Finance

How to Invest 10k USD Wisely in 2020 – Best Ways to Invest Money

Do you have $10,000 cash at your disposal? Are you looking for ways to invest $10,000 so that you can watch it grow and reap the rewards from it? Would you splurge for a trip to some far-flung corner of the world? Upgrade from your current car? Buy new furniture and a Jacuzzi for your backyard deck?

Those ideas might be the first that come to mind, but they may not be ones you will feel proud of ten or twenty years from now. Unless you have high interest debt you could pay off, your best bet with any “found money” is always going to be investing it for the long haul.

Why? Because when you invest cash instead of spending on depreciating assets, you set yourself up to have more financial freedom and better outcomes later on.

Smart Ways to Invest 10K

How should you invest $10,000? While there are plenty of smart ways to invest your money, the right option for you depends on your appetite for risk, your investing strategy, and your long-term goals. Your best available option should also take your unique needs into account. It should also account for the upcoming stages of your business and personal development. 

If you have $10,000 to invest, here are some ways for you to make a good amount of money down the line with that cash:

Investing in Blogs

A recent, growing trend in the field of investment is investing in blogs. The growing popularities of blogging sites have made more and more investors look towards web properties to put their money in. With the world turning more and more towards digital content, blogging sites hold a lot of money making potential. The only way is up and blogging sites can make investors some real money . ( Between 500-1000 USD per month on 10,000 USD investment )

Popular opinion classifies income from blogs as a type of passive income.  However, that’s not necessarily the case, especially at the beginning. However, if you invest in a blog that already earns consistently, you can just outsource the maintenance and upkeep and just enjoy the consistent influx of income. 

A blog/website can be treated as an online version of real estate. But unlike real estate, you don’t need a large amount of money to invest. A blog can start giving great returns on a small scale investment as well, and it’s the right medium to invest in, especially considering the times we live in.

Online Real Estate Investing

Real estate investment has really picked up after the housing crash of last decade. It seems to be quite popular. However, being a landlord isn’t for everyone. Dealing with tenants and maintaining an entire home to rent it out to someone else is something most people will run away from. Add late night calls and expensive repairs to that and real estate investment starts looking extremely undesirable.

Investing using online investing platforms lets you put some money in private real estate assets without dealing with the hassles that accompany ownership of traditional real estate. 

You can invest with as little as $500 on such platforms. This is an ideal amount for someone who has $10,000 to invest.  After opening your account with such firms, you can easily invest in major metro markets like Los Angeles, Washington D.C., and Jacksonville, Florida. Not only do such platforms have plans to support supplemental income, they also come with plans with long-term growth and balanced investing. 

Real estate crowdfunding is a great tool for people who want to invest in real estate but don’t want to raise hundreds of thousands of dollars or be physically present in the property. These reasons and others are why online firms are so popular, and why they could continue growing in the future.

Health Savings Account (HSA)

Another wise and pragmatic way to invest your $10,000 is a Health Savings Account (HSA). This type of account is available to individuals and families with high deductible health plans, offering a wide range of tax benefits for today and the future.

For starters, the money you contribute to a Health Savings Account (HSA) is deductible on your federal taxes. Upon that, your investment will grow tax-free in your account till you want to withdraw it for covering a qualified healthcare expense. As of 2019, families can contribute to a limit of $7,000. High deductible plan individuals can contribute up to $3,500. Citizens above 50 years of age can save an extra $1,000 every year. 

Once you turn 65, you can withdraw all the money you have saved in the HSA without any additional penalty. This enables you to utilize those funds for retirement or anything else that you want to do at that age. You can still save it for future healthcare expenses. 

Essentially, all the money you save in an HSA comes with a triple tax advantage. The contributions are deducted from your taxes, the money grows tax free and can be withdrawn tax-free once you turn 65 years old.  Win, win, win.

Peer-To-Peer Lending

Peer-to-peer lenders are another type of smart platforms to consider when you are looking to invest $10,000. Peer-to-peer lending platforms let you – the investor – earn interest on loans instead of traditional banks.

As an investor in  peer-to-peer lending platforms, you can spread your investment over numerous loans in increments starting from as low as $25. The best peer-to-peer platforms have historically offered a return of  4-6% per year after accounting for defaults. If you have a higher risk appetite, you can get an even higher rate of returns with riskier loans. 

The most prominent peer-to-peer lending platforms only require around $1,000 for you to get started as an investor. Your investments can be automated on a pre-selected strategy. You can also exercise manual control and choose the loans as per your criteria.  

Investing in peer-to-peer platforms is easy, and you can even use the platform for a traditional or Roth IRA or a 401(k) rollover.

Roth IRA

If you qualify for a Roth IRA and haven’t opened it already, you should get one quickly.  Roth IRAs offer a great tax advantage later on, and you can contribute up to $6,000 per year (or $7,000 per year if you’re ages 50 and older).

With a Roth IRA, you invest post-tax dollars today and let that money grow tax-free until you’re ready for retirement. The best part is, since you already paid income taxes on your contributions, the money you withdraw in retirement will be completely tax-free.

Anthony Montenegro, financial advisor and founder of The Blackmont Group, says he believes the Roth IRA is one of the most efficient ways to save for the future regardless of your age. You can contribute to a Roth IRA even if you have a 401(k) or comparable retirement account at work. And, depending on where you open your Roth IRA, you will likely have access to a diverse universe of holdings from traditional stocks, bonds, and mutual funds to alternative investments, ETFs, and derivatives like option strategies as well, he says.

Roth IRAs come with income limits, so ensure that you have the ability to contribute before openinh the account.  As of 2019, phase-outs start at $193,000 for couples and $122,000 for singles. Couples and singles who earn over $203,000 and $137,000 respectively can’t invest directly into a Roth IRA.

Coaching or Mentorship

Investing money in some sort of mentorship or coaching program seems quite firmly entrenched in left field compared to the other ‘traditional’ options discussed so far, it is a type of investment that can certainly prove to be worth the price in the long run. The money spent for the right financial guidance improves your accountability levels and can eventually pay off very well. 

Conclusion:

So if you have $10,000 to invest right now, put all the aforementioned tips to good use and watch your money grow. Remember, if you invest $10,000 today, with an interest rate of 6 percent per annum, you can get $32,071 in 20 years. If you wait for thirty years, you can get $57,434. 

You could have even more money if you managed a higher rate of return, but it’s not petty cash either way. Learn to let your money work for you, once you master that, the world is yours.

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