In 2021 I joined the $1000 challenge, a 1-year challenge where you invest $1000 in any way you want to see who makes the most money. I thought it would be an interesting experiment to try during the Pandemic. Because I run a personal finance blog, I decided to expand my experiment. I started my $1000 challenge in January 2021 by investing $5000 in FIVE different securities across FOUR categories: Crypto, Real Estate, Retirement, and an Individual Brokerage Account. I used a high yield online savings account as a baseline. For reference, all of my $1000 investments were made in the first week of January 2021.
I ended the $1000 Challenge in December of 2021. Since then, crypto crashed, interest rates soared to new levels, and the stock market entered a recession. Here is what happened to my $1000 investments in the past 9 months.
The Savings Account
Throughout 2021, some of the most popular online savings accounts have offered 0.5% APY. Today, you can find rates as high as 2.61% if you look hard enough. Consider Betterment’s Cash Reserve, Yotta Savings (Use Code HyderFT), or Ally Bank. If you deposit $1000 @ 2.61% APY, you will have earned $26 after 12 months.
Crypto
I invested $1000 in Bitcoin (BTC) and $1000 in Ethereum (ETH) through one of the top crypto brokerages, Coinbase. These are the two most popular crypto currencies with the largest market caps. Join Coinbase here to earn $10 in Bitcoin.
Real Estate
Fundrise is a crowd-funded real estate investing platform that allows you to invest with only $500. I decided invest $1000 for the challenge. Fundrise primarily focuses on investing in commercial residential properties such as apartment buildings and multi-family communities. The catch is that your money will be locked in for 5 years. Join Fundrise here to get $0 in advisory fees for 3 months. After that, you will pay a small fee of 0.85% APY.
Retirement
There are so many retirement accounts to choose from. I decided to choose a Roth IRA with Wealthfront since I already have two other Roth IRA’s with Betterment and M1 Finance. If you are interested, sign up with Wealthfront here to get $5000 managed free for 1 year. Wealthfront is a robo-advisor. Based on your answers to a few questions, Wealthfront manages your investments for you at a small fee of 0.25% APY. That accounts to a $25 annual fee for your $10,000 investment. Approximately 85% of these investments are in Vanguard ETF’s and 15% are in bonds.
Individual Brokerage Account
There are several platforms to choose from. The platforms known for zero fees include Webull, Robinhood, CashApp, and M1 Finance. I decided to put $1000 into M1 Finance where I can customize my portfolio how I see fit. I invested 25% of my portfolio in several Vanguard ETF’s, 25% in renewable energy ETF’s FAN and TAN, 25% in popular tech companies including Square, Apple, Google, Amazon, and Tesla, and 25% in industrial companies including Trane Technologies and ABB to name a few. Want to try M1 Finance? Join M1 Finance here and get up to $50 when you deposit $100 within 30 days.
21 Month Update
| $1000 CHALLENGE | 21 MONTH UPDATE 09/23/2022 | NET |
|---|---|---|
| 2.61% APY Savings Account | $1,026.10 | $26.10 |
| Bitcoin (BTC) | $565.28 | ($434.72) |
| Ethereum (ETH) | $1078.40 | $78.40 |
| Fundrise | $1,054.80 | $54.80 |
| Wealthfront Roth IRA | $748.04 | ($251.96) |
| M1 Finance Brokerage | $984.20 | ($15.80) |
Conclusion
Unfortunately, all of my investments have decreased except for my real estate investments in Fundrise. While my Fundrise real estate investments performed best, it is the least liquid of all of these accounts. Your money is locked in for 5 years with Fundrise. In my case, I have a little more than 3 years before I can withdraw my money but I plan to keep my money in Fundrise and maybe add more. It is a great investment platform.
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