Updated on 4 months by Favour Chinaza
It’s time to start investing if you’ve saved up at least $10,000. But, if you’ve never invested before, it can be a frightening experience at first — your money is on the line. So, how can you invest $10,000?
Several investing possibilities are available and making a choice can be difficult. Then, how do you know which investment option to pick? It all depends on your financial experience, interests, and risk tolerance. In this article, you will learn the 9 best ways to invest 10k for a cool return on your investment.
What Are the Best Investment Options for You?
Before deciding where to put your $10,000, determine who you are as an investor. Also, consider your short- and long-term financial plans and objectives.
Think about your risk tolerance. This knowledge will assist you in making the best-suited investment choice. High-risk investments offer high ROIs, but they also pose a higher chance of losing money.
Want some tips for investing $10,000? Below are the 9 Best ways to invest 10k of your money.
9 Best Ways to Invest $10k
- Stash it in a high-yield savings account
- Start or add to your emergency fund
- Try out self-directed brokerage accounts
- Use a Robo-advisors
- Stick it in U.S. Treasuries
- Pay off your high-interest debt
- Try real estate crowdfunding platforms (for experienced investors only)
- Max out an IRA
- Invest in Yourself
1. Stash It in A High-Yield Savings Account
This strategy isn’t an investment, but it’s a better option than money in a checking account. High-yield savings accounts are an excellent short-term “investment” option until you decide on a longer-term investing strategy.
Setting up an online savings account is simple. Yet, choose a financial institution that offers high APYs on its saving account. Both a credit union and traditional bank offer insurance on your money — up to $250,000.
Stash Your Money in a High-Yield Savings Account
Savings vs. Checking account: What are the differences
2. Start or Add to Your Emergency Fund
If you don’t already have one, this should be the first thing you do with your $10,000 investment.
Life happens. You can lose your job or get unexpected medical bills shoved in your face. It’s a good idea to set aside three to six months’ worth of expenses in an emergency fund. $10,000 should be plenty to get you started or supplement an existing fund.
An emergency fund is helpful because it’s liquid, which means you can access it whenever you need it. Not the best investment, but consider the alternative if something unexpected happens.
Ask yourself. How would you provide for yourself and your family until you return to work?
3. Try Out Self-Directed Brokerage Accounts
Self-directed brokerage accounts are our 3rd pick of 9 Best Ways to Invest 10k. Self Directed Brokerage accounts allow you to trade an almost limitless number of investments. Examples of some of the investment vehicles available in some large brokerages include:
- Mutual funds
- Exchange-traded funds (ETFs)
- Real estate investment trusts (REITs).
Works best for individuals who would like to choose and manage their investments. Having a little bit of experience is a plus before opening an account with a brokerage company. Also, be ready to take a considerable risk.
You can use a self-directed brokerage account to invest in the stock market. This account can also help you manage your retirement plans, such as a standard IRA, SIMPLE IRA, SEP IRA, or Solo 401(k).
As a rule of thumb, if you’re a newbie, stick to mutual funds and EFTs. If you aren’t ready to establish your stocks and bond portfolio, these two options are great for you.
Although many people think mutual funds and ETFs are the same, they are two different things.
Let’s delve into the difference between mutual funds and ETFs.
Open A Self-Directed Brokerage Accounts
A mutual fund is an investment portfolio that requires active management. It would be best to be dynamic with buying and selling stocks in your portfolio to outperform the market. And most mutual funds don’t beat the market.
The minimum investment requirements in mutual funds vary, but $3,000 is a popular figure, and this limit doesn’t allow diversification among several mutual funds with $10,000. This high investment cost is because mutual funds need active trading.
Several mutual funds also charge load fees. These sales commissions vary between 1% to 3% of your investment, and they can be set at the time of sale. But, some mutual funds do not impose any load fees.
ETFs is a sure part of the 9 Best Ways to Invest 10k. It is usually index-based, meaning they rely on tracking an underlying index. The S&P 500 index is a popular index, and it represents stock in the United States’ 500 largest traded corporations.
An ETF based on the S&P 500 index will invest in the index’s constituent companies in the same proportion as the index, and the ETF will, after that, track the index in this manner. As a result, an ETF is an excellent method to invest in the stock market.
The investment possibilities with ETFs are endless, and you can invest in any market across hundreds of different indices.
An ideal ETF investment would be with underlying indexes of developed-country equities, emerging-country stocks, and international stocks. Popular industries by EFT investing include energy, healthcare, and technology.
ETFs are well suited for new investors because they don’t have an investment limit. They trade on large exchanges much like stocks and offer similar commissions.
Real Estate Investment Trusts
Do you like investing in real estate through a crowdfunding platform? But you don’t have the funds or skills to get a single investment property. Have you heard of real estate investment trusts?
A REIT is a company that invests in and manages a portfolio of properties. They usually invest in retail spaces, office buildings, residential complexes, hotels, warehouses, etc.
Like purchasing stock, you’ll invest a set amount of money in a REIT (the amount varies per trust). You don’t own any of the trust’s properties; instead, you own a share of the REIT.
One of the most significant benefits of REITs is that they pay out large dividends, and U.S. Law requires them to distribute at least 90% of their net revenue to their shareholders in dividends. The average APY offered by most REITs is 10.6%.
4. Use A Robo-Advisors
In this 9 Best Ways to Invest 10k, we added Robo-advisors because our readers have always testified how good Robo-advisors helped their investment plans.
Robo-advisors are online, automated investing platforms, and they offer a cheaper alternative to hiring an investment advisor. Instead of paying a 1% to 2% management fee to an investment advisor, a Robo-advisor will charge 0.25% on average.
Another significant benefit that Robo-advisors have is human, financial investment advisors. Most financial advisors need a $500,000 commitment. But, Robo-advisors allow you to get started with no money. With most Robo-advisors, $10,000 is more than enough to invest.
Individuals who wish to invest with minimal involvement would find Robo-advisors helpful.
Usually, the app would assess your risk tolerance first. Then, it would identify your investment objectives, time horizon, and anticipated market reaction. Based on this information, these apps can build an investment portfolio that fits you. It can vary from cautious to aggressive, with many iterations.
5. Stick it in U.S. Treasuries
If you’re searching for a super-safe investment that offers a decent ROI, try the U.S. Treasury bonds. Treasury Bills, TIPS, and Treasury Notes are also worthy investment options to explore.
Yes, they’re dull and a headache to get. But these financial vehicles provide a reasonable ROI and are generally safe. It works the same as a CD, and you won’t be able to access your invested funds for a while.
After you’ve decided to put your $10,000 (or a part of it) into treasuries, go to Treasury Direct. You’ll be able to check current rates and buy U.S. Treasury bonds there.
6. Pay Off Your High-Interest Debt
The 9 best ways to invest 10k isn’t always a financial investment. In this scenario, we’re talking about debt repayment. If you think about it, you’re “earning money” by not having to pay interest by paying off high-interest debt.
Assume you have a $10,000 loan with a 15% interest rate. Let’s imagine you pay $250 every month. This route would take about five years to pay off, with interest costs reaching $4,000.
Instead, putting your $10,000 toward debt would save you about $4,000 over the following five years. That’s a fantastic return on investment.
7. Try Real Estate Crowdfunding Platforms (For Experienced Investors Only)
Real Estate Crowdfunding Platforms
This strategy is another investing platform that’s gaining popularity, like Robo-advisors. Instead of investing in equities and bonds, they focus on real estate.
Real estate investments cover a broad category. You’ll find platforms that invest in single-family homes, and others only allow you to own pieces of massive commercial agreements.
Most real estate crowdfunding firms use peer-to-peer (P2P) systems. This system connects real estate investors with companies in the property industry.
Some of these companies specialize in flipping properties, and they refurbish and resell existing houses for a profit. Others buy existing properties to generate cash flow through rentals in certain circumstances.
Usually, real estate crowdfunding platforms invest in commercial properties to generate rent, and they then later sell them for a profit when the market is crashing. You’ll profit from the property’s income while it’s in your portfolio and a windfall when it’s sold.
People with a high-risk tolerance would find real estate crowdfunding beneficial. You can lose money investing on these platforms, like buying stocks or mutual funds.
If you also want to secure your funds for an extended period, it’s worth exploring. It’s pretty uncommon for a crowdfunding campaign to pay off in ten years or more.
8. Max Out an IRA
Maxing Out an IRA
Maxing out an IRA is one of the 9 Best Ways to Invest your 10k. An IRA is one of the most beneficial investment vehicles available. It’s like a 401k; only you finance it yourself and don’t get a business match as you would with a 401k. Yet, we recommend you hold an IRA because of the many benefits.
Roth IRA and Traditional IRA are the two primary varieties available. With a Roth IRA, you can grow your money tax-free. It’s also possible to make withdrawals from your account without incurring income tax. Traditional IRA contributions are only tax-deductible for the current tax year.
You’ll have more than enough money to max out a single IRA (with a little left-over for a second one for a spouse!) because you have $10,000 to invest.
It’s up to you to create a Traditional or Roth IRA. But knowing where you expect your tax rate will be in retirement will help you decide. If you desire a higher tax rate in retirement, a Roth IRA is usually a superior option.
A traditional IRA may be preferable if your tax rate in retirement is likely to be lower. You’ll be able to take advantage of tax deductions now.
9. Invest in Yourself
Investing in Yourself is one of the 9 Best Ways to Invest 10k.
The best place to put a $10,000 investment is in yourself. Here are some ideas for investing in yourself:
Take (good) online courses
Online courses are the best investment in yourself if you’ve already attended college. You should ensure only to take part in courses from reliable sources.
Coursera is a great example. Many courses on the platform come from partnerships with many universities. If you’ve ever wanted to learn how to write in Python, there’s a class for that.
You can use the knowledge gained from these courses in your existing employment, and it’s also possible to monetize your acquired skill as a side hustle. We wouldn’t advocate investing all your $10k on online courses, but investing part is worth it.
Hire a Business or Career Coach
Working with a coach with expertise in your field can help you reach new levels in your career and business. It can be you’re looking for someone to help you build an action plan for your business. Or, you want to hone in on a skill like public speaking.
You can improve your resume, interview, and presentation skills with a career coach. Having someone who can record you practicing and assess your performance is beneficial. Paying for the service of a business or career coach is an excellent investment in yourself.
Read, Watch and Listen
Without breaking the bank, you can expand your knowledge and develop any skill you want if you wish to learn more about sales, project management, or money management. Pick up a book, watch a video or online lesson or listen to a podcast that focuses on topics that intrigue you.
Focus on Self-Care and Breaks to Increase Productivity
Self-care is key to enhancing your productivity and accomplishing your financial goals. You don’t need any other reason to take time for yourself, contemplate, and get away from your desk.
Set aside time to have a spa day, a vacation, a new hobby, or daily meditation practice. This short break is to check in with yourself and reflect on your career or business goals. You’ll also be able to address any underlying issues that may impede your progress.
Indulging in self-care helps you understand how deserving you are of all your goals. This awareness helps you build the mentality to succeed.
Boost Your Health and Wellness
To reduce your healthcare costs, eating nutritious meals and exercising is essential. Good health and wellness state can also help you advance in your profession.
Individuals who improved their health through a well-balanced diet and exercise experienced a 10% increase in productivity, according to a 2017 research sponsored by the University of California.
In other words, those who are better able to focus and feel more motivated at work are more likely to receive a promotion, increase, or bonus.
Subscribing to a meal-kit delivery service, joining a gym, or hiring a personal trainer to hold you responsible can help you stay motivated to maintain a healthy lifestyle.
Prioritize Your Health and Wellness
Start Saving for Retirement Early to Secure Your Future
There are several options for saving for retirement. The essential thing to keep in mind is that the sooner you begin saving, the more money you will amass over time. So, first, determine how much you should devote to reach your retirement objectives. Then start contributing to a retirement account to start developing your nest egg.
Establish Financial Objectives
Set financial objectives for the future and track your progress toward them. Your dreams might be short-term, such as saving for a trip, or long-term, such as repaying college loans. Here are some financial goal ideas to get you started:
- Creating a grocery budget for the month
- Putting together an emergency fund
- Setting money aside for a home
- Assisting a loved one with education expenses
- Making monthly payments on your credit card
Put Money Aside for A Rainy Day
Create a rainy day fund to save for modest needs that aren’t part of your usual living expenses. This fund will assist you with unforeseen conditions such as auto repairs. Keep your money in a checking or savings account.
Some money-saving methods that can help you add to your rainy-day fund include:
- Avoid unnecessary expenses such as to-go coffee.
- Prepare and eat all your meals at home.
- Reduce the number of subscriptions you have.
- Lower your electricity costs
Check out these 21 Easy Steps To Achieve Financial Freedom Fast
Any of the above-discussed 9 Best Ways to Invest 10k will definitely work for you. Whether you want to save for retirement, set up a college fund, or develop an ultra-safe CD ladder. A Robo-advisor or an investing tool can help a do-it-yourselfer investigate these choices. Contact a financial counselor if you’d instead work with a real person.
Remember, it’s always good to figure out your objectives and risk tolerance before diving into any investment. No investment is risk-free or 100%. But without risk, it’s impossible to create wealth.