The stock market, public debt, and crowdfactoring are three alternatives for anyone considering where to invest 1000 euros
All great architectural works begin to be erected with a stone. The investment path, on the other hand, also starts with small steps. While it is true that vast amounts of money are involved in this world, this does not mean there is no room for people who save more modest quantities and want to make a profit. People who wonder, for example, where to invest 1000 euros.
The answer? It depends. There is no right or wrong answer, just as there are no good or bad investment instruments per se. It all depends on the interests and needs of each investor. And depending on how they suit them, it is possible to distinguish more or less appropriate mechanisms.
The money invested also depends on factors such as the investor’s wealth. Ultimately, the greater the investor’s purchasing power, the greater the amount that can be invested. While some people think about where to invest 1000 euros, others think about where to invest 100 euros, and others 100,000 euros.
But other aspects also play a role, such as one’s knowledge of the financial system. When one makes his first foray into finance, it is common to be unfamiliar with the operation of many instruments. In these cases, starting with caution and not investing a very large sum is advisable. When the playing field is unknown, there are more possibilities of facing losses.
For these reasons, a thousand can be very reasonable to take off in the investment. Now, where to invest 1000 euros?
The first step: analyze the risk profile
With a budget of one thousand euros, some alternatives are out of reach for the investor, such as investing in real estate, which requires a more significant outlay. But there are still many options for people wondering where to invest 1000 euros.
However, before choosing the product, there is a preliminary phase. The first step is self-knowledge, the conclusion of which will have a significant influence on the decisions that follow. This is the moment to determine the investor profile.
Broadly speaking, it is possible to differentiate between two types of investors: the more risky and the more conservative. The former place profitability at the top of their priorities, while the latter place more value on security.
Both are aware that, by opting for one, they are turning their backs on the other to a certain extent. As the general rules of finance dictate, the riskier an investment is, the higher its return tends to be, and vice versa.
Generally, the most intrepid investors include equity products in their investment portfolios. So, what should you invest 1000 euros in? In products such as shares in companies listed on the stock exchange or units in mutual funds. Products whose returns depend on the price difference between the time of purchase and the time of sale and which generate passive income, such as dividends, which increases returns substantially.
On the other hand, more conservative investors tend to opt for fixed-income products. These allow them to know in advance what profitability they will obtain with this operation and when they can enjoy the benefits, which are not as high as in the previous options, in exchange for a much lower level of risk.
In these cases, what to invest 1000 euros in? Contracting remunerated accounts or deposits and acquiring public debt securities (such as Treasury Bills or Bonos and Obligaciones del Estado) are, without a doubt, some of the most popular products among investors with a more conservative profile.
What other alternatives are there?
The financial scenario is as broad as it is diverse. This has become evident in recent years, during which new investment and financing instruments have appeared to meet the demands of all kinds of savers considering where to invest 1000 euros.
Those who do not wish to sacrifice profitability or security can turn to products such as index funds. A kind of investment fund that replicates the performance of a specific index so that its evolution tends to be positive.
These are equity funds, so their returns can be very significant. And, by including a multitude of companies from many sectors, the risk is greatly attenuated. Although uncertainty does not disappear, the gains of some companies would be able to compensate for the losses produced by others.
Although, as we mentioned at the beginning, people with little knowledge of the financial system shouldn’t start investing in large amounts, it is necessary to mention a tool that can help them participate in this world without the need to know all its aspects: the Robo-advisors.
The Robo-advisor is considered the digital evolution of the conventional financial manager. Their functions and purpose are practically identical, with one key difference: the advice and management do not come from a human being but from a robot.
These technologies collect the preferences of savers and automatically design an investment portfolio to suit them, adapting it to their needs over time. Their great advantage? They free the user from the time-consuming and complex task of managing the portfolio but do not take control and decision-making away from the user.
It is likely that, sooner or later, the possibility of buying cryptocurrencies, such as Bitcoin or Ethereum, will cross the minds of everyone wondering where to invest 1000 euros. These products have been one of the preferred options for individuals over the last few years. However, speculation created a bubble that eventually burst and caused millionaire losses since it is a very volatile instrument with a lot of risk.
Other alternatives are not so well known, such as commodities. Wheat, coffee, silver, cotton… Or gold that is considered a safe-haven asset, especially in times of inflation. Although commodities can be acquired physically, other channels exist, such as investment in specialized funds, companies belonging to the sector, or the futures market.
However, these can become complex mechanisms, and their price can fluctuate a lot, so it is not the most recommended option for those starting in the world of investment and who doubt where to invest 1000 euros.
The birth of crowdfactoring
The massive deployment of the internet and its impact on all areas of society has triggered the emergence of the so-called alternative financing platforms. As their name suggests, they are channels detached from the banking system and based on digital solutions that explore new ways of investment and financing.
Thus arises, for example, crowdfunding, a collective financing mechanism through which a company receives the liquidity it needs thanks to the sum of the contributions of a group of individuals. This can be done altruistically, but it can also take the form of loans. In this case, the company undertakes to return the amount to the investor in the future, together with a certain interest, which would serve as an incentive and reward. And so crowdlending is born.
But it can also be the case that this loan is materialized through invoice financing. Then, we would discuss crowdfactoring, a method whereby investors advance businesses the amount of their outstanding invoices, gaining access to their collection rights.
When the customer, who plays the role of the drawee, pays the debt to the company, which acts as an assignor, the latter reimburses the original money to the investor, together with a previously agreed interest rate. Generally, these periods do not tend to be very long, giving savers who are hesitant about where to invest 1000 euros the opportunity to enjoy secure short-term gains.
What happens if you decide to invest 1000 euros in Inversa?
Initially, we mentioned no answer to the question “what to invest 1000 euros in“. There are riskier options that are more profitable and safer options that generate less profit.
And in this spectrum, where does crowdfactoring fall?
At Inversa Invoice Market, an online platform where it is possible to finance invoices from different companies quickly with just a cell phone, returns can be very high without turning your back on security.
During the first five months of 2023, Inversa’s average return reached 7.9%. We then proceed to simulate the investment using the profit calculator available on the website. The investor could receive twenty euros with an investment of one thousand euros in three months, a common term in many operations.
However, some of the invoices promise up to 10% interest. In these cases, a profit of more than 25 euros would already be obtained after ninety days.
And we cannot forget one of the great attractions of Inversa Invoice Market. On this platform, profits are not collected when the transaction is concluded but as soon as it is closed. In other words, the investor receives the corresponding interest back once the money is sent to the company.
With a much higher return and faster collection of profits than many of the most popular mechanisms on the market, Inversa allows people looking for something to invest 1000 euros in to enjoy profits while supporting the real economy.