $2.077/share in 2019 | One-year return: 13.16% | Expense ratio: 0.07%
5. Fidelity MSCI Real Estate Index ETF (FREL). Guaranteed dividend income; REITs are required by law to distribute at least 90% of their taxable income annually to shareholders.
Dividend yield: 3.26%, or $0.926/share in 2019 | One-year return: 18.15% | Expense ratio: 0.08%
...but wait, where are the bonds?
Bonds: do we need them?
Investors invest in bonds mainly to get a steady stream of income and to de-risk a portfolio. The portfolio above factors in income in the form of dividends. Also, The portforlio's diversification minimizes risk somewhat. Because the yield on bonds is so small, we don't recommend them. If you are decades away from retirement, we believe it is a waste of time to invest in bonds! AGG, which is frequently used as the standard for measuring the performance of the US bond market, pays a mediocre yield of 2.65% or $3.036/share in 2019. Moreover, you don't get as much capital appreciation with bonds as you do with stocks.
Bonus: grow beyond $1000.
Want to build long-lasting wealth with this portfolio? Make small and periodic contributions ($20, $30, $50...) weekly, monthly, etc. beyond your initial $1000 investment. Invest often. Stay disciplined. Invest for the long-term. Don't panic and sell-off when the markets are tanking. Don't try to get rich too quick. Slow and steady always wins the investing race.
How would you invest $1000? Let us know in the comment section and help us share this article.
Note: All information is current as of 02/05/2020. Dividend information and yield obtained from MarketWatch.
Hey Wadler, good work on this post. I really need to get more into trading ETFs because right now my stock market involvement is on autopilot in index funds. While safer, I could probably make more money with ETFs than I do with my yearly Vegas trips. Thanks for the great info!
Sorry for the delay in replying. I really appreciate your comment! I used to be a strict index fund investor myself. But over the last year, after mastery of the index fund realm, I came to the realization I needed to do more than match the market. Stocks offer arguably the best chance for capital appreciation. I still invest in index funds, but I've included a mix of stocks! You're right...ETFs are a great way to invest on the cheap. But Vegas is cool, too. haha. If you are looking at possibly investing in stocks, the coronavirus has provided an excellent opportunity to buy deeply discounted stocks! Have you seen our latest article published on 3/24/2020? You should check it out.Let us know if you need help. Best regards, my friend.