How to Invest $2,000: A Detailed Guide (2024)

Everybody’s investing journey has to start somewhere. While investing a sum of money and building a portfolio can be intimidating, it’s the first step in reaching your financial goals. Investing a part of your savings is a great way to grow your wealth and better your finances. Here are a few tips on how to invest $2,000 to get you started.

Is $2,000 Enough to Start Investing?

$2,000 is a great amount to start building your portfolio. Thanks to the rise of technology and online brokerage accounts, investors can start building their portfolios for under $100. And $2,000 will help you start building a diversified portfolio of stocks, exchange-traded funds (ETFs), mutual funds or bonds, especially if you’re wondering how to invest $2,000 a month.

Depending on the brokerage firm, $2,000 may not be enough to hire an investment adviser. However, many online brokerage accounts have a $0 minimum requirement where you can invest. Some of these platforms have robo-advisers that can help you make informed investment decisions that will help you achieve your goals.

Things to Consider Before Investing $2,000

Investing requires research and thorough decision-making. Here are a few things you should consider before investing $2,000.

Time Horizon for Investments

First, ask yourself how long you’re hoping to invest. Are you just trying to grow overall wealth, or are you trying to save for a specific goal, like buying a house? Understanding these goals will help you determine your investment time horizon or how long you plan on holding investments. Short-term goals will require safer investments since you’ll have less risk tolerance. However, if you plan on investing for the long term, you will be able to take on higher-risk, higher-yield securities.

Current Market Conditions

The investing market is heavily determined by macroeconomic factors, geopolitical events and global trends. Before making your initial investment, consider current market conditions and decide whether it’s a good time to enter the market. For example, if stock prices are declining, and you’re hoping to invest for the short term, it may not be the best time to invest.

Assessing Risk Tolerance

There’s no risk without reward. However, some investments are riskier than others. You’ll need to determine your risk tolerance before building your portfolio. Would you be okay with losing a sizeable sum in the short term for larger gains in the future? If not, you may want to invest in safer securities that don’t fluctuate much. If you don’t need to access your investment capital in the short term, you could take on higher-risk investments that have the potential for higher returns.

Best 18 Ways to Invest $2,000

Are you ready to start building your investment portfolio? Check out these 18 options and how to invest $2,000 and make money.

1. Diversify Your Portfolio

A diverse portfolio is more likely to be a successful portfolio. Diversification will help you minimize risk by holding various asset types and securities in different industries. Consider allocating your $2,000 to various assets, such as stocks, bonds, real estate and commodities. This way, if one market is performing poorly, your portfolio will be balanced out by other investment vehicles.

2. Invest in ETFs

ETFs give investors exposure to a diversified basket of stocks that might track an index or group together stocks in similar industries or achieve certain goals. A fund creates a portfolio of stocks, and investors can buy shares of the entire portfolio. This type of investment offers diversification, which is a great way to strengthen a portfolio. Investors should keep in mind the fees charged by ETFs and find a fund that aligns with their value, goals and risk tolerance.

3. Explore Robo-Advisers

Robo-advisers are offered by some investment platforms for investors who want a hands-off approach to investing. They use AI to generate personalized recommendations and build a portfolio that suits your goals. Find a robo-adviser with reasonable fees and good reviews from other investors.

4. Consider Individual Stocks

Individual stocks can produce larger returns, but only investors with a large risk appetite should allocate to them. Before investing in a company’s stock, research its mission and leadership team, analyze its financials and identify its growth potential.

5. Start a High-Interest Savings Account

A high-interest savings account may not generate as high of returns as the stock market, but it is a risk-free way to grow your savings. Find savings accounts with competitive interest rates to maximize your earnings.

7. Dividend-Paying Stocks

Some stocks and investments pay dividends or portions of the company’s earnings. While typically these dividends aren’t too substantial, they can help you grow your portfolio. Reinvesting the dividends will help you compound your returns.

8. Real Estate Crowdfunding

Real estate is a great way to diversify your portfolio. However, buying a property is often too expensive for many investors and there’s too much hassle to manage it. Crowdfunding allows investors to invest in a property and share in its profits without a large minimum investment and responsibility of direct ownership. Research different opportunities and choose ones that align with your goals.

9. Explore Cryptocurrencies

Cryptocurrency is one of the most volatile investment vehicles, but it does have the potential for significant returns. If you’re interested in crypto, only invest what you can afford to lose and stay updated on the market trends.

10. Certificates of Deposit (CDs)

Like a high-interest savings account, this completely safe investment option can give modest returns while posing no risk to your savings. Youpick a CD with a fixed interest rate and maturity period. Once it matures, you’ll be able to access your principal plus interest. This investment is less liquid than a savings account since you won’t be able to access the funds until it matures.

11. Explore REITs

Real estate investment trusts (REITs) expose investors to real estate without direct ownership. The REIT company will build a portfolio of properties, and investors buy shares of this portfolio in the form of a REIT. A REIT can be a great option for investors wondering how to invest $2,000 in real estate. Search for REITs with a good track record and own properties with growth potential.

12. Invest in Precious Metals

Precious metals like gold and silver can hedge against inflation and economic uncertainty. It’s not recommended to heavily allocate to precious metals, but investing a small percentage of your money can offer diversification.

13. Start a Side Business

Have you ever dreamed of selling your art or services? Another option is to invest your $2,000 in yourself and start a side business. Identify your skills and the market for them to generate additional income streams.

14. Retirement Accounts

The key to a successful retirement is preparing for it early. You could use your $2,000 to open or contribute to a Roth or Traditional IRA if you’ve earned that much in the year you contribute by working for wages. You can use the accounts to hold investments that will grow your retirement fund so you can work toward an easy and secure future.

15. Invest in Blue-Chip Stocks

Blue-chip stocks are shares in well-established and financially stable companies. They might not offer explosive growth, but they can be reliable investments that often pay dividends. They can help provide some security to your portfolio and potentially balance out higher-risk investments.

16. Explore High-Growth Mutual Funds

Some mutual funds focus on investing in high-growth companies and industries. These funds are typically on the riskier side but have the potential to deliver impressive returns. Ensure your portfolio can handle this associated risk before investing in these funds.

17. Consider Bonds

Bonds are a great way to get fixed income and are a safer investment. Bonds are issued by the government and corporations are offered for various maturity periods and yields. Look for a bond that matches your target investment horizon and risk profile.

18. Explore Micro-Investing Apps

Micro-investing apps like Robinhood allow investors to buy fractions of shares so that you only need to invest a small amount at a time. If you want to invest a portion of your $2,000, or you want to heavily diversify your portfolio, micro-investing apps may be a good choice.

Start Your Investing Journey Today

If you have money saved up and you’re wondering how to invest $2,000, then you may be ready to start your investing journey. Research the many types of investments and options to determine how to allocate your money. Keep in mind your goals and risk tolerance as well as how easily you’ll need to access that capital. This process will help you find options that match your liquidity, investment horizon and risk needs.