First thing first - In a short span of 1 year you can not expect high returns, it is much better if you are just able to bypass inflation in short period.
As per your comment, we can plan something better for various time slices.
You have $2000 per month to invest. Divide it in three chunks (depends on your risk bearing capacity, I am just putting an example):
Very short duration (1-2 years) : $850
Invest in Short Term Bonds or Bank Fixed Deposit / Recurring Deposit
3-5 years period : $750
Invest in Blue Chip or Large Cap Mutual Funds (Systematic Investment Plans)
20-25 years : $400
Even small amount will generate huge wealth in long span of 20-25 years because of Compounding Effect. Here you can use high risk mutual funds like small/mid cap funds or play in stock market as well but not in Penny Stocks, no and never.
Only invest in any penny stock if you know their management very closely and you are very sure of their vision and future plans. Also here you need to have an futuristic vision regarding company's model, product, plans, everything. If you are confident in all of these then only think of investing in Penny Stock and not all amount just use less than 10% of your portfolio size.
But if you don't have above level of expertise then stay away from penny stocks. You have many good companies with strong leaderships and good governance, invest in them. Here you can do Systematic Equity Plan i.e. monthly investment in few top rated stocks.
How to find them ?
- Select few sectors in which you have some knowledge.
- Out of these, select few sectors in which you see brighter future and growth.
- Out of these selected sectors, search for two market leaders in each sector.
- Now check out the history of these limited stocks which you have selected from above steps.
- Select all those which have perfect past(5-20 years) track record (governance, return, management, etc).
- Now put your $400 in few of these every month, re-balance half-yearly or yearly.
Re balancing is very important to keep your capital safe and to get better returns, even in case of Mutual Funds also. So play it wisely.
If you are not able to follow above steps to identify best stock then one more easy way you can opt for:
You can invest in Exchange Traded Funds (ETF) or can copy top 5 stocks (as per market cap) from any ETF.
You can also use few filters simultaneously to select best stocks in the country. Like wherever you belong to, your country has few companies listed from more than 20-25 years and having highest market cap and have trusted governance/management track record and having 10+% CAGR returns from last 3+ years. You can select best 5 out of these and invest. After 1 year use same query to find out new situation and re-balance your portfolio.
I always say to invest in 5 stocks at a time so that you can weekly track any news related to them. This is very important as even one bad news can destroy fame of any company and in no time it can become 0. So remain updated.
Generally if you select top companies of any nation based on above criteria, there will be very rare chance of capital erosion risk. And even if management is trustworthy and strong then any bad news are good time to grab high quality gems.
And last, Investing in stock market are subject to risk, take your decision wisely.