How to start investing with $1,000

Financial literacy is a necessary life skill.

Truth be told, you can never go wrong with being smart about how you handle your money. Although sometimes this is a tricky topic to get into, it’s important to ensure you start making your money work for you. As they say, the best time to start investing was yesterday. The second-best time is now.

According to Investopedia, investing is the process of putting money toward activities that are forecasted to generate income. To beat inflation, actively seeking opportunities to build wealth is an excellent way to thrive in this economy.

Feeling overwhelmed? Starting your investment with $1,000 can be the first step to kick-start your financial journey. At IGNITE, we’d love to turn your financial dreams into a reality. Here’s where our exciting contest comes in! The IGNITE Contest is a chance to win $1,000—and many other prizes—by just answering a quick survey about your student life. It’s that easy! All you need is to be an enrolled student at Humber Polytechnic or the University of Guelph-Humber. The best part is you get one entry per month from September to April, increasing the probability of giving your pocket a $1,000 boost.

Feeling lucky? Let’s make sure you are putting your money in the right bucket. IGNITE sought an expert’s opinion to find the best ways to invest your $1,000 and make the most of it.

Riddell Murcia, a professor in the Longo Faculty of Business and the Faculty of Media, Creative Arts, and Design, shared his tips on where you can make your first investments as a student. The Creative Entrepreneurship professor said that investing can look different for every student.

“It depends on the context,” he emphasized.

Clothes

Investment can also mean spending your money more intentionally. With career development in mind, understanding the context of your own industry can make a massive difference in how investment looks for you. This can mean investing in your physical presence by dressing professionally.

Confidence is key! Murcia said that this comes with adding value to your personal branding. For Murcia, $1,000 can be spent on pieces of clothing that showcase an image that best portrays the confidence and professionalism you would like to embody.

Going to networking events, engaging in coffee chats or going inside an interview room while wearing an outfit you feel confident in can impact how you present yourself. You walk differently and talk with boldness, knowing you look your best.

“You have to think about clothing as a piece of your work that is going to have a purpose,” Murcia added.

Murcia explained that this can also mean investing in clothes that help you perform your job more effectively. For example, a student enrolled in the real estate program can look at investing in clothing to establish professionalism with clients. If you are in the film production program, where you are usually in a film set for long hours, a good pair of shoes is your best investment.

Equipment

A zoom out shot of a woman peering into a DSLR camera. — *Via GIPHY*

Warren Buffet, the greatest investor of all time, once said, “The best investment you can make is in yourself.” Professor Murcia seconded this thought. He said that investing in equipment that enhances your skills and capabilities is worth every penny.

One of the most essential tools for students today is a good laptop. With schools leaning toward digitized learning, investing in a new computer could be used to gain knowledge and perform a job well. Murcia suggested that a portion of the $1,000 is a great opportunity to get that upgrade. This is especially true if you find your laptop outdated or not running as well as it used to.

“This can, in turn, get you a good job or start going up the ladder in the industry that you’re in,” Murcia said.

Murcia also noted that equipment can also be different for each industry. Suppose you would like to pursue photography, a couple of lights and lenses for your camera might be the upgrade you need to get that million-dollar shot. On the other hand, a freelancer can put the money into setting up a site.

“If you want to build a side business, the $1,000 can finance at least three years of your website. Plus, the development of a little bit of your branding,” Murcia explained.

Your tools can be pretty hefty on the wallet. But hey, if it’s going to spell the difference in your efficiency, it’s worth the trade. The return on investment will be seen in your productivity and quality of work.

High-yield savings account

An illustration of a hand tossing a coin which lands inside of a piggy bank. — *Via GIPHY*

If you don’t want to spend your $1,000 and would rather keep it accessible, Murcia recommends parking your money in a high-yield savings account. Unlike the big-known banks, some specialized banks offer better interest rates. This means you get extra cash by letting your money sit and chill in your account.

Murcia said that doing your own research to see what financial institutions suit you is a must. Different banks offer different promotions and terms. What’s good about most of these banks is how flexible your assets are since you can take your money anytime you want.

This is definitely a good way to make money while you sleep. Although it does not offer higher gains, it is as safe as it gets, as it is categorized as one of your best bets for low-risk investments.

Murcia said that a high-yield savings account can be your way to becoming more financially literate. It can serve as the foundation for building up your emergency fund. Set up as your “just in case” bucket, this form of savings account must include at least six months of your expenses that are readily available in case something happens.

“The $1,000 can be the start of that,” Murcia said.

Tax-Free Savings Account (TFSA)

A group of friends hanging out in a living room with a text that reads, "Is it tax free?" in all caps. — *Via GIPHY*

If you have an appetite for higher-risk investments, looking into the stock market is an alternative. As a starter, Murcia said that opening a Tax Free Savings Account (TFSA) is a great gateway for students seeking entry into stocks.

Designed to make saving appealing, TFSA was created by the Government of Canada to encourage the habit of putting aside money and engaging in investments. This is done by promising that all TFSA assets will be without any tax scratch. Yes! No tax deducted as long as the reserve of money and investments are made through the account.

One of the must-know things about setting up this account is its yearly contribution limit. For 2024, you can put in $7,000, which you can use to buy mutual funds, stocks or bonds. As a cherry on top, the money you put in your TFSA account is not deducted from your income tax.

Find out your eligibility to open a TFSA to start your financial journey. You can get a free reign on how to best get the most out of it. It can be your do-it-yourself project or you can let a financial advisor take the wheel. No matter what you want, you have options!

A $100 bill with a marker illustration of a person smiling while holding two coins, banging it together like the symbals. — *Via GIPHY*

Start today!

Now you know the ways to turn savings into earnings. Time to get that $1,000 capital to get you invested in investing. Get your savings on point by getting your grind on, or better yet make sure to join the IGNITE Contest monthly to give you a head start towards better finances.

As a last note, Murcia said that if we’re talking about financial literacy, the most important thing is that “you have a clear goal on how you’re going to use your money.” At the end of the day, money is considered a tool and not the goal. The road to setting yourself up for success is to invest in ways that fit your personal targets in mind.

What are you waiting for? Invest now and thank yourself later!

Feature image courtesy of Insung Yoon via Unsplash.

All this money talk can be pretty stressful, right? Check out IGNITE’s campus stress relief tips to bring you back into your zen mode!