What to do with $1000: five ways to get ahead
Some people think they need to have a lot to make a lot. This couldn't be further from the truth.
For as little as $1000 you can make some of the easiest and most worthwhile investments.
If you can get a little creative, your Christmas bonus or leftover savings for the year can go a long way.
If you're not financially ready to dip your toes in the residential market, why not have a go at commercial property? Investing in Australian real estate investment trusts (A-REITs) through a managed fund can give you access to high returns for a small price.
The sector has done well over the past year, with the total return of the S&P/ASX 200 A-REIT Accumulation Index sitting at 20.3% for the 12 months to June.
For $1000 you can take out securities with our 2016 Best of the Best placegetter APN A-REIT, which won the silver award for Best Property Securities Fund. APN has an average three-year yield of 16.05%, so if you're looking for decent returns A-REITs can be a highly liquid way of getting them.
Contributing an extra lump sum of $1000 to your super fund is a great way to cut tax and boost your retirement savings.
Any amount that you add on or take from your pre-tax salary is taxed at the low rate of 15%, so you're already winning by choosing an investment with a low tax rate.
No matter how old you are, making extra contributions to your super will be beneficial. If you're 45 and earning $80,000, adding $1000 a year to your fund from your pre-tax salary will boost your balance by $23,000 by the time you turn 65, according to Sunsuper's contributions calculator.
If you're 30 and earning $65,000, you would have $53,000 extra. Want your savings to go further? Salary sacrificing is definitely an idea.
Who doesn't want to pay off their mortgage faster?
If you've got a lazy $1000, investing it in your mortgage is a no-brainer. Extra repayments can save you thousands in interest in the long run, and also help you to pay off your loan earlier.
On a $350,000 loan over 25 years with an interest rate of 5%pa, YourMortgage.com.au estimates an extra repayment of $1000 in your fifth year will save you over $2000 in interest and help you to pay off your debt one month early. A little can go a long way - just check your policy first to make sure there are no strings attached to extra repayments.
Sometimes a helping hand is all you need. If you're new to investing and don't feel confident going it alone, a financial adviser could be the investment you need. An adviser can help you develop a plan to build wealth, either through an investment portfolio or a budget overhaul.
Research by Vanguard in the US found that skilled financial advisers can contribute significantly to their clients' long-term investment success in ways that have nothing to do with market performance.
Vanguard estimates an adviser may add 3% to a client's net return, so if it's extra help you need, see the Financial Planning Association website for a full list of qualified advisers.
Online savings account
With rates at an all-time low, traditional fixed-income products haven't been cutting it for Australian investors.
We all need to have some liquid assets, so instead of holding it in a regular everyday account, these days you may be better off popping your funds into a high-interest online savings account, with many offering rates higher than term deposits.
The accounts with the best rates usually have the strictest access conditions, so while you may not be able to touch your investment for some time, you're at least learning valuable saving skills.
For example, Newcastle Permanent's online savings account - our 2016 Best of the Best non-bank winner for Best Savings Account - pays 2.5%pa in interest.
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