If you are looking for the best ways to invest 20k wisely, you have come to the right place to learn where to start.
I’ll show you how to invest this money based on your current attitude toward investing, whether your primary goal is to make sure your money is safe and sound or to make as much money as possible from your money.
Peek: Top 3 Ways to Invest $20,000
- Effortless real estate investing
- Ally Invest: $0 for stocks and ETF trades
Investing $20,000 is serious business, but don’t worry, no matter how big the investment is, even if it’s a million dollars, I have great ideas and ways to try to maximize your investment to its full potential.
Best ways to invest $20,000 in 2022
These are the best ways to invest $20,000 wisely in 2022.
1. 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 along, your money will be safe.
Most people use this method when they invest $10,000 in an emergency fund or if they need immediate or short-term access to the funds.
Why are they called “high return” when you earn a low rate of return? Well, they earn more interest than most savings accounts in the market.
If you feel this is the right kind of account for 20K, check out some of my favorite high-yield savings accounts.
These types of accounts are great for saving emergency fund money — or any money you don’t want to go away overnight. These accounts are also great to use after losing a loved one when you are emotional and more prone to making poor investment decisions.
Fundrise It is one of the best investment sites out there. Fundrise specializes in a special area: real estate crowdfunding. If you’re looking for a way to invest in real estate without having to go through 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 that you can get started with as little as $500. Fundrise uses all small contributions to invest in larger loans.
Fundrise is essentially a REIT, a company that owns income-producing real estate. According to Fundrise’s customer returns page, they generated a return of 22.99% in 2021, for all investors as a whole.
When you look at the fees, Fundrise has an annual fee of 1.0%. This includes all advisor fees and asset management.
While 1.0% may seem like a lot compared to some other investment options, Fundrise has lower fees than other REITs.
Various real estate
There are many benefits to choosing Fundrise. If their returns stay on track, you’ll get significantly better returns than you would with a traditional REIT or with other P2P sites. On the other hand, these investments will be more risky 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 real estate investing experience, Fundrise makes it super easy. In fact, they now have Fundrise 2.0, which will take care of all the investment for you. Fundrise 2.0 will identify eFunds and eREITS and diversify your investments based on your goals.
3. Invest in yourself
There are a number of ways you can invest yourself in a long-term portfolio. I would just encourage you to do it, if you know what you’re doing. Even when you invest using automated and passive techniques, you may find yourself lacking the degree of financial planning necessary to reach your goals. You have been warned.
One way to invest on your own is to use Betterment.
to improve A great way to invest online in a mixture of stocks and bonds based on the degree of risk you can take. If you’re the type who doesn’t mind taking risks, you’ll find that Betterment will recommend more stocks than bonds – and rightly so.
will pay low Property under the supervision of the management expenses; However, Betterment automates investing and will rebalance your portfolio based on programmed protocols based on expert advice.
If you want your $20,000 to be invested automatically without much input from you, it is worth it.
Minimum Account / Setup Fee
investment ally It is another great option if you want to adjust your investments. It will only take 10 minutes of your time and you will be able to decide which exact investments you want to add to your portfolio – and in what proportions. Ally Invest offers some very cheap deals but you will need to do your own investment research to discover the best strategy for you. Read our in-depth review on Ally.
If you are interested in reading more about different brokerage platforms, consider our individual reviews of the following platforms:
4. Go with a CD (Certificate of Deposit)
There is no safer investment that you can make than having a Certificate of Deposit. With a CD, you can set aside your money for a specific period, such as a year, two years, or even five years. Your money earns interest during that time, so it’s better than putting it in a traditional savings account.
catch? If you withdraw your money before its due date, you will be penalized. If you have patience and time to spare, a CD might be worth your time, especially considering that interest rates on CDs are on the rise.
While higher yield savings accounts are also a viable option for the risk-averse investor, the guarantee is a bit lower as you can access (and spend) $20,000 plus interest at any time.
5. Money market accounts
These accounts are insanely boring, my friend. yawn.
But the good news is that money market accounts are stable and sometimes offer the same protection as their savings account counterparts. Check with your local bank or credit union to see if they offer a money market account.
What about interest? You will likely earn less than or equal to the amount you would earn with high-yield savings accounts. However, if this type of account is available to you and you need quick access to funds in case of emergency, this is a good option.
6. Peer-to-peer lending
Peer-to-peer lending is a great way to invest money by lending it to others. There is certainly a risk, but my experience with peer-to-peer lending is that it can provide an excellent rate of return.
Lending Club It is the largest peer-to-peer lender at the moment and you can start investing in one loan for $25 for each loan you invest. This means that you can invest $100 and diversify into four different loans.
If you want to learn more about peer-to-peer lending, I recommend you check out my Lending Club review to get a feel for how the biggest P2P lenders work.
7. Invest with a financial advisor
If investing $20,000 in a portfolio on your own doesn’t seem like a walk in the park, consider working with a financial advisor. A financial advisor can help you develop a comprehensive strategy to reach your goals. but please, please! I beg you! Don’t just hire anyone!
Some financial advisors are practically stealing from you. In fact, if you haven’t yet, read my story about the woman who was tricked into paying over $3,500 in variable annual fees and didn’t know it.
Hire someone you trust And the Do your homework too. You must understand the proposed investments before you drop the $20,000. Invest your money wisely by making sure your financial advisor knows what they’re talking about, and before you know it, you’ll be asking them, “What’s the best way to invest $500,000!”
8. Pay off debts
“I owe consumer debt up to my eyeballs and I’m not sure I should invest.”
Your intuition is good you shouldn’t invest yet, my friend.
How much consumer debt do you have? If it’s less than $20,000, consider using your pile of cash to pay off debt. If its value exceeds $20,000, you may want to consider using it all. Just make sure you have some kind of emergency fund before you do that.
Debt is like anti-investment. Unfortunately, it’s a little worse than that – debt always comes with a guaranteed clause of the interest you owe to the lender. As you can see, the value of your investments can go up or down. With debt, you will always pay more than you borrowed.
Not only that, but if you carry high consumer debt, you will likely lose interest much faster than you can gain. Let’s say you have $1,000 of credit card debt that burns you out at 25% interest. This means that you will pay $250 in interest payments each year. The average good investment is 8%. This means that you will have to invest $3,125 to get rid of the interest on your debt. So, if you were to take the $1000 and pay off the debt, you could take the other $2,125 and start making money, rather than stepping on the water financially.
9. Starting an Online Business
“I’m an entrepreneur and creative. Seriously, I am. What should I do?”
You are my personality type. Here are some of the ways you can invest your money and enjoy it…
Now, you may not be able to buy a building and start a restaurant with $20,000. But did you know? This kind of money will take you very far if you are going to start an online business.
In fact, I started an online business and boy did it pay dividends. I highly recommend learning how to start a blog and put your money to good use.
You can use the money to get a professional web designer working on your website or pay some writers to create some informative pages for quick and easy reference for your readers. Really, the sky is the limit.
10. Be a Freelancer
You might even consider becoming a freelancer and buying some quality equipment for your business. Maybe you love photography – invest in a great camera! Maybe you enjoy fishing – buy some extra rods and fishing gear and be a guide to the river! $20,000 will take you a long way to start your own freelance business.
11. Educate yourself in a new profession
This $20,000 can be used to invest in your education. Education, my friend, can turn into a profitable profession.
You may not have considered investing in your education, but that doesn’t mean it’s a bad choice. In fact, when you think about the return on your investment, you may make more profits than if you invested money in the stock market.
Investing in yourself is rarely a bad idea. The only time it could turn out to be a waste of money is when you don’t use the education you receive to pursue a new career and actually get the job. This is a risk, though, that is usually worth the risk.
12. Pause and wait
“I’m not sure what to do – even after reading this article.”
do not eat. It might be time to flex your brain muscles and discover new opportunities. If you don’t know how to do it, this article should give you some ideas.
If you are not sure how to spend your money, please do not do so until you are completely sure. As I mentioned, you can put your money into a high-yield savings account while you explore your options. It’s better to do nothing but make a huge mistake.
I start here
If the thought of investing your money totally terrifies you, don’t invest yet. Read all about The Money Uprising Movement™ and get a game plan for how you handle money. Over time, as you practice these rules, you will gain the confidence you need to move forward.
i believe in you. That’s why I put this information out there – I think you have what it takes to learn how to invest with confidence and manage your money better than ever before. You can do that, and I’m here for you.