In 2020, I heard about the $1000 challenge between the online Finance community. It is a 1-year challenge where you invest $1000 in any way you want to see who makes the most money. Since the $1000 challenge has been around for a while, no one has done this challenge in recent times. 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 $1000 in FOUR categories: Crypto, Real Estate, Retirement, and an Individual Brokerage Account. As a baseline, I will use a high yield online savings account. For reference, all of my $1000 investments were made in the first week of January 2021.
The Savings Account
As of March 2021, some of the most popular online savings accounts are offering 0.5% APY. This rate is offered by Ally Bank and Citi Bank. If you deposit $1000 @ 0.5% APY, you will have earned $1.25 after 3 months.
Crypto
I invested $1000 in Bitcoin (BTC) and $1000 in Ethereum (ETH) through Coinbase, a crypto brokerage. These are the two most popular crypto currencies with the largest market caps. Join Coinbase here to earn $10 in Bitcoin. Fortunately for me, I bought my crypto at a good time and made some money on my $1000 investments.
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. Scroll down below to see how much I earned in my first 3 months.
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. I focused on platforms known for zero fees, including 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 $30 when you deposit $100 within 30 days. As you will see from my 3 month update, the stock market has not been kind. Due to concerns with inflation, the federal reserve keeping rates low, and large funds cashing out, the Tech and Green Energy stocks and ETF’s have tumbled.
3 Month Update
| $1000 Challenge | 3 Month Update 3/31/21 | Net |
|---|---|---|
| 0.5% APY Savings Account | $1,001.25 | $1.25 |
| Bitcoin (BTC) | $1,670.51 | $670.51 |
| Ethereum (ETH) | $1,584.12 | $584.12 |
| Fundrise | $1,009.87 | $9.87 |
| Wealthfront Roth IRA | $1,003.66 | $3.66 |
| M1 Finance Brokerage | $960.80 | $39.20 |
Conclusion
In total, I have made $1230.21 in the past 3 months. The cryptocurrency Bitcoin has seen the largest growth and has been my best performing investment. Ethereum came second. I did not even count the 6% APY interest earnings from my BlockFi Interest Account where I store my Bitcoin and Ethereum. Of all of my investments, crypto is the highest risk and highest reward option. It could have easily went the other way. Real Estate investing through Fundrise seemed to be the least risky of investments. It behaved like a high yield savings account and it was not affected by the stock market crash or changing interest rates in March 2021. My worst investment was my choice in stocks and ETF’s in the stock market. While my Industrial stocks did well, my tech and green energy stocks took some heavy damage in March. With President Biden’s March 31st announcement on improving infrastructure and renewable energy initiatives, I expect my portfolio to perform much better over the next 3 months. To stay updated with my $1000 investments, subscribe here. I will be posting a 6 month and 9 month update before finalizing my results at the 1 year mark.
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