For most of us, $1,000 is a lot of money.

But is it enough to invest with?

Most big time investors have tens of thousands of dollars to “play” with, so it’s easy to feel like investing is out of reach.

But there are actually several strategies available for those of us with more limited funds to get started invested.

Before You Invest

Before you start thinking about investing, you need to be aware of the risks involved.

We all have different comfort levels when it comes to financial risk.

There’s no right or wrong approach, but you do want to make sure your strategy aligns with your overall financial goals.

High Yield Savings Accounts

If you are completely risk averse, but still want to put your money to work for you, consider putting your savings into a high-yield savings account.

I wouldn’t consider this an investment since the interest is likely to be less than inflation (meaning your spending power will go down over time), but it is a good option for stashing some of your savings.

The ease of access and the security offered make a high interest savings account the ideal place to put your short term and emergency savings.

Forex Trading

Forex trading is an interesting method of investing that involves making money by trading currency.

Because currency rates are always fluctuating in value, it’s possible to make some money by buying a currency on the rise and then converting it back.

The forex market is traded 24 hours a day, making it an attractive vehicle for day traders to take advantage of by converting lots of small amounts into small wins that gradually add up to higher profits.

Forex trading also has a low barrier to entry with some forex brokers allowing you to get started with as little as $50.

Forex trading is relatively complex and has varying degrees of regulation. If you’re interested in exploring this type of investment, make sure you do your research before jumping in.

ETFs (Exchange Traded Funds)

Most of us are familiar with the stock market, and if you have a retirement account at work, you’re likely already invested in some way.

But if you’d like to invest more directly you may find yourself relatively limited with $1,000.

ETFs are securities that are traded just like stocks, but they can be bought at much lower prices. Their value is affected in a similar way to traditional stocks and shares, but at a lower cost to you.

Because ETFs are more affordable you can buy more and diversify your portfolio to reduce risk.

ETFs are a great way to invest in the stock market when you have more limited investment funds.

Peer-to-Peer Lending

Peer-to-peer lending involves lending money to someone online as a loan. They then pay this money back with interest, allowing you to make a return on your initial investment.

By going through a trusted peer-to-peer lending site you can choose from a range of people to lend to, and some sites may offer you protection on your initial investment.

You can also break up your lending amount so you spread your $1,000 out across loanees.

Peer-to-peer lending can be attractive, but still comes with risks.

• Loanees who don’t repay their loans may cause you to lose money.

• The returns on your investment can be slow.

• It may be difficult to withdraw money if you need it before the lending term is up.

If you’re interested in peer-to-peer lending, make sure you vet the site you choose to ensure you’re lowering your risks as much as possible.

Put Your Money in a CD

A CD (Certificate of Deposit) is an alternative option to a savings account that many banks offer.

Your money is essentially “locked” away for a fixed term, after which you accumulate a fixed amount of interest.

CDs can be more attractive than savings accounts because they have higher interest rates. They’re also appealing for shorter term savings goals (1-3 years) since there’s little risk of losing your money.

The downside to CDs is that your money is inaccessible for the length of the CD’s term.

While it may be possible to get your money out of a CD early, there could be penalties involved that negate any interest you would have earned.

Pay Off Your Debts

If you have any debt, it may make more sense to put your $1,000 toward paying it off.

While this may not seem like an investment strategy, it could actually save you more money in the long run.

Most debt accrues interest at a higher rate than you’ll see from traditional savings methods, making it more valuable to pay off debt than save sometimes.

Plus, by paying off your debt sooner, the overall interest you pay will be lower, meaning you’ll not just save money on the interest, but also free up future disposable income you can invest elsewhere.

Final Thoughts

If you’ve suddenly found yourself with an extra $1,000, investing it can be an exciting and scary proposition.

Evaluate the risks and do the research to understand exactly what’s involved.

And as with any other spending you do, if you make sure your investment is intentional and aligns with your financial goals you can feel confident it’s the right decision for you.