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 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 September 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 $3.75 after 9 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 9 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. In my 3 month update, I said that my tech and green energy stocks were not doing well. Unfortunately this was still the case at the 6 month update even though President Biden announced his infrastructure plan that should have theoretically helped the green energy stocks go to the moon. At 9 months, I am still down on Green Energy, Vanguard ETF’s, and Tech Stocks, but I am up on Industrial stocks. In the past 3 months, I have lost $165 in my M1 Finance account.
9 Month Update
| $1000 Challenge | 9 Month Update 9/29/21 | Net |
|---|---|---|
| 0.5% APY Savings Account | $1,003.75 | $3.75 |
| Bitcoin (BTC) | $1,389.91 | $389.91 |
| Ethereum (ETH) | $1390.43 | $390.43 |
| Fundrise | $1,033.45 | $33.45 |
| Wealthfront Roth IRA | $1,034.50 | $34.50 |
| M1 Finance Brokerage | $1002.10 | $2.10 |
Conclusion
All of my investments have dropped since my last update except for Fundrise. Fundrise has continued to be a safe and conservative investment performing better than savings accounts and my selection in Roth IRA stocks. Bitcoin and Ethereum are neck at neck as my top performing but riskiest investments. In total I have made $850.39, down from $930 in my last update. In both the 6 month and 9 month update, the cryptocurrency Ethereum has been my best performing investment. While I did not count this in my earnings, I am also earning more than 4% APY through my BlockFi Interest Account where I store my Bitcoin and Ethereum. My investments in green energy, Vanguard ETF’s, and tech have caused my M1 Finance Roth IRA to go from 2nd place in the 6 month update to last place in my 9 month update. To stay updated with my $1000 investments, subscribe here. I will be posting my 1 year update sometime after Christmas 2021.
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