Investing money can seem scary at first, especially if you are a first timer. However, if you figure out necessary details like how you want to invest, the amount you are willing to invest and your level of risk tolerance, it becomes easier to make a decision.
If you have 50k and you are looking for how to invest it, this article contains a outline of the best ways to invest 50k. Carefully read through!
Table of contents
How Can I Invest 50K In 2022? What You Should Do
Here’s an outline of how you can invest $50,000:
1. Build a DIY Portfolio of Individual Stocks
Individual stock purchases may be a suitable alternative if you desire complete control over your portfolio investments. To construct a broad portfolio, you should generally acquire at least 20 different equities. But, happily, with $50k to invest, it should be entirely feasible.
To be successful when investing in single stocks, you must have a plan for screening them. Two of the most popular stock techniques are value investing and growth investing. Other investors prefer an income strategy centered on dividend-paying equities.
You can build a DIY portfolio of individual stocks on any of the following platforms:
- TD Ameritrade
- Ally Invest
- E-trade
2. Invest in ETFs and Mutual Funds
If you are not interested in putting in the time and work into investing in dozens of individual stocks, your 50k can work for you in ETFs and mutual funds.
ETFs and mutual funds are stock, bond, or other asset baskets that aggregate investor funds. Buying only one share of either type of investment can provide quick diversification in dozens or hundreds of stocks. Both provide index-tracking and actively managed choices, with index versions often having lower expense ratios.
3. Individual Bonds
Bonds are debt instruments. Here the investor loans money to a borrower in return for periodic interest payments and then the bond’s face value when the bond matures. Bonds come in several varieties including:
- Treasury securities — Treasuries come in various maturities and are considered risk-free assets because they are backed by the U.S. Treasury.
- Corporate bonds — Various corporations issue these. Their security is in part based on the financial state of the issuer and their ability to make interest payments and redeem the bonds when they mature.
- Municipal bonds — Munis are given by state and local governmental entities. Interest on these bonds is generally exempt from federal taxes. Investopedia defines municipal bonds as a debt security issued by a state, municipality, or county to finance its capital expenditures, including the construction of highways, bridges, or schools.
4. CDs
CDs, or certificates of deposit, are FDIC-insured savings accounts that typically have a term of six months, a year, two years, or more.
A CD can generally be described as a type of federally insured savings account. Unlike the conventional savings accounts that enable depositors to access their money whenever they want it, CDs generally require investors to keep their money invested for a specific period of time in exchange for predetermined monthly interest payments.
5. Invest in Your Retirement
You can invest in your retirement with the aim of maxing the retirement accounts.
If your employer offers a 401(k) that matches employee contributions, and you aren’t currently contributing enough to earn that amount, let your extra 50k free up some space in your budget so you can do so.
You can also contribute to a Roth or traditional IRA. These retirement accounts do have annual contribution limits — $6,000 in 2021 ($7,000 if age 50 or older). You can keep enough money in these retirement accounts in order to help prepare yourself for retirement down the road.
Your retirement accounts commonly invest in index funds and ETFs, mutual funds, and are low-risk investments because your investments are diversified.
SEE ALSO: Should I Invest in 401k? What Must I know in 2022
6. Invest in real estate
According to a collaborative study by the University of California and German Central Bank, real estate has offered the highest returns of any asset class in the last 415 years.
As such, you can invest your 50k by making down payments for rental properties and gaining profit by selling the property later at a higher price.
You can also invest in real estate by buying a property and renting it with companies like Arrived. With the increasing inflation rate, rents will go up while your mortgage payments stay the same. This increases your cash flow and your rental yield as an investor.
Another option to invest in real estate is a REIT (real estate investment trust) through real estate investing apps like Fundrise. Fundrise an investment platform that allows you to create a simple, low-cost way for anyone to access real estate’s historically consistent, exceptional returns.
7. Index funds
Investing in index funds is similar to investing in the stock market but without the danger. The risk of investing in index funds is quite low, but the rewards are enormous. The trick is to diversify your stock portfolio by investing in the largest corporations through an index fund.
According to a report on Bankrate, the best index funds to own this year are as follows:
- Fidelity ZERO Large Cap Index (FNILX)
- Vanguard S&P 500 ETF (VOO)
- SPDR S&P 500 ETF Trust (SPY)
- iShares Core S&P 500 ETF (IVV)
- Schwab S&P 500 Index Fund (SWPPX)
These index funds track the S&P 500 Index Fund and gives you an option of investing your $50,000 in stocks of the S&P 500 at a low cost, while still enjoying diversification and lower risk.
READ ALSO: HOW TO BUY PORTILLO’S STOCK in 2022
8. Start a business
Next on our list of est way to invest 50k is starting a business. If you invest 50k in a promising business, be sure to reap the dividends in the long run.
Before venturing into a new business, be sure to conduct research into your prospect, seek expert advice and develop a solid business plan before starting out.
The amount of money needed to start your business depends on your business model and industry. However, a 2009 study conducted by the Ewing Marion Kauffman Foundation puts the average cost of starting a business is around $30,000, leaving you $20,000 for other investments.
Recommended: How To Start A Business Without Money In 2022 | Full Guide
9. High-yield savings account
This is another way to invest your 50k. It’s much more profitable than the normal savings account. Your money can sit in there and accrue some interest until you are ready to invest in bigger and more profitable ventures.
A high-yield savings account is a type of savings account that typically pays 20 to 25 times the national average of a standard savings account.
Before opening a high yield savings account, it’s always wise to compare options across the marketplace. Differences in interest rates and fees will add up over time, especially if you’re keeping a relatively large balance in savings.
READ ALSO: 9 Best Fixed Rate Bonds In 2022 | Expert Guide
10. Invest using a robo advisor
Robo advisors are digital platforms that render automated, algorithm-driven financial planning services with little to no human supervision. A typical robo-advisor asks questions about your financial situation and future goals through an online survey; it then uses the data to offer advice and automatically invest for you.
When choosing the best robo-advisor, you can consider any of the following:
- Betterment: Best robo-advisor overall
- Acorns: Best for fees
- Blooom: Best for 401(k) management
- Wealthfront: Best for DIY financial planning
11. Invest in yourself
An investment in yourself serves you for a lifetime. It can take forms llike pursuing a creative project, nurturing a talent taking a course, learning a new skill or pick up a new side hustle to get paid today.
While you won’t likely spend everything on yourself, you can also prioritize your health and wellness which is a major factor that affects results.
READ ALSO: Hedge Funds vs Investment Banks: What Is The Difference, Which Is Right For You?
12. Annuities
This is a low-yielding investment with a potential return of about 3%. An annuity is a means to enhance your retirement income.
Annuities are a good investment because they give regular income, tax benefits, and a potential death benefit. Another benefit is that your money is safe and your returns are guaranteed.
13. Invest in cryptocurrency
When it comes to investing, cryptocurrency can be considered as one of the most exciting ways to go.
Bitcoin, the world’s largest crypto by market cap, has fallen half its value since hitting a record high. Some experts are saying now is the time to invest by using trusted cryptocurrency apps like Binance, Coinbase, Webull, crypto.com, etc.
14. Invest in art
Mordern art has offered an annual return of 14% over the last 25 years, as of December 2020, versus a 9.5% annual return from the S&P 500, according to the Citi Global Art Market chart.
If you want to invest in art, Masterworks is a good place to start. You can buy and sell shares in multimillion-dollar paintings on the platform. If you decide to keep your shares until the painting sells, you’ll receive returns from the sale.
SEE ALSO: How To Invest $50k And Get The Best ROI | 2022 Expert Guide
15. Invest in an emergency fund
One wise thing to do once you have your 50k in hand is to set up an emergency fund or fund it if you already have one. It will shield you from life’s unpleasant surprises.
As you may have guessed, there are so many ways to invest your $50,000 with confidence. You might choose one particular method, or you might choose to diversify. Just make sure to invest somehow so you can offset inflation and your wallet will thank you for it!
16. Open a 529 College Savings Plan
If you are a parent with 50k to invest, you can invest in a 529 college savings plan account.
There are various ways that you can profit from investing in a 529 plan. First, it offers tax-free growth and withdrawals. Second, many states offer tax credits or deductions on 529 plan contributions.
Third, the funds can be used on any qualified education expenses (which includes K-12 expenses). And, fourth, account owners can change the beneficiary to another qualified family member at any time.
17. Pay off your debt
According to a survey from Experian in 2021, the average American carried $254,354 worth of debt (including mortgage),
If you are in debt, it makes more sense to consider paying them off before investing in the stock market. Are you tempted to ask why?
Paying off your debt will not yield money like an investment, but it will allow you to keep more money in your wallet for the future. Not only that, but you’ll earn money by lowering the amount of interest you spend on your obligations. You may even find out how much you’ll “earn” by paying off your debt today if you utilize a debt payoff calculator.
For most people, paying off debt offers more mental health benefits than financial benefits.
18. Open a Taxable Brokerage Account
A taxable brokerage account is an account that doesn’t have any tax benefits, but they offer fewer restrictions and more flexibility than tax-advantaged accounts such as individual retirement accounts (IRAs) and 401(k)s.
A taxable brokerage account functions similarly to an IRA, but without the additional tax benefits. On the other hand, you can withdraw the money whenever you choose as long as you’re willing and able to pay short-term or long-term capital gains on any earnings you withdraw. You can invest your $50,000 in money market accounts, equities, bonds, index funds, mutual funds, ETFs, and more, just like an IRA.
FAQs On Best Ways To Invest
The three classes of investments are owning a business (stocks), money lending (bonds and loans), and real estate
There are a good number of investing apps to choose from, but you must find one that meets your needs. If you’re looking for an automated investing app for beginners, then Acorns or Betterment might be good choices. If you’re looking for a more traditional brokerage, then TD Ameritrade or Fidelity apps may be worth exploring.
One of the most common ways to start investing in stock is by utilizing a broad index fund that tracks either the S&P 500, Nasdaq, or Dow Jones Industrial Average.
Investing in bitcoin can yield high returns overnight; however, e sure to analyze the risk tolerance, market performance, liquidity and all.
Conclusion
If you feel you don’t have the time, knowledge or confidence to manage your investments yourself, don’t hesitate to speak to a financial adviser.
References
- doughroller.net – How to Invest $50k: The 8 Best Investing Strategies
- goodfinancialcents.com – How to Invest $50,000: Grow your money safely
- investorjunkie.com – How to Invest 50k: The Best Place to Invest Money Right Now
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