The 10 Best Ways To Invest $10K | FortuneBuilders (2024)

Key Takeaways

  • 10 Best ways to invest $10,000

  • Before you start investing your $10K

Did you recently get a windfall of $10,000? Perhaps you received an inheritance or won a prize. Regardless of how you came into this large sum of cash, what you do with it is what matters. You can certainly tuck it away in your savings account, but you’ll end up losing money over time due to inflation. Instead, you can invest your money and watch it grow.

Here, we’ll discuss how to invest 10k so that you can maximize your returns and help secure your financial future.

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The 10 Best Ways To Invest $10K | FortuneBuilders (1)

10 Best Ways To Invest $10,000

There are any number of ways to invest your hard-earned cash. We decided to focus on the following 10 methods:

  1. Mutual Funds & Exchange-Traded Funds (ETF)

  2. Real Estate Crowdfunding

  3. Real Estate Investment Trusts (REIT)

  4. Rehabbing & Home Improvements

  5. High-Yield Savings Account

  6. Start Or Add To An Emergency Fund

  7. Self-Directed Brokerage Account

  8. U.S. Treasuries

  9. Fund Your Retirement Account

  10. Use A Robo-Advisor

1. Mutual Funds & Exchange-Traded Funds (ETF)

Mutual funds and ETFs are some of the world’s most popular investments, and it’s easy to understand why. Choosing your own stocks and bonds can be a major challenge. Unless you’re prepared to keep a vigilant eye on the market, it’s almost impossible to know which stocks to invest in. With a mutual fund or ETF, the fund takes care of that for you. All you have to do is choose a fund that aligns with your goals.

It’s worth pointing out that there’s a big difference between mutual funds and ETFs. A mutual fund has managers who choose which stocks to invest in. These human managers use their knowledge and experience to build a portfolio that they believe will beat the broader market. Then again, there’s no guarantee that this will actually work. Over time, most mutual funds perform less well than the market as a whole.

Most mutual funds will require you to make a minimum investment, $1,000 at the very least. And minimums of $3,000 are not uncommon. This can make it hard to invest in multiple funds if you’re starting with $10,000. Not only that, but mutual funds charge higher investment fees in order to pay their managers. In addition, many mutual funds charge between 1% and 3% of your investment, either upfront or upon the sale of your investment.

ETFs, on the other hand, are almost always index-based. This means that they’re built to track a particular index, most often the S&P 500, which consists of the 500 largest publicly-traded companies in the United States. When you invest in the S&P 500, you’re basically investing in the entire U.S. economy.

Because an ETF invests in index stocks, your investment’s performance will track with the index. So if you’re investing in an S&P 500 ETF, your investment will increase or decrease at the same rate as the index itself. You’ll never beat the index, but you won’t fall short, either.

That said, not all ETFs invest in the S&P 500. You can invest in ETFs that track indexes for developing countries, the energy sector, the financial sector, and all kinds of sectors. In that case, you won’t be tracking with the S&P 500, you’ll be investing in that index.

ETFs also have no minimum investment and very low trading fees. As a result, you can easily diversify your $10,000 investment across several ETFs, which track several industries, regions, and sectors.

2. Real Estate Crowdfunding

Real estate investment represents an excellent opportunity for long-term growth. You can invest in single-family property developments, large apartment buildings, or even commercial and industrial real estate.

With crowdfunding, you don’t have to be a billionaire to invest in a major project. Via a peer-to-peer crowdfunding program, you can look at various properties and choose which one to invest in. These can be new properties or existing properties. Some projects may be purchasing properties for the rental income, while others will buy properties, renovate them, and sell them for a profit. There’s sometimes a combination of the two, where investors will renovate a property, rent it out for a time, and sell it for a higher price some time down the road.

That said, you also need to be aware of the risks. Real estate tends to increase in value over time, but an individual property can easily lose value. Moreover, you can’t take your money out once it’s been invested. You have to wait for the project to complete and the funds to pay out. In many cases, the timeline of the project is longer than 10 years. Most other investments can be sold whenever you want, so they can serve as emergency savings if you find yourself in financial distress.

A lot of crowdfunding platforms restrict their services to accredited investors. Accredited investors are people with high earnings or high net worth, so they can absorb potential losses. To become accredited, you need to earn $200,000 a year for two consecutive years, or $300,000 combined income if you’re married. Either that, or you can have a net worth of more than $1 million, not including your primary residence. These are the same people who are allowed to invest in privately-traded stocks and other high-risk investments.

Then again, there’s no legal requirement to limit real estate investment to accredited investors. Many crowdfunding platforms will let anybody invest, provided they can afford the minimum investment for the project. In some cases, this minimum can be as low as $500 – a small slice of your $10,000.

3. Real Estate Investment Trusts (REIT)

If you like the idea of investing in real estate but are leery of crowdfunding platforms, there’s another option. You can invest in a real estate investment trust (REIT). An REIT is similar to a mutual fund, but instead of investing in a swath of stocks, you’re investing in a selection of real estate properties, most often commercial spaces.

Investing in a REIT is also analogous to purchasing a stock. You buy a certain number of shares, which give you an interest in the REIT but not direct ownership of any of the properties.

The most important advantage of a REIT is the dividend income. By law, REITs are required to pay a minimum of 90% of their annual income in dividends. Across the industry, this works out to an average return of 11.8% per year. As with any investment, though, different REITs will have different performance, and there’s no such thing as a guaranteed return.

4. Rehabbing & Home Improvements

If you own your home, you can put your $10,000 into home improvement. This won’t directly improve your financial situation. But it can increase your home’s value – sometimes substantially. This won’t just get you a better price when you sell your house. By increasing your home’s value, you also increase the amount of money you could borrow on a home equity line of credit.

Of course, different improvements will net you a different return on investment (ROI). Here are the 10 home improvements that net the highest average ROI.

  • Minor bathroom remodel – 102% ROI

  • Landscaping – 100% ROI

  • Minor kitchen remodel – 98.5% ROI

  • Attic bedroom conversion – 93.5% ROI

  • Major bathroom remodel – 93.2% ROI

  • Major kitchen remodel – 91% ROI

  • Entry door replacement – 90.7% ROI

  • Deck, patio, or porch addition – 90.3%

  • Basem*nt remodel – 90.1%

  • Replace windows – 89.6%

5. High-Yield Savings Account

Strictly speaking, a high-yield savings account isn’t an “investment.” You’re only earning a small percentage compared to most other investments, but it’s better than leaving your money in a zero-interest checking account. It’s also a good way to store your money short-term, if you’re expecting a major expense like a wedding or cross-country move.

The nice thing about savings accounts is that they’re easy to open. You can even open an account online and start earning 2% per year per more. And unlike stocks and similar investments, your money is guaranteed. The FDIC insures U.S. savings accounts for up to $250,000 per year, so you don’t have to worry about your money disappearing or your savings losing value.

6. Start Or Add To An Emergency Fund

If you don’t already have an emergency fund, that’s really the first thing you should be doing with your $10,000. Most investment advisors recommend keeping at least three to six months’ worth of expenses in a savings account. If you unexpectedly lose income or incur added expenses, you won’t have to borrow money. Even if you don’t put the entire $10,000 into savings, it’s smart to stock some away for a rainy day.

If you want a little more growth potential, think about investing in a money market fund. They generally earn better than a savings account, but there’s also the potential for loss. You can also purchase a CD for a higher interest rate, but you’ll pay a penalty if you withdraw your money before the CD matures.

[ Thinking about investing in real estate? Register to attend a FREE online real estate class and learn how to get started investing in real estate. ]

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7. Self-Directed Brokerage Account

A self-directed brokerage account is an account with a major brokerage that allows you to direct your own investments. The most common investments are stocks and bonds. But a brokerage can also help you with option trades, mutual funds, ETFs, and REITs.

Brokerages will charge a commission for their services, which can vary depending on the brokerage. You’ll typically get more robust service with higher commissions, but that’s not always the case. It’s smart to shop around, and find a brokerage with reasonable fees and a good reputation.

A self-directed brokerage is designed for people who want to manage their own investments. You need to be comfortable choosing which stocks to invest in, and you need to be willing to accept any losses. Then again, if you get a kick out of choosing your investments, you’ll have plenty of opportunity.

8. U.S. Treasuries

U.S. Treasuries are literally U.S. government debt. These are some of the safest investments in the world, since they’re backed by the full faith and credit of the U.S. government. Unless the United States goes bankrupt, you’re going to earn your return. That said, you have to invest for a specific term. Until the term is over, you won’t be able to access your money.

There are four types of U.S. Treasury investment:

  • Treasury bills, or “T-Bills,” have the shortest term. They can last from one to 12 months, so you get your money quickly.

  • Treasury notes mature after two, three, five, seven, or 10 years, but they pay interest every six months.

  • Treasury bonds are the longest-term Treasury investments, and take 20 to 30 years to mature. They pay interest every six months, though, and the rates are higher than shorter-term investments.

  • Treasury inflation-protected securities (TIPS) mature after five, 10, or 30 years, and pay interest every six months. But the balance increases with the CPI, so you won’t lose value due to inflation.

9. Fund Your Retirement Account

A small percentage of people are lucky enough to be doing jobs they genuinely love. These people plan to work as long as possible because their job is also their passion. The rest of us would eventually like to retire, and investing in a retirement account is an investment in your future.

Most people use either a IRA or a 401(K) to make their retirement savings. Let’s take a quick look at both.

An IRA, or individual retirement account, is a fund you invest into from your own money. Most IRAs are tax-deferred, which means you don’t pay any tax on the money you deposit. Instead, you only pay taxes on money that’s withdrawn from the IRA. That said, you can’t withdraw money before age 59 ½ without paying a penalty. With a Roth IRA, you pay taxes upfront, but as long as the money is deposited for at least five years, you don’t pay any taxes on withdrawals. Keep in mind that for the current tax year, the annual IRA contribution limit is $6,000, or $7,000 for individuals aged 50 and up.

A 401K plan is a retirement plan where you deposit a certain percentage of every paycheck. These deposits are tax-free, and you only pay taxes when the money is actually withdrawn. As an added bonus, most employers will match up to a certain percentage of your deposit. Let’s say you deposit 5% of each paycheck, and your company matches up to 5%. With that 5% match, you’re not just saving for the future; you’re giving yourself a tax-free 5% raise!

10. Use A Robo-Advisor

A robotic advisor is a lot like a human financial advisor, except they’re an algorithm. Your costs are significantly lower because you’re not paying an actual human. Most human investment advisors charge between 1% and 2% of your balance as a management fee, while robotic advisors charge as little as 0.25%. There’s also no minimum investment in most cases, so your $10,000 will be plenty to get started.

Of course, no system is perfect, and you won’t get the same human interaction that you will with a traditional financial advisor. And some robo-advisors offer poor advice, so you’ll want to shop around to find the best robotic advisor.

Before You Start Investing Your $10K

Before you make an investment of any dollar amount, you want to understand your financial goals and priorities. Knowing why you’re investing in the first place will help you stay motivated so that you can eventually reach your goals.

To start, define your financial goals. This might include short-term and long-term goals such as saving up for a house, your child’s education, your retirement, or even buying your dream car! Any goal that you might have is valid. Create a plan for how you plan to reach those goals, and then select the best investment options that will help you reach those goals in the defined time frame for each.

If you have any high-interest debt, such as credit cards or high interest loans, you may want to prioritize paying these off before you begin investing. That’s because the interest on these debts is typically higher than the returns you’d be making off of your investments. Overall, you’d be netting a loss. Come up with a strategy for eliminating your high-interest debt before you start investing.

Summary

Determining how to invest 10k comes down to your goals and how much risk you are willing to take on. However, all of these methods are an effective way to manage your money. Provided you choose the right method for your current life situation, you can find a lot of success. So take a leap, invest your money, and put it to work for you.

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The information presented is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. Nothing provided shall constitute financial, tax, legal, or accounting advice or individually tailored investment advice. This information is for educational purposes only.

The 10 Best Ways To Invest $10K | FortuneBuilders (2024)

FAQs

What is the best investment for $10 000? ›

How to invest $10,000: 10 proven strategies
  • Open a high-yield savings account.
  • Build a CD ladder.
  • Get your 401(k) match.
  • Max out your IRA.
  • Invest through a self-directed brokerage account.
  • Invest in a REIT.
  • Contribute to your HSA.
  • Invest in yourself.
Apr 2, 2024

How to turn 10k into 100k fast? ›

With that out of the way, here are some of the best ways to turn 10k into 100k so you can start building wealth.
  1. Start A Blog.
  2. Invest In Real Estate.
  3. Start An Online Business.
  4. Start A Service-Based Business.
  5. Invest In Dividend Stocks and ETFs.
  6. Start An Etsy Store.
  7. Flip Stuff To Make Money.
  8. Buy & Flip A Blog.
May 1, 2024

How to double 10k quickly? ›

How To Double 10K Quickly
  1. Flip Stuff For Money. One of the more entreprenurial ways to flip 10k into 20k is to buy and resell stuff for profit. ...
  2. Invest In Real Estate. ...
  3. Start An Online Business. ...
  4. Start A Side Hustle. ...
  5. Invest In Stocks & ETFs. ...
  6. Fixed-Income Investing. ...
  7. Alternative Assets. ...
  8. Invest In Debt.
May 1, 2024

Where best to put $10,000? ›

For higher returns, an attractive investment for £10,000 could be shares or equity funds (which are made up of shares). You could invest in a tracker fund that mimics the performance of stocks listed on the FTSE 100, which is a low-cost way of investing in shares. Remember shares are higher risk than bonds.

How to turn 10K into 20K fast? ›

  1. Retail Arbitrage. Retail arbitrage offers an effective way to turn $10K into $20K. ...
  2. Invest in Stocks and Exchange-Traded Funds (ETFs) ...
  3. Start an Airbnb Side Hustle. ...
  4. Invest In real estate. ...
  5. Peer-to-peer lending (P2P) ...
  6. Cryptocurrency. ...
  7. Resell Products on Amazon FBA.

How much interest does $10 000 earn in a year? ›

How much interest can you earn on $10,000? In a savings account earning 0.01%, your balance after a year would be $10,001. Put that $10,000 in a high-yield savings account that earns 5% APY for the same amount of time, and you'll earn about $500.

How can I flip 10k fast? ›

Effective strategies include buying and scaling an established online business, investing in real estate through crowdfunding, flipping products or websites, and diversifying investments across stocks, mutual funds, and more speculative ventures like cryptocurrencies.

Can you turn 10k into a million? ›

How realistic is it to get to $1 million? Even with above-average gains of 15% per year, it would still take more than 30 years for a $10,000 investment to grow to $1 million.

How to invest $10k for passive income? ›

Whether you have $10,000, or much less, in the bank, here are 10 investment options to consider:
  1. Mutual funds.
  2. Exchange-traded funds.
  3. CDs.
  4. Real estate investment trusts.
  5. Money market accounts.
  6. Roth IRAs.
  7. High-yield savings accounts.
  8. Brokerage accounts.

How to flip 20k fast? ›

The Best Ways To Double $20,000
  1. Invest In Real Estate.
  2. Start An Online Business.
  3. Invest In Stocks & ETFs.
  4. Invest In Small Businesses.
  5. Start A Service-Based Business.
  6. Try Crypto Investing.
  7. Retail Arbitrage.
  8. Lend Out Your Money.
May 1, 2024

How can I double $5000 quickly? ›

5 ways that you can double your money
  1. Get a 401(k) match. Talk about the easiest money you've ever made! ...
  2. Invest in an S&P 500 index fund. An index fund based on the Standard & Poor's 500 index is one of the more attractive ways to double your money. ...
  3. Buy a home. ...
  4. Trade cryptocurrency. ...
  5. Trade options.
Nov 3, 2023

How to flip 1k to 10K? ›

How To Turn $1,000 Into $10,000
  1. Retail Arbitrage.
  2. Invest In Real Estate.
  3. Invest In Stocks & ETFs.
  4. Start A Side Hustle.
  5. Start An Online Business.
  6. Invest In Alternative Assets.
  7. Learn A New Skill.
  8. Try Peer-to-Peer Lending.
May 1, 2024

What is the safest investment with the highest return? ›

These seven low-risk but potentially high-return investment options can get the job done:
  • Money market funds.
  • Dividend stocks.
  • Bank certificates of deposit.
  • Annuities.
  • Bond funds.
  • High-yield savings accounts.
  • 60/40 mix of stocks and bonds.

How to turn 100k into 1 million? ›

If you keep saving, you can get there even faster. If you invest just $500 per month into the fund on top of the initial $100,000, you'll get there in less than 20 years on average. Adding $1,000 per month will get you to $1 million within 17 years. There are a lot of great S&P 500 index funds.

What is a good amount to keep in cash? ›

While you're working, we recommend you set aside at least $1,000 for emergencies to start and then build up to an amount that can cover three to six months of expenses. When you've retired, consider a cash reserve that might help cover one to two years of spending needs.

How to flip 10,000 dollars? ›

Here are some ways to flip $10,000 fast:
  1. Flip items (buy low, sell high)
  2. Start a blog.
  3. Start an online business.
  4. Write an email newsletter.
  5. Create online courses or teach online.
  6. Invest in real estate with EquityMultiple.

What is the fastest way to save $10 000? ›

6 steps to save $10,000 in a year
  • Evaluate income and expenses. To make room for saving, you'll need a meticulous budget that outlines all your sources of income and all your expenditures. ...
  • Make an actionable savings plan. ...
  • Cut unnecessary expenses. ...
  • Increase your income. ...
  • Avoid new debt. ...
  • Invest wisely.
Apr 2, 2024

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