There comes a time in the lives of most Australians when they wish to start saving their money to build their wealth. The good thing is you can start investing with relatively small sums, and $1,000 is a pretty good start. Given options such as term deposits, shares and futures, knowing how they work becomes crucial, so you know what’s best for you. You would also have to pay attention to aspects like minimum amounts, fees and commission.
What are my options when I want to invest $1,000?
Pay off existing debt first
If you have an existing credit card debt, student loan, personal loan or home loan, use some of the money you have to repay your debt. This can help you save in the form of interest in the long run, and the quicker into a loan you make a lump sum repayment, the more you can save.
Contribute extra towards your super fund
Any money you can spare towards your super fund can increase your super savings considerably. Know that the government does not tax contributions from your after-tax income because you’ve already paid tax, but there’s a limit in place before you have to start paying tax. If your pre-tax annual income in less than $50,454 and you make after-tax super contributions, you stand to get matching contributions from the government.
Share trading
Simply put, buying a share is buying a single unit of ownership of a public business. You can buy shares of companies listed on the Australian Securities Exchange (ASX), and you get to choose from shares of over 2,000 companies. You can benefit if there’s an increase in the share price and also if you get a share in the company’s profits in the form of dividends. Yo generally only need a deposit of $500 to start share trading on the ASX.
Term deposits
A lot of term deposits allow you to open the account with a deposit of $1000 or more. With a term deposit, you will have to lock your money in the account for a given time period and in exchange you'll earn a fixed interest rate on your deposit. You can usually choose a term length from as little as one month to five years at a time. Term deposits are a low-risk way to invest your cash.
High interest savings accounts
If you don't like the idea of locking your money in a term deposit, a high interest savings account is another option for deposits of $1000 or more. Bonus savers usually offer a slightly more competitive interest rate than term deposits, however they often have monthly deposit conditions to meet. Although, a monthly deposit condition is a great way to help you save money .
Compare savings accounts, term deposits and share trading accounts.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
How do I compare investment products?
Minimum investment amount. When buying shares, you can invest in as little as one share. If you’re considering opening a term deposit, you may come across minimum limits of $500 or $1,000.
Brokerage fees. Share trading platforms will also charge a brokerage fee for each trade placed on the ASX. Some will be higher than others, so compare your options.
Ongoing conditions to meet. A lot of bonus savings accounts will require you to deposit a certain amount each month in order to earn the interest, so make sure you can meet the conditions.
What are the pros and cons to investing $1000 in a savings account?
Pros
Guaranteed returns. Savings accounts come with no risk, and the money in your account continues to earn interest over time. How much interest you earn depends on the financial institution you deal with. Online banks tend to offer better interest rates because they don’t have to deal with overhead expenses typically associated with financial institutions. Some savings accounts let you earn bonus interest if you meet certain criteria.
Government guarantee. The Australian Government, through the Australian Government Guarantee Scheme Security, secures deposits of up to $250,000 per person per institution. This makes savings accounts and term deposits good places to park some of your money.
Flexibility. You get to choose from different types of savings accounts to suit your needs, and some give you easy access to funds in your account via online and phone banking. If you put your money in shares or futures, getting access to required money can take some time.
Cons
Low returns. While savings accounts offer predictable, safe returns, they tend not to match up with returns that you may get from other forms of investment alternatives. In Australia, savings accounts tend to offer standard variable rates in between 1% to 2%.
Is there anything else I should consider?
Risk. When you start investing it is crucial that you understand the basic relationship between risk and returns. A general principle suggests that higher the perceived risk, greater the potential returns. However, perception of risk can vary from one individual to the next, and is not a necessary reflection of statistical analysis.
Risk profiling. Risk profile refers to how much risk you’re willing to take and how it can affect your decision making process. Risk profiling can help identify optimal investment risks after taking into account the risk required, tolerance to risk as well as risk capacity.
Financial goals. Financial goals are ideal when they are measurable and specific. Instead of saving indefinitely towards a comfortable retired life, it is best that you think about how much money you’ll require then.
Shirley Liu is Finder's global program manager. She was previously the publisher for banking and investments and has also written comparisons for energy, money transfers, Uber Eats and many other topics. Shirley has a Master of Commerce and a Bachelor of Media, Journalism and Communications from the University of New South Wales. She is passionate about helping people find the best deal for their needs.
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