The best way to invest $10,000 is a question many people ask themselves when they are ready to start investing.
It can be daunting for some, but it doesn’t need to be. If you do it right, investing in the stock market does not have to be scary or complicated- if you do it right!
Let’s take a look at 21 investment ideas to make sure you are getting the most out of your money and find the best ways to invest $10,000!
21 Best Ways To Invest $10,000
1. Emergency Fund
One of the first things you should do with your $10,000 is create an emergency fund. It’s always a good idea to have an emergency fund saved up in case of unexpected expenses.
It can be helpful to have a financial cushion to fall back on!
An emergency fund will help you cover unexpected costs in the event of something unexpected- and expensive! It would be best if you tried to have at least three to six months of living expenses saved up in case of an unexpected job loss or other financial crisis.
Choose a savings account such as Chime to maximize earnings on your emergency fund. Money in an FDIC insured account earns next to nothing these days, but Chime accounts earn higher interest rates than traditional savings accounts.
2. Robo Advisor Investing
A Robo-advisor is an online platform that provides automated, algorithm-based portfolio management. With a minimum investment of only a couple thousand dollars, you can invest in a diversified portfolio made up of stocks and bonds- with no need to worry about asset allocation or rebalancing.
Investing with a Robo-advisor, like Betterment and M1 Finance, is simple, straightforward, and maybe one of the lowest-risk ways to build wealth over time. Plus, Robo-advisors charge lower fees than traditional investment advisers.
Another benefit of investing with Robo-advisors is investing in fractions of assets. If you’ve got $10,000 to save but don’t want to put all your eggs in one basket- Robo-advisors, like Betterment, allow you to invest smaller amounts of money into more than one investment vehicle.
3. Stock Investing
It’s no secret that the stock market can be a great way to make money. Stock investing is a long-term strategy that can yield significant financial rewards if done correctly.
Before you invest in individual stocks, it’s essential to educate yourself about what you’re doing and possibly get independent financial advice from an investment advisor. Here are some tips to take before investing.
- Invest what you’re willing to lose- don’t put money into something that you’ll be devastated if the individual stocks drop in value or become worthless.
- Set a comfortable threshold for how much of your money you’re willing to lose. Remember, the more risk involved, the higher the potential payout, and the higher chance you could lose your initial investment.
- Don’t buy stocks on a whim. Only invest if you’re confident that the company will be successful over time, not just for a couple of days or weeks. Also, research what types of stocks are popular among investors (growth stocks, blue-chip companies, etc.).
Trading stock online is an excellent method of investing small amounts of money and you can easily get started investing as a beginner with Robinhood. You can open a brokerage account for as little as $50, and many online brokers don’t charge any transaction fees.
Use the money you have leftover after maxing out your 401(k) or IRA from #7 to invest in stocks through a brokerage account.
4. House Improvements
Making some home improvements is also a great way to invest $10,000. If you plan to sell your house, investing in renovations will go a long way towards getting top dollar for it.
Renovations can include major projects like building an addition or updating the kitchen and bathrooms- but they can also be as simple as painting the walls or putting in new flooring.
Even if you are not planning on selling your house, investing in home improvements can make it much more enjoyable to live in and increase the value of your home when it comes time to sell.
5. High-Yield Savings Account
A great place to invest your money is to put it in a high-yield savings account. You’ll be able to earn above-average interest on your savings while still having access to it at any time you want.
It’s simple and easy, with no added hassle of having to transfer funds back and forth. Some of the best rates right now come from online banks like Chime that offer high-yield savings accounts to their customers.
Savvy Tip: Make sure to shop around for the best rate before opening an online savings account. Most high-yield savings accounts have minimum balance requirements and may charge fees if you don’t meet those requirements.
6. Your Retirement Account
One of the best things you can do is put your money into a 401(k) or IRA (Individual Retirement Account). There are tax benefits for both.
A 401(k) is a plan sponsored by the employer that allows you to participate in your employer’s investment options while deferring income taxes on the money until withdrawal. Each time you get paid, contributions get deducted from your paycheck, and the money goes into an account.
That money is typically invested in mutual funds or stocks, but as long as it’s invested, that’s what matters!
Not taking advantage of an employer match is like turning down free money, so don’t do it!
An IRA, or Individual Retirement Account, is an investment account that offers tax advantages for saving money for retirement.
Contribute the maximum amount of money you are allowed annually. If you cannot afford to save the maximum amount, put in at least what you can afford in either a traditional or Roth IRA- even if it’s only $100 per month.
Once you’ve maxed out your 401(k) or IRA contributions for the year, start thinking about investing in other investments.
7. U.S. Treasuries
U.S. Treasury bonds and securities are another excellent investment to consider if you want to invest $10,000, especially if you’re looking for a safe place to invest your money. They are backed by the U.S government, meaning there is no risk of defaulting on your investment.
There are different types of Treasury notes with varying rates of interest associated with them (and they differ in maturity), so you’ll want to take time before making a decision about which one suits you best. The answer will depend on when you think you might need access to your money again.
TIPS bonds, also known as Treasury Inflation-Protected Securities (TIPS), protect against inflation. The Consumer Price Index controls the amount of money paid on the principal. You’re paid money from whichever is higher between the adjusted principal or original principal when a TIPS matures.
They offer a safe way to earn a competitive interest rate on your money while avoiding a lot of volatility in the markets. But they typically aren’t going to provide returns anywhere near the returns you might get from other high-risk, high-reward investment options.
8. Pay Off Debts
When it comes to investing, one of the best things you can do is pay off any high-interest credit card debt you may have. Paying off high-interest debts will save you money in the long run and help improve your credit score.
Credit card debt, for example, can quickly spiral out of control if left unpaid, and the interest payments can erase any wealth growth you may achieve.
Once you have paid off debts, you have more money to your name, and that leftover cash each month can be put to good use! You can use it and a sound investment strategy to make more money and build your wealth.
9. Pay Off Your Mortgage
Paying off your mortgage may be a great way to invest your money. Depending on how far you are in your mortgage term, paying off your mortgage will cut the amount of interest you pay throughout the life of your loan and increase the equity that you have in your home.
It may benefit you more to prioritize any debt that sits at a higher interest rate, including credit cards and auto loans. Not only will you cut down on unnecessary interest payments, but you will also cut down on any penalties and fees.
After paying off high-interest debt, snowball those payments and apply those payments to your mortgage. It will reduce the number of payments you owe on your home and cut down on interest payments, eventually allowing more disposable income.
10. Cryptocurrency Investing
If you want a little more excitement in your life, consider investing in cryptocurrencies. If nothing else, it’s a fun way to make some extra money- and cryptocurrency markets are booming right now.
But before you do anything with cryptocurrency, educate yourself on how trading works and take the time to understand what makes a good investment.
There’s a lot of misinformation and bad advice about trading in the cryptocurrency market, so finding reliable information from sources you trust is imperative.
11. Mutual Funds
Mutual funds are professionally managed investments that combine the money of many investors to acquire stocks, bonds, and other assets. Mutual fund managers use the pooled capital to buy and sell these securities to produce profits for the fund’s shareholders.
Mutual funds or index funds offer an excellent way for small-time investors to invest in the stock market, and they’re also a good option if you don’t know much about investing.
You can even purchase mutual funds with as little as $500 to $1,000 investment. They can provide instant diversity and professional management of your money. Mutual funds have been an effective way to save for retirement or other long-term financial goals.
The best Vanguard funds you can invest $1,000 – $3,000 in include mutual funds (and index funds!), so it’s worth checking out Vanguard investment options to get good ROI.
12. Index Funds
An index fund is like mutual funds, but a single individual or firm does not control them. The index fund tracks certain stock market indexes, such as the S&P 500.
These funds offer instant diversity, and they’re a great way to invest in the stock market if you don’t want to spend a lot of time managing your money.
If you’re looking for a safe and relatively easy way to invest your $10,000, index funds are a good option that offers instant diversity and professional management of your money.
Plus, you can invest in them with as little as $1,000. And in the long run, index funds have been an effective way to save for retirement or other long-term financial goals.
13. Local Businesses
Investing in local businesses is a great way to keep your money in the community- and it can also yield outstanding returns.
Researching local businesses before you invest offers insight into how well they’re doing financially. If you know, there’s strong revenue growth, that’s a good indicator that the business might be successful over the long haul.
Online companies like Mainvest specialize in crowdsourcing private company investments and may have the perfect business for you to invest in your area for as little as $100 or $1,000.
Often, these companies will look for ongoing funding opportunities to keep them afloat. If you get in early, you can get an excellent return on your investment.
14. Real Estate Investment Trusts (REITs)
Real estate investing is more than just buying and flipping houses! You can buy shares of property ownership and get money without being a landlord.
Real estate investment trusts (REITs), like Fundrise, own all or part of income-producing properties like apartment buildings and shopping centers.
They often distribute at least 90% of their taxable income to investors. Like any public company, REITs issue shares and can be purchased through brokers or directly from the REIT itself.
A top diversification strategy is to mix stocks and bonds with real estate investment trusts (REITs). The reason: Income-producing real estate generally rises when other investments, such as stocks and bonds, fall in value.
If you’re looking for a way to diversify your investments with something that offers some decent growth potential with little risk, real estate could be a good option.
15. Private Real Estate
Many investors go to private online real estate companies and invest directly in income-producing properties. These properties can range from single-family rental homes to apartment buildings and shopping centers.
Real estate in the private sector offers some of the same benefits as investing in REITs — namely, diversification and income — but with potentially higher returns and more growth potential than you get with REITs.
16. Exchange-Traded Funds (ETFs)
One of the easiest ways to invest $10,000 in the stock market is exchange-traded funds (ETFs) and are an excellent way to grow your money over time because they’re typically low-cost and secure.
ETFs can be traded continuously throughout the day like stocks, making them appealing for many investors. Investing in ETFs is easy to do depending on which service or brokerage account you use.
Another way to invest in ETFs is with Acorns. Acorns is a micro-investing app that’s free to download and lets you put your spare change from everyday purchases into an investment account.
While ETFs can be a brilliant addition to an investment portfolio for beginners, you shouldn’t put all your eggs in one basket. Instead, it would help if you used ETFs to diversify your portfolio and reduce risk.
17. College Savings
Savings accounts for college might not be as exciting as real estate or private equity, but they can still provide a solid return over time.
A 529 plan is a tax-advantaged investment account that you can use to save money specifically for education expenses like tuition and housing.
If you contribute to a 529, your earnings grow tax-deferred in most states. And withdrawals taken for qualified education expenses are free from federal income tax.
18. Start Your Own Business
Why not start a side hustle business if you have an entrepreneurial streak? About anyone can start a business- and as long as you’re willing to hustle, chances are it can be successful.
The internet has made it easier than ever to make money by creating your own business or selling other people’s products. And while starting a business is risky, there are plenty of successful entrepreneurs who will tell you that it’s definitely worth the risk.
Be sure to do your research and pick a business that you’re passionate about. You’ll also want to make a budget and develop a business plan to help guide you as you launch your business.
Some good business ideas to consider include:
- Blogging – Do you enjoy writing about a particular topic? If so, maybe blogging is the way to go. You can find an audience for just about any subject, and if done well, blogging can be very profitable as well. You can start a website with BlueHost for only $2.95 a month!
- Proofreading – Do you enjoy reading and editing? Proofreading is an excellent option for those who like to be meticulous and like the idea of working from home. We recommend the FREE 76-minute workshop from Proofread Anywhere to learn about starting a proofreading business.
- Bookkeeping – Are you good with numbers? Maybe a bookkeeping business is the right fit for you. You’ll need to learn how to do this from someone who already knows, but if you’re willing to invest some time, this could turn out well. Not sure how to get your bookkeeping business off the ground? Bookkeeper Launch has a FREE workshop to get you started!
- Freelance writing – If you’re good at writing, try freelancing. There are plenty of websites to find work that allows people to post freelancers’ jobs. Jasper and SurferSEO can help you write quickly and get it ranked well with Google.
19. Invest In You
If there was ever a time to invest in yourself, it’s when you’re young and not weighed down by financial commitments or responsibilities. If you’ve got $10,000 burning a hole in your pocket, there are tons of ways to spend it that will pay off in the long term.
Go Back To School. One of the most worthwhile ventures you can invest in is a certificate or degree from a top-notch school. Getting a degree will not only qualify you for higher-paying jobs but will also open up professional opportunities and enhance your networking skills. One of the best ways to go back to school is online courses.
Professional Development. Education is an excellent investment, but so is self-improvement as a profressional. Invest in books that will expand your knowledge and skills and conferences and seminars to help you become a better professional.
Personal Development. No matter what line of work you’re in, it helps to invest time into developing yourself personally and professionally. From improving your communication skills to becoming more effective in meetings, developing yourself can help you stand out at work and achieve greater success.
20. Farmland Investments
Investing in others is a great way to boost your karma. Just make sure that if you choose this route, you’re investing in people or organizations worthy of your money.
You might not think investing in farmland is a possibility. Still, it is an excellent option for many people, especially those who want to start investing but don’t have much money.
One way to invest without actually owning the land is by purchasing “shares” of farmland or investing in an agricultural real estate investment trust. You typically need a larger investment, but it’s worth a shot since the returns can be worth your while.
FarmTogether is a fantastic platform to start investing in farmland and diversify your portfolio, plus they have low fees and low investment minimums.
21. Peer-To-Peer Landing
If you’re looking for a higher rate of return than that offered by traditional investments, peer-to-peer lending might be the way to go.
With this option, you can loan money directly to individual borrowers and earn interest on your investment – usually at rates much higher than what you’ll find in a traditional savings account.
With peer-to-peer lending, you can invest in a diversified portfolio of loans issued by your choice of several different companies. The best known peer-to-peer lender is Lending Club, but there are several others in the industry.
Although it is one of the riskier investments, it attracts competitive interest rates and is a great way to diversify your investments.
Tips For Your Plans
For all of these options, make sure to diversify your portfolio options and minimize risk. No matter which course you choose, make sure you create a detailed plan and monitor your progress along the way. If you are unsure about creating a financial plan and investment strategies, contact a certified financial planner for help.
What Are Your Goals & Risk Tolerance?
Before you use any of these plans, take a moment to ask yourself what your financial goals are, as well as your risk tolerance level. Your goals will help you determine which plan is right for you.
Research before choosing a new investment opportunity to determine how likely you will see returns on your investment. Also, research to find out what kind of return you can expect.
Some investments are riskier than others – so once you know all of the facts about an opportunity, make sure it is something you are comfortable with before investing.
Your investments can be diversified across multiple companies to protect against anyone business failing- but brace yourself for the possibility that some of your investments could lose money. If you are not comfortable with the idea of losing some (or all) of your investment, then investing or even starting a business might not be suitable for you.
Budget & Track Investments
If your goal is to build wealth for the future, whether for retirement, a down payment, or another long-term investment opportunity, saving money will play a huge role. The sooner you start saving, the better off you’ll be in the long run.
If you have your eye on something big down the road, cut back on daily expenses and stash away as much money as possible right now. A personal finance management tool such as Personal Capital or Mint will help you automate your savings and investments by linking your financial institution information.
Personal Capital and Mint can help you create a budget, check your account balance, track your investments, and plan for the future.
Paying Off Debts
Make it a priority to eliminate any debts that are weighing you down. It’s a good idea for you, no matter what, as it frees up more capital for yourself and even more money to put into the investment universe.
Whether it’s a credit card balance or a car payment, focus on paying off these debts as quickly as possible because carrying a balance can cost you tons of money in interest payments. Once your high-interest loans are under control, you will be able to put your money to work for you in more lucrative ways.
Do you like to set your hours? Do people say that you are well-organized, responsible, and dependable? If so, starting a small business might be a suitable investment for you.
There are many unique business ideas to give a try, even as a small side hustle!
You could sell your handmade items, start a house cleaning service, or do anything else you’re great at. Keep track of your business expenses and use the profits to reinvest in your company and expand your customer base.
Everyone has unique personal finance and investment goals, time horizons, and risk tolerance. Understanding your situation is the key to finding the best plan to help you invest $10,000 and reach your goals.
By starting to save immediately, paying off debt, building up an emergency fund, and investing in opportunities that align with your risk level- you can keep growing your wealth and watch it grow exponentially.