How Different Generations Can Best Invest With as Little as $1,000


By Victor Ochieng

Many people would like to invest, but they often feel they don’t have enough assets. At times one would make $1,000 or even slightly more, but the money ends up fizzling away simply because they don’t see where they can invest such a “small” amount of money.

According to a Prudential Research survey report called The African American Financial Experience, the feeling of not having enough assets is one of the reasons that keep people off investing.

And Stacey Tisdale, a financial journalist, has had the same belief throughout her career. She confesses that she’s always seen investing as something reserved for the wealthy.

In a bid to ascertain whether investing is only for the wealthy, three financial experts were approached and asked how they would invest $1,000, were they someone born between 1982 and 2004 (Millenials), 1965 and 1982 (Generation X) or 1945 and 1964 ( a baby boomer).

Investing $1,000 as a millenial

One of the experts who were asked how they would invest the money is Rianka Dorsainvil, the founder of a financial planning firm called Your Greatest Contribution, who’s also the 2015 President-elect of Financial Planning Association’s NexGen community. According to her, she would invest the money in Roth IRA. She argues that in Roth IRA one’s contribution grows and it allows the investor to make withdrawals without any taxation or penalties after hitting 59 and a half years of age. Once the money is in Roth IRA, which one can easily open at their bank, she would focus on investing in index fund, particularly the widely known S&P 500 (SPY).

Investing $1,000 as a “Generation Xer”

The other expert contacted was Lazetta Rainey Braxton, founder & CEO of Financial Fountains and a member of The Association of African American Financial Advisors’ board of directors. We share her answer on how she would invest $1,000 as a Generation Xer. Many people in the generation X category have pressures, ranging from childcare, child education to saving for their retirement. According to Braxton, this group must first ensure that they save for emergency, save to attend to short term goals, and save for retirement. She says that were she to have only $1,000 to invest, she would vouch for Vanguard with a 2040 target date (VFORX). With great diversification offered plus its alluring equities, Vanguard 2040 can help one achieve their retirement fund targets. Another available option for someone not interested in large equity risk is Vanguard 2035 fund (VTTHX), which is a fund with less money in the stock market.

Investing $1,000 as a baby boomer

Finally, we share with you how Frank Paré, CFP, founder and president, PF Wealth Management Group L.L.C., would invest $1,000 as a baby boomer. The baby boomer age set might be weighed down by the idea that it’s already too late to make any reasonable investment. But Pare says it’s never too late. Were he to have only $1,000 to invest, he would go for Schwab total stock market index fund (SWTSX). The fund exposes the investor to the total market, allowing the investor to enjoy market-type returns without necessarily beating the market. This is ideal if you’re looking at longer term, say beyond 2 years. Boomers are also advised not to forget to regularly make contributions to their investment accounts as a way to cut down on losses and risks. Where necessary, they should also work with financial experts to ensure that they take tax into account.