How to Invest $10,000 – Upping the Ante on Your Investments
Joy Wallet is advertiser-supported: we may earn compensation from the products and offers mentioned in this article. However, any expressed opinions are our own and aren't influenced by compensation. To read our full disclosure, click here.
Investing is the best way to build wealth and achieve personal financial goals. But how you invest can make all the difference to the returns you generate. Whether you are a beginner or already own a portfolio, you need to be aware of the investment goals, the timeline for them, and your risk tolerance. This will help decide on an investment strategy that works for you.
If you have $10,000 available to you and do not have debts, there are different ways you can invest and grow the money. Let’s take a look at them.
Jump To
How to invest $10,000
Before you begin your investment journey, it is important to pay off debt. Only when you are debt-free, will you be in a position to invest your money and make the most of it. If you have debt, you will end up paying interest on it and save less. Make it a priority to pay off the debt at the earliest so that you can start working towards your investment goals.
Whether you are saving for a new home, retirement, or a new car, there are several ways to invest $10,000 for any investment strategy without having to pay high fees. If you take the low-risk options, you will have a low rate of return but if you are ready to carry a little more risk, you will be able to generate solid, significant returns. Our review has investment options for all types of investors.
Emergency fund
The first step you need to take is to put your money in an emergency savings fund. It is always essential to have an emergency fund aside and you must park at least some amount of cash in the savings account so that you are prepared whenever life throws a curveball at you. Invest three to six months' worth of expenses in the account. Even if you add the $10,000 to it, you will get a solid start on your investment journey. Building an emergency fund may not sound exciting to you but keeping cash on hand is a good investment. This means you will be able to avoid taking a loan in the form of credit card debt or borrowing from friends and family when you are in need.
Retirement account
A retirement account is ideal to achieve your long-term financial goals. You can start saving for retirement through the individual retirement account. The lump-sum money can be invested in a traditional IRA and you can enjoy tax benefits, barring any income restrictions and the funds are tax-deferred until withdrawn. If you choose Roth IRAs, you will not get any tax deduction but the funds will be tax-free if you withdraw them after a period of five years.
You must keep in mind that both the accounts are designed to be withdrawn after the age of 59.5 years. But you can make withdrawals from the Roth contributions earlier without any penalty. Check the annual contribution limits for IRAs before you invest. If your employer offers a match for 401(k) and makes a contribution to the account based on the amount you deposit from your paycheck, you must take advantage of this money. No matter the workplace retirement plan offered to you, it is best to take it.
Stock market
Enjoy diversification of your portfolio with an investment of $10,000 in the stock market. Pick growth stocks and invest across companies in different industries so that the market volatility does not affect your portfolio. Stocks mean ownership in the business and it is a great way of building wealth for long-term goals. You can own a well-balanced portfolio of individual stocks with the amount of money.
All you need to do is open a brokerage account and start investing. You can also invest in fractional shares and own a part of the stock if you do not want to put a lot of money in a particular stock. If you are looking for consistent returns, pick dividend-paying stocks for your portfolio. You can also consider robo-advisors like Betterment to help make the right investment decisions.
Index fund
An index fund is a great place to invest your $10,000. It is a stable place to start, especially if you are a beginner and want to make money without regular active management. Index funds are low-risk and low-cost. They invest in stocks or bonds and ensure consistent returns. They help capture the performance of the market or industry passively. If you want to invest for the long term and do not want to take an active approach to managing your money, index funds are worth considering.
Secure Retirement with Guaranteed Income for Life
With access to over 20 top-rated annuity companies, our advisors will help you find the best rates and terms on annuities that provide guaranteed income, security, and peace of mind.
High-yield savings account
If you want to be completely safe, consider investing the $10,000 in a high-yield savings account. They offer the best interest rates which are higher than those offered by the traditional savings bank account. Your money will remain safe since the deposit is covered by FDIC insurance for up to $250,000. Just like a regular savings account, you can enjoy quick and convenient access to money without any penalty. The accounts are also free to open and maintain.
Real estate
Real estate is the best investment to make money, there is no doubt about it. But you cannot own a property for $10,000 nor can you make a down payment of $10,000 on the purchase of a property. This means you need to consider an alternative to investing in real estate which is through real estate investment trusts (REITs). It offers more advantages than owning a property outright. You can choose to invest as much amount as you want and enjoy high liquidity while diversifying your portfolio. The REIT will pay consistent interest on your investment. There are several REITs you can choose from.
Real estate crowdfunding is another way to invest in the real estate industry. The minimum investment required is $500 and you will have a couple of properties in your portfolio. The investment is long-term with a holding period of five years and you will receive dividends. The crowdfunding platform will charge a management fee to cover the operating expenses and the balance will be distributed as a dividend.
Mutual funds
You can achieve long-term retirement goals with an investment in mutual funds. You can start with $10,000 and then grow your investment as it generates returns for you. Making monthly investments is a great way to achieve dollar cost averaging and you can buy mutual funds without any commissions. The fund is managed by a professional who will invest across different stocks and generate consistent returns for you. The majority of mutual funds will track indexes like the S&P 500, it is made by 500 of the top companies in the U.S. Several retirement accounts also invest in mutual funds.
Exchange-traded funds
An exchange-traded fund (ETF) is a safe way to invest in different stocks while enjoying diversification. An ETF is a mix of securities that are traded on the stock exchange and it could be a single commodity to a number of securities. The average return for an ETF is around 10% and it has low expense ratios, making it a great addition to your portfolio. You can invest in ETFs through brokerage accounts like Fidelity.
Related: Best ETFs
Cryptocurrency
If you are ready to take high risk, join in on the crypto wagon. It is a rage these days and almost everyone has heard about it. The digital currency, popular through Bitcoin, is highly volatile and the industry is still in its infancy. If you can hold the investment for the long term and understand the risks, it is a great way to invest your money. All you need to do is open an account with a crypto platform like Coinbase and fund the purchase. You can buy, sell, trade, or hold the asset based on your investment strategy. However, cryptocurrency is not for someone who may require money in the short term.
Bonds
If you have $10,000 and do not want to take a lot of risks, you can consider adding bonds to your investment account. One of the low-risk asset classes, bonds are issued by the Government and corporations. The Treasury bonds will pay you a fixed interest and the minimum investment required for it is $100. However, corporations do issue bonds that pay a higher interest rate but the risk also increases. Bonds are considered safer than the stock market or cryptocurrencies.
Secure Retirement with Guaranteed Income for Life
With access to over 20 top-rated annuity companies, our advisors will help you find the best rates and terms on annuities that provide guaranteed income, security, and peace of mind.
Considerations for new investors
Here are some things you need to keep in mind if you are a beginner in the investing world.
Risk appetite: Understand your tolerance for risk before you begin investing. Some investments like stocks and cryptocurrency are volatile and can make you uncomfortable when they decline. If you sell them out of panic, you could end up with heavy losses. Knowing your risk tolerance will help you pick the investments that are best suited for your investment goals.
Goals: Before making any investment, you need to have short-term, medium-term, and long-term goals. They will help you achieve what you want through saving and investment. Only when you are aware of your goals, you will be able to work around the investment options available.
Investment strategy: You need to decide if you will be an active investor or a passive investor. An active investor will choose the individual investment or mutual funds and a passive investor will pick an asset like mutual funds or ETFs that invest in other securities and charge low fees. If you have the skills and knowledge, you can consider a mix of both.
Taxes: Whenever you make an investment, you will attract a tax liability and you need to be aware of the impact of taxes on the returns you generate. There will be a tax liability on the interest, capital gains, or dividends you earn. Understand how it impacts your income and then makes a decision. It is possible to avoid taxes by holding investments in tax advantage retirement accounts like IRA.
Secure Retirement with Guaranteed Income for Life
With access to over 20 top-rated annuity companies, our advisors will help you find the best rates and terms on annuities that provide guaranteed income, security, and peace of mind.
FAQs
Which are the low-risk investments to make?
If you want to take minimal risk, the best investment advice is to open a high yield savings account and invest in certificates of deposits. Your money will remain safe and you will be able to earn consistent, steady returns.
How can I earn passive income with $10,000?
It is possible to put your money to work and earn passive income. Consider investment options like REITs, dividend-paying stocks, or bonds to earn a steady income.
Which is the best investment for a beginner?
If you have $10,000 and want to begin your investment journey, start with a high yield savings account or certificate of deposits. If you want to diversify your portfolio, you can invest in ETFs or individual stocks. Do not put all the money in the same basket, consider diversification of the portfolio to reduce risk and increase the chances of a higher return.
The bottom line
$10,000 may not seem like a lot of money these days due to inflation but it is a lot if you want to get into the best investments. Take it as a chance to grow your nest egg into something larger. Pick a few of these investment ideas and consider your long-term investment goals. Investing is not only about paying off the high-interest debt or building an emergency fund, the purpose is to grow your money.
No matter what your goals are, choosing to invest in your future is a great way to build financial flexibility with time. Investing is about considering all the investment options and choosing what is most important to you. With time, your goals and circumstances will change, this is when you will have to change your investment strategy, but continue to stay committed for the long term. If you need help choosing an investment product, consider working with a financial advisor who will help choose the right products for you.
Joy Wallet is an independent publisher and comparison service, not an investment advisor, financial advisor, loan broker, insurance producer, or insurance broker. Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only. They are not intended to provide investment advice. Joy Wallet does not and cannot guarantee the accuracy or applicability of any information in regard to your individual circumstances. We encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Featured estimates are based on past market performance, and past performance is not a guarantee of future performance.
Our site doesn’t feature every company or financial product available on the market. We are compensated by our partners, which may influence which products we review and write about (and where those products appear on our site), but it in no way affects our recommendations or advice. Our editorials are grounded on independent research. Our partners cannot pay us to guarantee favorable reviews of their products or services.
We value your privacy. We work with trusted partners to provide relevant advertising based on information about your use of Joy Wallet’s and third-party websites and applications. This includes, but is not limited to, sharing information about your web browsing activities with Meta (Facebook) and Google. All of the web browsing information that is shared is anonymized. To learn more, click on our Privacy Policy link.
Images appearing across JoyWallet are courtesy of shutterstock.com.
Writer
Vandita Jadeja is a financial writer and editorial assistant at Joywallet. She loves to read and write about money and brings 7 years of experience from the financial industry. She loves coffee, mountains and sunsets.
Share this article
