So, you want to invest $20,000. That’s a chunk of change!
If you want to invest your money wisely, whether that be an investment of 20k, like we are talking about here, or trying to figure out how to invest 100,000 dollars, you’ve come to the right place to learn where to start.
Which of the following statements best reflects your situation?
- I would love to try out some alternative investments
- I want a guaranteed return, no matter what
- I don’t anticipate needing the money anytime soon
- What if I need the money now?
- I’m in consumer debt up to my eyeballs
- I’m creative. What should I do?
- I’m not sure what I should do – even after reading this article.
I’m going to show you how to invest that money based on your current attitude toward investing.
So, whether your primary goal is to make sure your money is safe and sound or it’s to earn as much money on your money as possible, read on, soldier.
Investing $20,000 is serious business, but no fears, no matter what the size of the investment, even investing a million dollars, I have great ideas and methods for you to try to maximize your investment to its fullest potential.
Which of the following statements best reflects your situation?
“I’m adventurous and would love to try out some alternative investments.”
There’s a little secret many financial advisers won’t tell you. But you know what? I will. Here’s the secret: You don’t necessarily have to invest using traditional investments like stocks and bonds and mutual funds. There are other ways to invest your money.
If you’re the adventurous type and would like to invest your $20,000 in some alternatives, here are a few options . . . .
Peer-to-peer lending is a great way to invest money by loaning it to others. There’s certainly risk involved, but my experience with peer-to-peer lending is that it can provide a pretty stellar rate of return.
Fundrise is one of the best sites out there. Unlike some of the other P2P sites, Fundrise specializes in a special niche: real estate crowdfunding. If you’re looking for a way to invest in properties without having to do the day-to-day duties of a landlord, Fundrise can be an excellent way to get your foot in the door.
One of the advantages of investing with Fundrise is you can start with as little as $500. Fundrise uses all of the smaller contributions to invest in larger loans. Fundrise is basically a REIT, which is a company who owns income-producing real estate. According to Fundrise’s website performance page, they had a return of 8.76% back in 2016.
When you’re looking at fees, Fundrise has a 1.0% annual fee. This includes all of the advisor fees and asset management. While 1.0% might sound like a lot compared to some other investment routes, Fundrise has lower fees than other REITs.
There are several benefits of choosing Fundrise. If their returns stay on course, you’ll get drastically better returns than you would with a traditional REIT or with other P2P sites. On the other hand, these investments are going to be a little riskier than other options.
Getting started and investing with Fundrise is easy. You can create an account and start investing in no time. Even if you don’t have any experience with investing in real estate, Fundrise makes it incredibly easy. In fact, they now have Fundrise 2.0, which will handle all of the investing for you. Fundrise 2.0 will select the eFunds and eREITS and diversify your investments based on your goals.
Lending Club is the largest peer to peer lender and you can get started by investing in one loan for as little as $25 per loan you invest in. That means you could invest 100 dollars and diversify into four different loans.
If you’d like to learn about peer-to-peer lending, I recommend that you check out my Lending Club review to get a feel for how the two largest P2P lender works.
If I were starting out with a $20k investment, I would be sure to invest $5,000 of that into a Lending Club Account.
“I want a guaranteed return, no matter what”
Maybe you aren’t the adventurous investor I mentioned above. If you are averse to risk when it comes to your finances, or even if you’d just like to take some time to consider what your best options are, I have the perfect solution for you.
Go with a CD
There is no safer investment you can make than getting a certificate of deposit. With a CD, you put your money away for a set term, like a year, two, or even five. Your money accrues interest during that term, so it’s better than placing it in a traditional savings account.
The catch? If you take out your money before its maturity date, you’ll be penalized. If you have patience and time to spare, though, a CD could be worth your while, especially considering that interest rates on CDs are climbing.
While high-yield savings accounts are also a viable option for the risk-averse investor, the guarantee is slightly lower since you can access (and spend) your $20,000 plus interest at any time.
“I don’t anticipate needing the money anytime soon and I don’t mind risk.”
Sweet. You’re in a good position to make some serious money.
I would recommend you do some traditional investing either yourself or with the help of a professional. Let’s take a look at both options . . . .
Invest For Yourself
There are a number of ways you can invest yourself into a long-term portfolio. I’d only encourage you to do so, however, if you know what you’re doing. Even when you’re investing using automated, passive techniques, you might find yourself lacking the degree of financial planning necessary to reach your goals. You’ve been warned.
Okay, so you still want to invest yourself. One way to do so is to use Betterment, you can learn more about them by reading our Betterment.com review. Betterment is a pretty nifty way to invest online in a mixture of stocks and bonds based on the degree of risk you can stomach. If you’re the kind of person who doesn’t mind risk, you’ll find that Betterment will recommend more stocks than bonds – and rightly so. Betterment automates investing and will re-balance your portfolio based on programmed protocols constructed on expert advice.
With Betterment, you will pay a low assets under management fee. If you want your $20,000 to be automatically invested without much input from you, it’s worth it.
If you want to fine-tune your investing, don’t go with Betterment. Instead, open up an Ally Invest account. It’ll only take 10 minutes of your time and you’ll be able to select the exact investments you want to add to your portfolio – and in what proportions. Ally Invest offers some pretty cheap trades but you’ll need to do your own investment research to discover the best strategy for you.Other Discount Brokerage Account Reviews:
Invest With a Financial Advisor
If investing $20,000 in a portfolio on your own doesn’t sound like a walk in the park, consider working with a financial advisor. A financial advisor can help you come up with a comprehensive strategy to reach your goals. But please, please! I beg you! Don’t just hire anyone!
Some financial advisors are out to practically rob you. In fact, if you haven’t read my story of the woman who was duped into paying over $3,500 in variable annuity fees and didn’t know it.
Hire someone you trust and do your own homework too. You should understand the investments being proposed before you plop down your $20,000. Invest your money wisely by making sure your financial advisor knows what they are talking about, and before you know it, you will be asking them, “What is the best way to invest $500000!”
“If an emergency happened, I’d need the money now!”
On a risk scale of 0 to 10, with 0 being a little risk and 10 being a lot of risk, you’re probably going to land at -15. No worries. We can work with that.
You have $20,000 to invest but you don’t want to lose your money. Here are some options I’d recommend . . . .
High-Yield Savings Accounts
Ah, the beauty of simplicity. High-yield savings accounts allow you to earn a low rate of return (when compared to stocks and bond investing, for example) while ensuring that unless armageddon comes, your money will be safe. Most people use this when they are investing 10,000 dollars into their emergency fund or if they need to have immediate or short term access to the funds.
Why are they called “high-yield” when you earn a low rate of return? Well, they earn more interest than most savings accounts on the market.
These types of accounts are great for saving emergency fund money – or any money you don’t want to disappear overnight. These accounts are also great to use after the loss of a loved one when you’re emotional and are more prone to make poor investing decisions.
If you feel this is the right type of account for your 20 grand, check out some of my favorite high-yield savings accounts.
Money Market Accounts
These accounts are crazy boring, my friend. Yawn.
But the good news is that money market accounts are stable and sometimes offer the same protections as their savings account counterparts. Check with your local bank or credit union to see if they offer a money market account.
How about the interest? You’ll probably earn less than or equal to the amount you would with high-yield savings accounts. Still, if this kind of account is available to you and you need quick access to the money in case of an emergency, this is a good option.
“I’m in consumer debt up to my eyeballs and I’m not sure I should invest.”
Your hunch is a good one. You shouldn’t be investing yet, my friend.
How much consumer debt do you have? If it’s under $20,000, consider using your stack of cash to pay off the debt. If it’s over $20,000, you just might want to consider using it all. Just make sure you have somewhat of an emergency fund before you do.
Debt is like the anti-investment. And unfortunately, it’s quite a bit worse than that – debt almost always comes with a guaranteed condition of interest that you would owe to the lender. You see, your investments could go up or down in value. With debt, you’re always going to pay more than what you borrowed.
Not only that, but if you are carrying high consumer debt, it is probably losing you interest much faster than you can gain it. Let’s say you had $1,000 of credit card debt burning your for 25% interest. That means every year you would pay $250 in interest payments. A good average for investments is 8%. That means you would have to invest $3,125 to just break even with the interest on your debt. So if you were to invest $1000 into paying off debt you can take the other $2,125 and start making money, instead of treading water financially.
Want to further your cause to pay off debt? Try these online tools.
“I’m entrepreneurial and creative. Seriously, I am. What should I do?”
You’re my kind of person. Here are some ways you can invest your money and have fun doing so . . . .
Start an Online Business
Now, you may not be able to buy a building and start a restaurant with $20,000. But you know what? That kind of money would take you pretty far if you were to start an online business.
You can use the money to have a professional web designer work on your website or you could pay a few writers to craft some informative pages for quick and easy reference for your readers. Really, the sky is the limit.
Become a Freelancer
You might even consider becoming a freelancer and buying some quality equipment for your business. Perhaps you love photography – invest in a great camera! Maybe you enjoy fishing – buy some extra rods, fishing gear, and become a river guide! $20,000 will take you quite far into starting your own freelance business.
Educate Yourself into a New Career
That $20,000 can be used to invest into your education. Education, my friend, can turn into a lucrative career.
You may not have thought about the possibility of investing into your education, but that doesn’t mean it’s a bad choice. In fact, when you consider the return on your investment, you might make many times more than if you were to put the money into the stock market.
Investing in yourself is rarely a bad idea. The only time it might turn into financial waste is when you don’t use the education you receive to pursue a new career and actually land the job. That’s a risk, though, that’s usually worth taking.
“I’m not sure what I should do – even after reading this article.”
Don’t fret. It might just be time to flex your brain muscles and discover new opportunities. If you’re clueless on how to do that, here are some ideas . . . .
Pause and Wait
If you’re not sure how you should spend your money, please don’t until you’re absolutely sure. Like I mentioned, you can park your money in a high-yield savings account while you figure out your options. It’s better to do nothing than to make a grave mistake.
If the thought of investing your money absolutely terrifies you, don’t invest yet. Read all about The Money Uprising Movement™ and get a game plan for how you deal with money. Over time, as you practice these rules, you’ll gain the confidence you need to move forward.
I believe in you. That’s why I put this information out there – I believe you have what it takes to learn how to invest with confidence and manage your money better than ever. You can do it, and I’m here for you.