7 Ways to Invest $1,000

If you have $1,000 to invest, you're in luck -- having a grand in cash can open you up to many great opportunities for growing it into something more. This is especially important at a time when inflation threatens to devalue the power of your dollars, shrinking that $1,000 into a few dollars less. With that in mind, the following seven ideas are some smart ways to invest $1,000 for your future.

1. Pay off high-interest debt

Credit cards, personal loans, and other debts with high APRs can drag down your income. You might even pay more interest on credit card debt in a year than what you could have earned on other investments. Use that $1,000 to pay down what you've borrowed, freeing up your money for other financial goals.

2. Invest in the S&P 500 index

The S&P 500 (otherwise known as the Standard & Poor's 500) is a stock index that tracks the 500 largest companies in the U.S. Investing in an S&P 500 index can be a great way to diversify your $1,000 without requiring you to hand pick your own stocks.

3. Invest in your retirement plan

Retirement plans, like 401(k)s and IRAs, can help you save for your golden years with tax advantages. Money invested in a traditional 401(k) and IRA will grow tax free, meaning you won't have to worry about paying taxes on investment gains until you withdraw money in retirement. And if your employer offers a match on 401(k) contributions, don't hesitate -- take the match. You can potentially turn that $1,000 into a greater lump sum to invest.

4. Buy shares of stocks

Stocks can offer immense long-term potential for your $1,000. Many brokers also let you buy fractional shares, which could help you invest a small amount in numerous companies. This gives you the option of diversifying your portfolio and exposing your $1,000 to different market sectors and industries. No-fee brokers are probably the best way to get started, as you won't have to pay trading commission on your $1,000.

5. Use a robo-advisor

Robo-advisors automate the investing process for you. They'll assess your risk tolerance and time horizon (that is, how long you expect to invest), then create an investment portfolio best fitted for your $1,000. Some will even rebalance your portfolio or use advanced strategies -- like tax-loss harvesting -- to maximize your returns.

6. Save for the long term in a CD

Current rates on certificates of deposit (CDs) are nothing to ignore. In May, CD rates hovered between 4% and 5%, having gotten a major boost from the Fed's interest hiking campaign. Locking your $1,000 into a short-term CD could produce some significant returns, but beware the consequences: You'll have to keep your money locked up for the term of your CD, or risk forfeiting a portion of your interest.

7. Deposit $1,000 in a high-yield savings account

If locking $1,000 in a CD is too restrictive you could also open a high-yield savings account. These accounts have higher interest rates than average savings accounts and allow six penalty-free withdrawals per month, for more convenient access to your money.

Paying down debt or investing $1,000 in one or several of these investments can have amazing consequences for your financial future. Bear in mind, however, that stocks, ETFs, and index funds may have short-term market risks, so it's important to select these wisely and for the long run. More importantly, keep investing in your future, as you'll likely build wealth by consistently setting money aside rather than "hitting it big" on one investment.