What’s best way to in­vest $1K?

Van­guard, Sch­wab are great for be­gin­ners

USA TODAY US Edition - - MONEY - Matthew Frankel The Mot­ley Fool is a USA TO­DAY con­tent part­ner of­fer­ing fi­nan­cial news, anal­y­sis and com­men­tary. Its con­tent is pro­duced in­de­pen­dently of USA TO­DAY.

You don’t need a ton of money to start in­vest­ing. Your $1,000 is more than enough to start with, and there are some great ways you can put that money to work.

The big­gest draw­back to start­ing with a rel­a­tively small amount of money is that buy­ing in­di­vid­ual stocks isn’t very prac­ti­cal. Bro­ker­age commissions have cer­tainly got­ten cheaper, but a prop­erly di­ver­si­fied port­fo­lio should have five or six dif­fer­ent stocks at a min­i­mum.

How­ever, by in­vest­ing in mu­tual funds or ETFs (ex­change-traded funds — ba­si­cally mu­tual funds that trade like stocks), you can put nearly all $1,000 of your cap­i­tal to work right away in high-po­ten­tial in­vest­ments.

For be­gin­ning in­vestors, the Van­guard S&P 500 ETF is a great start­ing point. It in­vests in all 500 com­pa­nies that make up the S&P 500 in­dex and has a rock-bot­tom 0.04% ex­pense ra­tio. This fund lets you ben­e­fit from the mar­ket’s gains, which have his­tor­i­cally av­er­aged nearly 10% per year, with­out too much ex­po­sure to any one stock.

If you’re younger and want to take a more growth-ori­ented ap­proach, the Sch­wab U.S. LargeCap Growth ETF is just as in­ex­pen­sive but fo­cuses on growthori­ented stocks.

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