What's the best way to invest $1,000?

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While finding yourself with an extra $1,000 isn’t quite enough to entertain thoughts of early retirement or quitting your job to pursue your ultimate dream of breeding mini-cows on a farm in Belize (or something like that), $1,000 is enough to make a difference in your finances—as long as you use it wisely.

Since it’s the season for fiscal year-end bonuses, tax returns, and whatever else might be coming your way, we sat down with Brandon Croken, Financial Service Specialist at East Coast Credit Union to talk about the best way to ensure an extra influx of cash is put to its best use.

Pay off high-interest debt.

The first thing Brandon recommends? Put any extra money toward paying off any high-interest debt you might have.

“If a member has any high interest debt like a credit card, line of credit—anything with an interest rate in the 10–19 per cent range—it’s probably best to pay that down first,” he recommends. “If you invest that same amount, you’re just not going to get the same returns.”

No debt? Good for you! But what about your emergency/rainy day fund?

Save it.

“If you don’t have anything set aside in case the car breaks down, or you need to replace an appliance, or in case of emergency, then having some accessible cash would be the next thing I would suggest,” says Brandon.

By having some cash set aside for emergency expenses, it means you can potentially avoid some of that higher-interest debt if you find yourself in a jam.

It’s recommended to have three months living expenses saved in case of emergency, but even having a little bit tucked aside can go a long way.

A Tax Free Savings Account (TFSA) could be a great place to park this money.

“A TFSA can be used for a range of investment options. It can just be a regular savings account that you can access when you need. But you won’t be taxed on the interest you earn on that account which can be beneficial,” says Brandon.

Invest it.

If your high-interest debt is under control—and you have a healthy emergency fund—then the question becomes: What are your longer-term financial goals?

If you’re looking to save for your first home, investing that extra cash in an RRSP might make the most sense because you may be able to use funds in your RRSP toward a down payment through the First Time Homebuyer’s Plan.

Regardless of your goals, if you find yourself with a few extra bucks in your pocket, it’s always a good idea to get the advice of a trusted financial expert. It’s a great time to take stock of your overall financial health and to think about where you want to be in the future.