How to Invest $20,000

Joseph Meyer
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Sneak Peek: Top 3 Ways to Invest $20,000

High Interest savings

A savings account is the safest place to park your money. As interest rates are controlled by the feds, you can rest assured your money will be there when you need it. If you’re comfortable with online banking, Tangerine Savings account is a great option. It offers a measly 0.5% interest, but you don’t have to jump through hoops to get the monthly interest credited to your chequing or savings accounts.

If you can stomach watching your interest rate go up and down a bit, a no-fee high-interest savings account like President’s Choice Financial’s High-Interest eSavings Account (currently at 1.2%). You’ll earn at a higher rate during a period of high interest and then the rate drops to 0.5%. If you churn more than once a year, this post from Moolanomy has some great advice.

Fundrise

Invest in stock

Best Ways To Invest $20k in 2021

Pumping money into the stock market can seem a little daunting for some people. In addition to the regular challenges inherent in investing in the stock market, 20k can represent a substantial sum of money.

However, with the right choices, you can build a portfolio that can radically increase its overall value and enable you to make some great gains. Below is a comprehensive guide to help you make the right investments with your money.

High-Yield Savings Accounts

There are plenty of reasons why you should have a healthy cash cushion in your wallet:

➤ Emergency Funds : It’s the fund for rainy day that will help you get through the unexpected. It’s the safety net for any unexpected expenses or family crisis.

➤ Insurance : You’re not going to get your desired coverage by paying your premium with cash. You’re going to have to reimburse your insurance company with cold hard cash every month.

➤ AltaVista : If you plan to use the money for investing in my AltaVista stocks, you’re going to need a sturdy cash cushion in case the market crashes. I’m not expecting the AltaVista market to crash anytime soon, but it’s good to have a contingency plan.

I love cash because it’s easy; I can always convert it into anything else I need. However, I’m not a big fan of cash. I’d much rather that you invest that cash, so you can start building your money portfolio that you can use to transform your financial future. Here’s a list of the best places where you can park your cash without any risk.

Fundrise

Invest For Yourself

If the statement related to "investing in your financial future" takes a slightly more personal angle to you, than you should invest for yourself first.

Investing is a skill that will serve you well throughout your life. The key thing here is that you should invest as a habit and not as an emotion.

Investing does not mean gambling or risking your savings. The overriding factor to investing is time. You need to invest over the long term.

Unlike in gambling, when you invest in stocks, the odds are stacked in your favor. Provided that you are patient, you will be a long-term winner.

Therefore if you have disposable income, and funds required to invest, the best time to start is right now.

Even if you do not have extra money to set aside, consider contributing to your 401(K) and/or Individual Retirement Account every year.

Clearly, I am not one to preach about how to run your life, but I do want to teach you how to invest your hard earned dollars in the stock market.

The good news is, you do not need to be rich to invest, because even modest amounts can make you quite wealthy over time.

And that is exactly why you should invest for yourself first. You are the only person who can answer the question, "How much money do I need to retire?"

Go with a CD

If you want the most conservative and low-risk investment option, you can go with a Certificate of Deposit. A CD is a low-risk investment that gives you predictable rates of return.

A CD can be used to start a college fund or save for a down payment on a house, and it gives you a sense of security that you can’t get with most other investments.

A CD is a safe investment, but it’s not very liquid. Once you lock your money in, you can’t get it out without paying a penalty. So if you’re not comfortable with having your money tied up, a CD isn’t the best option for you.

That said, CDs are a good place to start if you’re just starting out with investing. They give you a sense of ownership in the market without the risks associated with higher-risk investments.

In short, CDs are a good place to start, but they’re not the best investment option if you’re looking to maximize your returns.

Money Market Accounts

A money market account is a savings account that pays more interest than a basic bank account. These accounts are insured by the FDIC, which means you don’t have to worry about losing money due to bank failure.

Different money market accounts have different minimum deposits required at the bank to open an account. The term "money market" refers to the wide variety of people who typically look to open a money market account, including small business owners and investors looking to make short-term investments.

Different banks will have different interest rates and some may offer different benefits besides the standard interest rate. They may provide rewards or you may get a debit card that allows you to access your account anywhere. Before you choose a particular money market account, you should research the product you want to purchase. This ensures that you are getting the best possible rate as well as an account that is tailor-made for your specific needs.

Peer-to-Peer Lending

Peer-to-peer lending is the practice of loaning money to other people. You can perform peer-to-peer lending with a private company or with a social lending platform (which are online companies that connect investors and borrowers).

Invest With a Financial Advisor

The world of investing can be a bit intimidating, especially if it’s your only foray into the financial waters. Whether you’re looking to invest in an IRA or just cash for the weekend, investing can seem like an impossible task. Sadly, many people pass on investing altogether because of their lack of knowledge or confidence. There is no doubt the world of financial advice is complicated, but if you take the time to learn a bit about it, you can better understand and manage the process.

Let’s start by talking about the pros and cons of investing without the help of a financial advisor.

The first pro is obvious. It’s totally free. In fact, some people would argue it’s more of a con because it’s free. There is an entire industry of financial advisors out there that serve to generate commission and fees, but you can definitely make your own investment decisions. Or you can work with a broker or online platform that charges you very little in exchange for the services they provide.

“I’m in consumer debt up to my eyeballs and I’m not sure I should invest.”

It’s hard to convince people who are in over their heads with debt that they should build up an investment portfolio. Let’s face it: Investing means postponing another debt payment. And debt payments are good things; they are a means to get you through a bad patch with the promise of a better life in the future. But sometimes, you can get yourself into trouble. Sometimes a debt payment is a Band-Aid for a bigger problem.

“I’m entrepreneurial and creative. Seriously, I am. What should I do?”

If you talk to most of the folks out in the world about entrepreneurship, you’ll notice one thing many of them have in common. They’ve decided to go out on their own because they can’t stand working inside somebody else’s company anymore. For them, they just want freedom. For them, they just want to start something.

In our company, everybody has a title. There is no “I’m just a contractor here” mentality. All who work for us have titles, even if it’s not CEO, and even if it’s not Vice-President. Recognizing the value of every member is really important to us, and you’d be surprised at how few companies do this in the 21st century.

Start an Online Business

Whether you’re an established business or a startup, one thing that’s not generated often enough for employees is useful insights about how to effectively manage the company’s finances.

At its core, finance serves as a conduit for relevant information that allows businesses to make the right decisions and effectively manage their assets. The most important lesson finance teaches is that money doesn’t grow on trees. Making money and spending it should go hand in hand.

For small businesses, a critical component of good financial planning is choosing the right funding sources. One of your best options is to borrow money from a bank to use as capital for investing in your company’s future. Banks are constantly looking for ways to become more competitive and make money by offering potential borrowers attractive loans.

Over the past several years, a growing number of businesses have learned of the many advantages of online business loans. And today, you can find all types of business loans ranging from small to large; personal to commercial.

In this post, we’ll focus on explaining why you should consider an online business loan as an important financing option for your company and then we’ll take a closer look at the kinds of online business loans available on the market today.

So what is an online business loan?

Become a Freelancer

Educate Yourself into a New Career

Have you ever thought to yourself, “Is this what I really want to do?” Why not take a risk and go after your dream?

Is there a business you’ve always wanted to start, but haven’t, for whatever reason? The time is right to look at what you want in life and then formulate a plan to achieve it.

Investing money is not just about putting your money in a bank and collecting interest. It’s about planning, research, education, and execution. Competence is learned. It’s something you build and develop.

To be a competent investor, you have to make a personal commitment to learning and education. It takes more than just signing up for a class. If you are serious about investing, you have to commit yourself to the process of education. Your future soon depends on the quality of the decisions you make. You can’t make timely, informed decisions relying on what you already know. You need to constantly learn and improve. Consistent learning and education is key to being successful in investing.

How are you doing in terms of personal growth? How willingly are you investing yourself? Are you invested in your own personal development? Investing 20 grand in your education is the best thing you can do for yourself.

“I’m not sure what I should do – even after reading this article.”

I can’t guarantee that the person you’re asking for advice will be able to answer your question. But I’m going to share some general rules that should help you make the best possible decision.

Before you make any decision, write it down and make a clear statement. Define the terminal value (what you expect to get out of it) and write down the probabilities of achieving it. These rules don’t guarantee that you’ll make the right decision, but they should give you a better method for assessing all of your options.

Also, it’s important to remember that there’s no right or wrong answer… just make sure you think about what you’re doing and that you back up your claims with reasons and opinions rather than opinions alone.

I’m not a financial adviser, and you shouldn’t take my advice as the final word. But it’s what I would do with that kind of money, and hopefully you’ll find some of it useful.

Pause and Wait

For some people, investing can feel like a scary idea. But with the right amount of knowledge, you can make wise financial decisions to grow your wealth.

First step: You don’t need to do anything just yet. One of the best investing tips we can give you is to simply stop and wait for a moment before jumping into the world of investing. Why? There are two reasons:

If you’re like most people, you’ve just received a bonus (or raise) at work. Just let that money sit in the bank for a bit. When you’re ready to invest, you can do it for what amounts to pocket change. (When Warren Buffet invests, he thinks nationally and acts globally, but acts locally.)

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About the Author

Brian Lostracco is a life and business coach. He also creates and holds several seminars on business management and entrepreneurship.

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