Disclaimer: Before we start this blog post, we want to mention that were not financial advisors and you should always consult with a financial advisor before investing your money. With that being said, let’s get started!
$20,000 is a lot of money to save up. For most people, it would take years to save up that much money. So, if you have $20,000 saved up and are looking for ways to invest it, we are going to go over multiple ways to get your ideas flowing on what you could do with that money.
Pay All Your Debt Off
If you have a lot of debt, the first thing you should do is pay it off. This is because in most cases, credit card or even loan interest rates could be higher or close to the return you would make from investing.
This would mean investing the money instead of paying off debt would LOSE you money in the long term. So, if you’re looking to invest your $20,000 and get a return on investment (ROI), the first thing you should do is make sure all your debt is paid off.
Let’s say you had $5000.00 in debt at 15% interest and you’re paying the minimum monthly payments. You could end up paying almost double the original debt. This is why it’s so important to make sure you’re debt-free before making any investments.
Diversified Stock Portfolio
One of the smartest things you can do with your money is to invest in a diversified stock portfolio. This will help protect you from any one particular stock taking a dive and losing all of your money.
The best way to diversify your stocks is to invest in an index fund. Index funds are a type of mutual fund that tracks a specific market index, such as the Dow Jones Industrial Average or the S&P 500.
By investing in an index fund, you are essentially investing in all of the stocks that make up that index. This provides instant diversification and helps to protect you from any one particular stock taking a nosedive.
You can buy ETFs on Robinhood which are free.
Take a look at this video of Kevin O’Leary from Shark Tank answering this question.
Invest In a High Yield Savings Account
Another way to invest your $20,000 is to put it into a high-yield savings account. This is a type of savings account that typically pays a higher interest rate than a traditional savings account.
The benefit of investing in a high-yield savings account is that it is a very safe investment.
The downside of a high-yield savings account is that the interest rates are typically lower than other types of investments, such as stocks or bonds. However, if safety is your primary concern, then a high-yield savings account is a great way to put your money away without worrying.
Invest In Yourself
Investing in yourself is a good way to up your income over the long term. Look into some skills that could make you more employable or learn a new trade.
You could also start your own business. This is a great way to invest in yourself, as you will be the sole owner and control everything that happens. However, starting your own business is a risky endeavor, so make sure you do your research before taking the plunge.
To figure out if this option is best for you is by looking at the potential return on investment. If you think the returns from starting your own business could be higher than other investments, then it might be worth taking the risk.
You also have to look at our current income level and job security. If you have a good income and job security, then starting your own business might not be the best idea as it is a very risky investment.
However, if you are struggling to make ends meet or are unhappy with your current job, then starting your own business could be a great way to invest in yourself.
Invest In Fundrise
If you’re looking for a more hands-off approach to investing, then you may want to consider investing in Fundrise. Fundrise is an online real estate investing platform that allows you to invest in commercial and residential real estate projects.
The benefit of investing in Fundrise is that it is a very passive investment. Once you’ve invested your money, you don’t have to do any more work.
The team at Fundrise will handle all of the behind-the-scenes work, such as finding properties, negotiating deals, and managing the projects.
Peer To Peer Lending
Another way to invest your money is through peer-to-peer lending. With peer-to-peer lending, you are essentially loaning money to people or businesses.
The benefit of peer-to-peer lending is that it can provide a higher return than other types of investments, such as stocks or bonds.
The downside of peer-to-peer lending is that it is a more risky investment, as you are relying on the borrower to repay the loan.
However, if you’re willing to take on a little bit of risk, then peer-to-peer lending can be a great way to invest your money.
Conclusion
There are a lot of different ways you can invest your $20,000. It’s important to do some research and figure out what is best for you. There is no one-size-fits-all answer when it comes to investing, so make sure you take the time to figure out what will work best for you.
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