Retirement is around the corner for Gen Xers. Every dollar you invest now has less time to grow compared with millennials and Gen Zers, but the right allocation can still make a major impact on your financial future.
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If you have an extra $1,000, here are some of the best ways to spend it on your investment portfolio this year.
Also see three investments that equal the “perfect portfolio” and how anyone can invest in them.
Maximize Retirement Accounts
For many Gen Xers, retirement accounts like a 401(k) or IRA should still be the foundation of their portfolio. Contributions here come with tax benefits that can stretch your $1,000 further. With a traditional IRA or 401(k), contributions may reduce your taxable income today. With a Roth IRA, the money grows tax-free, and withdrawals in retirement aren’t taxed.
Once you turn 50, you also become eligible for catch-up contributions. In 2025, that means an extra $7,500 in a 401(k) and $1,000 in an IRA beyond the standard limits. Adding $1,000 now, and taking advantage of those catch-up contributions in the years ahead, can significantly boost your retirement savings.
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Index Funds or ETFs
At this age, your portfolio should contain a mix of less-risky investments, such as index funds or exchange-traded funds (ETFs). They spread your money across hundreds or even thousands of companies, lowering your risk while still giving you exposure to overall market growth.
With $1,000, you could buy an S&P 500 index fund for exposure to America’s largest companies or a total stock market ETF that tracks large cap, midcap and small cap stocks. Many of these funds are also low cost, which means less of your money goes to fees and more stays invested.
REITs
Owning a property isn’t realistic for everyone, but you can still reap the benefits of real estate with real estate investment trusts (REITs). These are companies that own, operate or finance income-generating properties and sell shares to raise capital.
You can invest directly in REITs or REIT ETFs, which can give your portfolio exposure to a whole new asset class while also generating income. REITs are also attractive because they often pay higher dividends than individual stocks.
Target-Date Funds
If you prefer a more hands-off approach, a target-date fund is one of the easiest ways to invest $1,000. And for Gen Xers who want to grow their investment portfolios while keeping risks low, target-date funds are perfect because they automatically adjust asset allocation from aggressive to conservative as you approach retirement.
For example, a 2035 target-date fund will be tailored for someone aiming to retire around that year, gradually reducing risk as 2035 approaches. Target-date funds ensure that your portfolio aligns with your risk tolerance without you needing to monitor it constantly.
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This article originally appeared on GOBankingRates.com: The Best $1K Gen X Can Spend on Their Investment Portfolio This Year
