The Smartest ETFs to Buy With $1,000 Right Now – The Motley Fool

You don't need to be a rocket scientist to make money in the stock market, and there are some smart moves that everyday investors can make that will make them wealthier.

If you have around $1,000 that you don't need for living expenses or debt repayments and you want to invest it, here are two exchange-traded funds (ETFs) that would be especially smart buys today.

A core index fund with a sophisticated approach to stock weighting

Large-cap stocks make great fundamental investments for many investors' portfolios. S&P 500Made up of 500 of America's largest and best companies, is a great way to gain exposure to this wealth-building asset class.

of Invesco S&P 500 Equal Weight ETF (RSP 0.96%) Going a step further, unlike most S&P 500 index funds that are market-cap weighted, Invesco's ETF, as its name suggests, equally weights the stocks it buys.

You want to own large stocks, but not mega-cap stocks. NVIDIA, appleand Microsoft If it has grown too large and is now a large part of many index funds, the Invesco S&P 500 Equal Weight ETF could be a great option.

Invesco funds reduce concentration risk by distributing their holdings equally. In this way, the ETF offers shareholders a high level of diversification and maintains this by rebalancing its holdings quarterly.

As a result, Invesco's ETF holdings are more diversified across sectors, rather than being stuffed with tech stocks like many large index funds. As of Sept. 10, information technology was the fourth-largest sector after industrials, financials and health care.

Finally, Invesco's fees are reasonable: The Invesco S&P 500 Equal Weight ETF has an expense ratio of 0.20%, which equates to just $2 per $1,000 invested per year.

Smaller companies, bigger profit potential

If you are looking to add more growth potential and diversification to your investment portfolio, Vanguard Russell 2000 ETF (V2O 2.48%)Vanguard ETFs offer a low-cost way to invest in a broad range of small- and mid-cap stocks. These smaller companies tend to have big growth potential.

The Vanguard Russell 2000 ETF holds more than 2,000 stocks with an average market capitalization of $3 billion. This is quite different from the average market capitalization of the stocks held by the Invesco S&P 500 Equal Weight ETF, which was worth nearly $100 billion as of June 30. The two funds are complementary; combined, they can provide both stability and strong growth to your portfolio.

It's worth noting that small businesses tend to be very sensitive to interest rates. In the current economic environment, this could be a very good thing. With inflation slowing, the Federal Reserve has signaled that it may start cutting interest rates as early as this month. This could be a boon for small-cap owners. Small businesses often rely on loans to expand, so lower interest rates tend to make them more profitable.

With an annual expense ratio of just 0.1%, the Vanguard Russell 2000 ETF offers a simple, low-cost way to profit from rising small-cap stock prices due to lower interest rates.