The $1,000 Investment Throwdown

growing money

Happy 2014!  While everyone is busy looking backwards I’m looking forward and I’m looking forward to doing things differently.  This year I have joined the Grow Your Dough Throwdown by Jeff Rose at Good Financial Cents.

What Jeff and a bunch of other personal finance bloggers are doing is investing $1,000 various ways.  The goal is for each blogger to report back monthly on how their portfolio is doing and I guess whoever ends up with the most money at the end of the year gets serious bragging rights. While they’re mostly investing in the stock market, and honestly, who wouldn’t since the markets returned something like 30% last year, I’m going to be a little unorthodox.

If you don’t know your stuff, choosing a fund or even an individual stock to invest in can be daunting and more than a little risky.  I’m not risk adverse so that doesn’t scare me.  What I do want to do is practice what I preach.  For years now I have preached the gospel of the side hustle; a.k.a Plan B; a.k.a. a small side business.  I’m planning on doing just that.  So what am I doing with my hard earned $1,000? Not paying a bill, that’s for sure.  This is how I’m investing my money:

  • $250 on a peer-to-peer lending platform. I’ll probably use Lending Club since I currently have no money in that portfolio.  It just makes it easier for me to track since I already have money invested in Prosper.  If you don’t know about peer-to-peer lending, check out my primer on peer-to-peer lending and my portfolio’s performance for the past few years.If I want to grow my funds fast, I would invest in the riskiest of loans.  While I’m not risk adverse, I’m also not stupid.  I will most likely be center of the road and shoot for a 10% return with these loans.  That’s far greater than any interest that I would earn with a regular savings account.  My Prosper account is currently earning 7% but that account is extremely conservative since I was basically just experimenting with that account for the past few years.  Now that I have a full three years of knowledge and results from the peer-to-peer lending platforms, I have much greater confidence that I can earn significantly more.
  • $500 into my own side business.  This will probably be split a number of different ways.  Some money is definitely going to go to inventory.  I’ll also use a bit for advertisements and one additional website or so.  I truly believe in investing in yourself.  This one has the potential to go far south or far outpace everyone else’s gains.  We’ll see. 
  • $250 completely in the air right now.  This went into ShareBuilder investment account that I will most likely use to invest in individual stocks. When I worked for investment banks, there were tons of rules and compliance regulations that completely discouraged me from having such an account if the company didn’t ban them outright. Now that I no longer work for banks and investment companies, I am free to invest my money as I choose. 

    I chose ShareBuilder because I already have a savings account with them earning 0.75% interest.  If you open a checking or savings account with them they give you either $50 or $25 respectively to do so.  They’re giving me $50 to open my account and make a trade.  With low trade fees (around $6.95 per trade) I’m already ahead of the game since that $50 counts as interest.

That’s how I’m spending my $1,000.  Now, if you’re in debt is this something that I suggest? Well, it all depends.

If you are busy paying your debt back some crazy interest rate like the 29.99% rates that I see all of the time now I would say no, don’t do this. Take your $1,000 and either stash it into your emergency fund or pay down your debt.  I happen to be paying 0% on my debt right now and I have an emergency fund so I can afford to do this.

This will be a fun experiment.  I plan on reporting back on how this is all going on a monthly basis.  If I crash and burn you get to witness that too. Wish me luck!

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6 Responses to The $1,000 Investment Throwdown

  1. Baheejah says:

    This is a great idea – good luck!!

  2. What a great idea for a competition!

    I like your thinking outside of the box as well. Investments in your own business have the chance to beat any stock market returns. I was going to say it’s kind of cheating in the frame of the comp really as you are leveraging your time into cash, which you have theoretically no limit of, unlike the $1000 starting limit. However those investing in the market will also be using their time to research the best stocks and again the more time they have to do this then the more likely they’ll get a better return. So it’s a fair game I think.

    Good luck!

    • Sandy Smith says:

      This is how I plan on beating them all! My return is directly proportional to the amount of time that I can invest. It IS cheating a little, but hey, it’s my money!

  3. Great post Sandy. I love setting personal goals, but I rarely set financial goals – well not numeric goals anyways. But when you think about it all of our personal goals are actually financial goals at heart, aren’t they?

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