8 Best Ways To Invest $1,000 in 2025

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You have $1,000 saved and you’re trying to figure out what to do with it. It would be a significant amount of money to splurge and spend all at once — but is it enough to invest? The truth is, $1,000 is a great place to start investing and can make a difference in your financial health.

Below, CNBC Select suggests several ways you can invest $1,000 and explains how to decide which option may work best for you. Some investments might offer greater returns, but they also come with greater risk. If your financial safety net allows for this risk, such investments are worth considering. If not, you can use your $1,000 to correct that.

An emergency fund is crucial to your financial health. When you’re facing unexpected expenses, such as job loss, medical expenses or surprise home or car repairs, your emergency fund will keep you from straining your budget or going into debt.

Experts generally recommend having between three and six months’ worth of living expenses in your emergency fund. If you’re not quite there, $1,000 can go a long way.

A good place to park your emergency fund is a high-yield savings account. This way, you’ll get guaranteed returns in the form of compound interest. Some high-yield savings accounts are now offering around a 5% annual percentage yield (APY) — a return we haven’t seen since the 1990s. Plus, these accounts are usually FDIC-insured so they are virtually risk-free.

Here are a few high-yield savings accounts we recommend:

If you have credit card debt, paying it off should be your priority, especially in a high-rate environment.

Let’s say you have a $1,000 balance on a credit card with a 20% APR and only make a minimum payment of $25 each month. The balance will take you 67 months to pay off and you’ll lose $661 to interest. Or you could pay the whole balance off instead and not worry about interest charges at all.

If you owe considerably more, you may feel as though $1,000 would barely make a dent in your card debt. In that case, you may also want to look into a 0% intro APR credit card or debt consolidation loan to save on interest charges. The Wells Fargo Reflect® Card, for example, has a 0% intro APR for 21 months from account opening on purchases and qualifying balance transfers (then 17.49%, 23.99%, or 28.24% variable APR). Balance transfers made within 120 days from account opening qualify for the intro rate, BT fee of 5%, min $5.

Another aspect of your financial life you want to cover is your retirement funds. If your employer offers a 401(k) match, you may be missing out if you’re not taking full advantage of it. Further, it’s good practice to save 15% of your annual income for retirement (including any contributions by your employer). If that seems like a lofty goal to you at the moment, contributing $1,000 can definitely make a difference.

If you don’t have an employer-sponsored retirement plan, you can always invest in an individual retirement account (IRA) instead. The IRA contribution limit for 2023 is $6,500, or $7,500 if you’re 50 or older.

CNBC Select picked Charles Schwab IRA as the best IRA account. If you’re just beginning to invest, Fidelity Investments IRA can be an excellent choice.

Let’s say your emergency fund is in good shape, you’re on track to contributing to your retirement plan and you have no high-interest debt. Yet, you’d rather not take on risk when it comes to your money.

In this case, you might want to look into certificates of deposit (CDs). This type of deposit account earns a fixed interest rate for a specific amount of time on the funds you deposit when you open an account. The term lengths typically range between three months and five years. Longer terms tend to come with higher APYs but with a traditional CD, you can’t withdraw your money before the end of the term. Otherwise, you’ll generally have to pay an early withdrawal penalty.

Interest rates on CDs are often higher than those on regular savings accounts. This means you might get better returns at the trade-off of no easy access to your cash until the maturity date. But if you already have an emergency fund parked in a more accessible account, putting extra money aside in a CD can be a good move.

At the time of writing, the following accounts are offering some of the best CD rates:

Kenneth Chavis IV, CFP and senior wealth manager at LourdMurray, suggests money market funds « for those who are not comfortable with investment risk but want to earn some interest on their money. »

Money market funds (MMFs) invest in lower-risk debt securities, such as U.S. Treasury bills and commercial paper, and are considered some of the safest investments. MMFs pay monthly dividends. The yield is typically close to or a little higher than on bank savings accounts. This is also a highly liquid option — you can withdraw the money you’ve invested at any time.

You can buy money market funds from a bank, fund provider such as Fidelity Investments or Vanguard or by opening a brokerage account.

Speaking of Treasury bills, they’re also a low-risk investment since they’re backed by the government and give you a guaranteed return over a set period of time.

« You will get a nice guaranteed rate dependent on how long the maturity is (assuming you hold until maturity) and you will not owe state income tax on the interest, » Chavis says.

Since there’s a maturity period, this option provides less liquidity than money market funds. At the same time, the term can be very short — from just a few days to a year.

You can buy Treasury bills directly from the TreasuryDirect website or go through a broker like Charles Schwab or Fidelity.

If you don’t mind parting with your $1,000 for a while for a chance of higher returns (at higher risk), consider investing in the stock market.

Chavis suggests going with stock index funds. These investment funds follow a benchmark index, such as the Nasdaq 100 or the S&P 500. The money you put in such a fund is then invested in all the companies that make up the index, which allows for a more diverse portfolio than you’d get buying individual stocks.

« This is a great option for those with a long-time horizon, » Chavis says. « You will get good stock market diversification, low costs and likely no trade fees. »

You can invest in an index fund if you have a brokerage account, a traditional IRA or a Roth IRA.

Many of the best stock trading platforms don’t charge commission fees, including TD Ameritrade, Ally Invest, E*TRADE, Vanguard, Charles Schwab and Fidelity. Or if you want a simpler interface and trading platform, consider investing apps like Robinhood* and Webull. Both apps also provide access to fractional shares which allow you to purchase a portion of a stock that’s less than one full share. Doing so can help you diversify your portfolio with less money.

If you’re interested in investing but want a more hands-off approach, you can use a robo-advisor which will automatically invest in several index funds and ETFs based on your goals and risk tolerance. These accounts typically have low or no minimum opening deposits and have much more affordable management advisory fees than traditional financial advisors. CNBC Select suggests Betterment and Wealthfront as our top picks for the best robo-advisors.

You don’t need to wait to have thousands of dollars to start investing. Even just $1,000 can go a long way if you make it benefit your financial well-being. Whether you’re at the very beginning of your financial journey, paying off debt and adding to your emergency fund or you’re ready to start investing in stocks, even a small initial contribution can help you lay the foundation for a prosperous future.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every personal finance guide is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of financial products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best products.

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*(Review Robinhood disclosures here.)