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Slide Show | January 2013

30 Smart Ways to Spend $1,000

By the Editors of Kiplinger's Personal Finance magazine

Follow @Kiplinger

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You can do a lot with $1,000. In fact, we came up with 30 surprising ways to use a grand. For example, you can grow your nest egg or build your brand, feather your nest or nurture a relationship, or just invest in yourself. Read on for more ideas that are guaranteed to provide a return on your investment.

30 Smart Ways to Spend $1,000

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30 Smart Ways to Spend $1,000

Invest in Low-Minimum Mutual Funds

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Put extra cash to work in a couple of funds with low fees and low minimums. Homestead Small Company Stock (HSCSX), a member of the Kiplinger 25, requires only $500 and charges just 1.06% a year in expenses. Nicholas Equity Income (NSEIX), which has a $500 minimum and a 0.79% expense ratio, invests in dividend-paying firms of all sizes and aims to deliver a higher yield than Standard & Poor’s 500-stock index.

Invest in Low-Minimum Mutual Funds

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30 Smart Ways to Spend $1,000

Buy Low-Priced Stocks

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All three of these stocks sell for less than $10 a share, meaning you can buy 100 shares of one company, or a mix of two or three, for less than a grand. Entegris (symbol ENTG) offers contamination-control, shipping and storage services for semiconductors. Erickson Air-Crane (EAC) builds helicopters used for firefighting and heavy-construction projects. Verastem (VSTM) is not profitable, but UBS analyst Matthew Roden thinks the biotech company has a formula likely to prove crucial in the fight against many types of cancer. Learn more about these stocks and three others that are less than $10 a share.

Buy Low-Priced Stocks

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30 Smart Ways to Spend $1,000

Build an ETF Portfolio

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With exchange-traded funds, you can put together a well-rounded portfolio for less than $1,000. Start with 16 shares of Vanguard Total World Stock (VT, $48), which tracks an index of nearly all the globe’s publicly traded companies, then add two shares of Pimco Total Return (BOND, $110), an actively managed ETF that invests primarily in high-quality U.S. bonds. This mix will give you a 78% allocation to stocks and a 22% allocation to bonds, appropriate for a long-term investor in his or her thirties or forties.

Build an ETF Portfolio

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30 Smart Ways to Spend $1,000

Take a Cruise

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We found a five-night trip for two, including an evening in Miami and four nights on a Bahamas cruise ship, starting at $1,045 (including airfare from New York’s LaGuardia, plus taxes and fees) at Gate1Travel.com. Your itinerary acquaints you with Miami’s caliente nightlife and gives you a chance to enjoy the Bahama classics, including snorkeling and strolling along white sand beaches.

Take a Cruise

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30 Smart Ways to Spend $1,000

Install a Putting Green

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Improve your short game (indoors or out) with a Pro Putt Trainer ($995 plus shipping). You get a 4-by-12-foot swath of Mirage TourPutt, a synthetic turf used by Ping at its testing facilities. The package comes with two cups and flags; spend another $17 for side moldings to keep your ball from falling overboard. The whole thing assembles or disassembles in less than a half-hour.

Install a Putting Green

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30 Smart Ways to Spend $1,000

Open a Roth IRA

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The big draw of this retirement savings account is that you can take tax-free withdrawals from it after you turn 59½. If you invest $1,000 in a fund that earns an 8% annual return and continue to invest $100 a month, in 30 years you’ll have nearly $160,000. TD Ameritrade requires no minimum investment for a Roth IRA, and many funds have low minimums for Roths. For 2013, you may contribute to a Roth if your income is less than $127,000 if you’re single ($188,000 for couples who file jointly). If you earn more than that, you could convert a traditional IRA to a Roth. You must pay taxes on any pretax contributions and earnings on the amount you convert.

Open a Roth IRA

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30 Smart Ways to Spend $1,000

Start a Charitable Fund

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A number of community foundations let you funnel as little as $1,000 a year into donor-advised funds, sometimes called acorn funds. You contribute cash, stocks or other property -- and take a tax deduction for your contribution each year -- until you reach a certain threshold, typically $5,000 or $10,000. After that, you recommend an IRS-approved charity to the community foundation trustees. Although you no longer have direct control over the gift, the foundation usually respects your wishes. You can find a directory of community foundations nationwide at www.cof.org/locator.

Start a Charitable Fund

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30 Smart Ways to Spend $1,000

Buy Down Your Mortgage Rate

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On a $200,000, 30-year fixed-rate loan, $1,000 paid at closing as prepaid interest will typically buy down the rate by 0.125%. That would save $5,168 in interest over the life of the mortgage. When you’re loan shopping, ask first for a rate with no points (a point is 1% of the loan amount), then ask how much the lender will adjust the rate per point.

Buy Down Your Mortgage Rate

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30 Smart Ways to Spend $1,000

Build an In-Car Entertainment System

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Keep the kids happy with two iPad 2 Wi-Fi tablets (16 GB; $399 each) and headrest mounts. The Griffin Technology Cinema Seat mount is just $12 on Amazon. More heavy-duty mounts, such as the TouCoul CV1002 CoolVue and GripDaddy v2ARM (both $60), attach with brackets and have extensions, so you could place one screen between the front seats. Buy two 6-foot charge cables ($6 each) and a dual car-charging port, such as Energizer’s Universal USB Charger ($15), so that you never run out of juice. You can cut the cost by $400 if you go Android instead. The Google Nexus 7 and the Amazon Kindle Fire HD are each $199. Or buy a refurbished tablet; they’re tested to meet manufacturer specs.

Build an In-Car Entertainment System

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30 Smart Ways to Spend $1,000

Help Your Child Save for Retirement

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As long as your child has earned income of at least $1,000, you can give him or her that amount to invest in a Roth IRA. Target-date retirement funds are good choices for a young adult’s Roth. The funds’ mix of stocks and bonds gradually becomes more conservative as the investor nears retirement. Vanguard’s target-date funds have some of the best returns and lowest expenses in the category.

Help Your Child Save for Retirement

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30 Smart Ways to Spend $1,000

Self-Publish a Book

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Making a paper or digital version of your masterpiece is free at Amazon’s CreateSpace.com (the publisher takes a percentage of your sales), but you’ll have to pay if you want help with editing and design. Among CreateSpace’s services, for example, is the $728 Total Design Freedom Standard package, in which a professional team designs the book’s cover and interior based on your input. Tack on Comprehensive Copyediting for $160 (up to 10,000 words; 1.6 cents per word thereafter).

Self-Publish a Book

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30 Smart Ways to Spend $1,000

Add a Kitchen Backsplash

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An average, 10-by-10-foot kitchen requires about 33 square feet of backsplash coverage. You’ll pay about $28 per square foot, including installation, for midrange-quality “subway” tiles (like those used in New York City subway stations) or for basic-quality mosaic glass tile. Money left over? Update your sink faucet (try www.faucetdirect.com), cabinet hardware (www.knobdepot.com) or lights (www.lampsplus.com).

Add a Kitchen Backsplash

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30 Smart Ways to Spend $1,000

Give to a Classroom

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What better way to spend your charitable dollars than to help teachers help kids? At DonorsChoose.org, you get your pick of teacher-proposed projects, from outfitting a media center with computer chairs to buying magazine subscriptions for seventh-graders. You can donate to one project or spread the wealth among several; Donors-Choose makes the purchase and sends it to the teacher. For your contribution, which is tax-deductible, you’ll get pictures of the students and feedback on how the project is helping them.

Give to a Classroom

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30 Smart Ways to Spend $1,000

Volunteer on Vacation

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Use your next vacation to give something back. The Sierra Club offers environmental and historical-preservation trips throughout the country starting at about $400. For example, the program fee is $545 for a weeklong habitat-restoration project in May to remove non-native plants in Point Reyes National Seashore, in California. Round-trip flights from Washington, D.C., or New York City to San Francisco run about $300. Meals and accommodations in a rustic boathouse are included. Other weeklong projects include wildlife habitat work in Arizona’s Altar Valley ($695) and restoration of historic homesteads in Antietam National Battlefield, in Maryland ($695).

Volunteer on Vacation

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30 Smart Ways to Spend $1,000

Splurge on Romance

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A quick way to accomplish couples therapy (or celebrate Valentine’s Day): Spend $1,000 on a night at a great hotel with a terrific restaurant. A Friday-night stay at The Inn at Little Washington, a five-star inn in rural Washington, Va., with a prix-fixe for two dinner at its famous restaurant comes in at $971. Willows Lodge, in Woodinville, Wash., has a 2,500-square-foot spa and two acclaimed restaurants. A three-course dinner for two with a bottle of wine at the bistro-style Barking Frog costs about $200; rooms start at $239. Total: $439 -- so you can stay two nights.

Splurge on Romance

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30 Smart Ways to Spend $1,000

Improve Your Tech Skills

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Many community colleges offer classes that could help you learn the technical skills you need to get ahead in your job or find a better one. For example, Montgomery College, a community college with three campuses in Montgomery County, near Washington, D.C., offers more than 100 technology classes, ranging from digital literacy to programming for mobile devices. For county residents, your $1,000 will cover tuition and fees for seven credits.

Improve Your Tech Skills

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30 Smart Ways to Spend $1,000

Buy a Bicycle and Ride to Work

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Commuting by bike has both physical and financial benefits (use our calculator to see how much you'll save biking to work). For $1,000, you can buy a good bike and a good helmet (think of it as cheap life and health insurance). If your ride to work isn’t too onerous, consider the eight-speed Jamis Commuter 4 ($950). Its curved handlebars position you upright as you navigate through traffic, its padded seat is comfy, and it’s equipped with fenders and a luggage rack. For longer commutes, the Raleigh Port Townsend (about $900) is a better choice. It has drop-style handlebars and 18 speeds, as well as commuter-friendly fenders and a front rack.

Buy a Bicycle and Ride to Work

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30 Smart Ways to Spend $1,000

Add to an Emergency Fund

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Or start one, if you don’t have one yet. About one-third of Americans haven’t started an emergency fund and, as a result, don’t have sufficient savings to pay for unexpected expenses, according to a survey by the Consumer Federation of America and American Savings Education Council. Ideally, your account will eventually have enough to cover at least six months of expenses. For more information, see 9 Reasons You Need an Emergency Fund and 7 Strategies to Build an Emergency Fund.

Add to an Emergency Fund

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30 Smart Ways to Spend $1,000

Invest in New Companies

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Thanks to the government’s approval in 2012 of “crowdfunding” as a way for businesses to raise capital, it’s easier than ever to invest in new companies. Upstart allows you to give money to entrepreneurial college graduates from a pool of 30 universities, including Harvard, Stanford and MIT. You can invest in $100 increments, and you’ll receive a modest portion of the company’s income -- up to an annual rate of return of 14.99% (or lose your stake if the project goes under). You can also contribute through Kickstarter, which focuses more on creative individuals who want to raise money to produce films, music and art. Kickstarter projects keep 100% of the funding, so there’s no financial return to backers.

Invest in New Companies

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30 Smart Ways to Spend $1,000

Convert a Fireplace to Gas

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Don’t want the muss and fuss of a wood fire in your fireplace? Install gas logs. For $600, you can get 2-foot-long, realistic-looking ceramic logs in your choice of wood type and arrangement (stacked neatly or askew), including a gas burner (www.gaslogguys.com). Installation costs $200 to $350, and it’s about $15 to $25 per foot to run a line to service the gas logs.

Convert a Fireplace to Gas

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30 Smart Ways to Spend $1,000

Buy a Home Safe

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You should have enough cash at home -- preferably in tens and twenties – in case of an emergency, such as a natural disaster. A rule of thumb is to have $500 to $1,000 on hand. You’ll pay about $200 to $500 at www.valuesafes.com for a home safe that’s fire-resistant (rated for one hour of fire) with a bit more than 1 cubic foot of space. For a two-hour rating and 2 cubic feet of space, the price jumps to about $700.

Buy a Home Safe

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30 Smart Ways to Spend $1,000

Stage Your Home

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A home stager can boost the appeal, and the sale price, of your home. Stagers declutter and rearrange furniture to improve traffic flow and make rooms appear more spacious. You can find a stager at www.stagedhomes.com. Stagers charge $250 to $500 for a walk-through and consultation; they generally charge $50 to $150 an hour for additional services, and $500 to $1,500 a month for rental of furniture and accessories.

Stage Your Home

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30 Smart Ways to Spend $1,000

Take a Vacation for Two

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Whoever calls it “flyover country” hasn’t teamed his way through forests, between mountains and across rivers on a cross-country train trip. On the California Zephyr, you can journey on Amtrak from Chicago to San Francisco in about 50 hours. When two passengers share a sleeping car, both pay a rail fare but they split the cost of the room. We found fares for about $899 one way, including a shared roomette. Spend your extra $100 on an intimate meal in San Francisco or put it toward your return flight.

Take a Vacation for Two

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30 Smart Ways to Spend $1,000

Build Your Brand

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Stay poised for new opportunities -- and boost your standing at the office -- by polishing your professional image. A career adviser can help you update your résumé, network and identify strengths for about $500 for a few sessions. Consider hiring a photographer to take professional headshots (about $200); use your favorite photograph on sites such as Facebook, LinkedIn and Twitter for a cohesive online presence. Create a blog or Web site for free using a platform such as WordPress.com. Or for $99 a year, upgrade to the WordPress Value Bundle, which includes a domain name of your choice, high-definition video uploads and custom design options. Those looking for work may want to invest in a LinkedIn Job Seeker Premium account ($180 for six months). Among its benefits are five monthly “InMail” messages, which you can use to contact anyone on LinkedIn. Need business cards? Design a card at a site such as Vistaprint.com, where you’ll pay $15 for 500 premium matte cards.

Build Your Brand

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30 Smart Ways to Spend $1,000

Write a Will

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Expect to pay about $300 for a lawyer to draft a simple will. You could pay up to $1,000 for a more comprehensive estate plan that includes a living will or health-care directive and a power of attorney document. Online forms can be an affordable way to write a will if your finances are uncomplicated. Even if you do use one of these documents, you should consider getting a lawyer to review it.

Write a Will

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30 Smart Ways to Spend $1,000

Prepare for a Post-Retirement Career

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There’s a certificate program for just about every second-act career imaginable, from landscape design to writing grant proposals, says Kerry Hannon, author of Great Jobs for Everyone 50+. The International Fitness Professionals Association offers a senior fitness specialist certificate for $479, which leaves plenty left over for new exercise equipment. You could find a second career as a geriatric care manager, a person who helps seniors navigate their health care options. The application, handbook and exam to become a certified care manager costs $270. You can use the rest of your money to buy two years of membership ($345 per year) in the National Association of Professional Geriatric Care Managers.

Prepare for a Post-Retirement Career

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30 Smart Ways to Spend $1,000

Hire a Personal Trainer

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Fortify your New Year’s resolution to get and stay fit by hiring a personal trainer. A one-on-one session with a certified trainer ranges from $40 to $100 an hour, according to the American Council on Exercise. If you share a coach with a few friends, you can bring the hourly price to $20 to $30 each (giving you at least 33 sessions for $1,000). Find an ACE-certified trainer here.

Hire a Personal Trainer

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30 Smart Ways to Spend $1,000

Learn a Language

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Expand your language skills (and impress your friends!) with lessons in Mandarin Chinese, the world’s most widely spoken language. Beijing Language and Culture University’s four-week language programs for international students cost as little as $950 for tuition and dorm accommodations. You’ll pay extra for the application fee (about $95), airfare and food. For more information, visit www.studyinblcu.com. Closer to home, try a 12-month subscription to Rosetta Stone’s TOTALe Online (regularly $299, but look for specials at www.rosettastone.com).

Learn a Language

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30 Smart Ways to Spend $1,000

Pay Down Debt

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If you've racked up credit-card debt, making a $1,000 payment can go a long way. For example, by paying a credit card balance with an 18% interest rate, you get an 18% return -- plus the priceless feeling of being more in control of your finances.

Pay Down Debt

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30 Smart Ways to Spend $1,000

Get Marriage Counseling

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Getting through a rough patch, or just deepening your relationship, may require help from a licensed marriage and family therapist. A one-hour session ranges from $75 to $200 and averages $100, according to the National Directory of Marriage and Family Counseling. Treatment typically runs 12 weeks, but ten sessions, at $100 each, should put you on the right track. To find a therapist, go to www.therapistlocator.net.

Get Marriage Counseling

Start Over

Slide Show

30 Smart Ways to Spend $1,000

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