There’s a lot you can do with $10,000 to invest. From stocks and ETFs to RRSPs and GICs, there are several potential investment options to explore. In this guide, we’ll show you how to invest $10k in 5 different ways, explore the pros and cons of each investment option, and look at how to find the best way to invest $10,000 based on your investment goals.
| Investment | Risk profile |
|---|---|
| Stocks and ETFs | Medium to high |
| Index funds | Medium |
| Mutual funds | Medium |
| Bonds | Low (but higher for some corporate bonds) |
| GICs | Low |
Best Welcome Bonus
Best for $0 Commission Trades
Best for Beginners
The best way to invest $10,000 depends on a host of things: your age, goals, investment knowledge, and risk tolerance. You’ll need to have a clear picture of these before deciding on the best investment option.
For example, if you’re investing for your retirement, you may want to adopt a long-term approach with stocks and ETFs, and take advantage of the tax benefits of a Registered Retirement Savings Plan (RRSP).
But if you’re investing for a shorter period of time and need access to your funds in an emergency, something as simple as a high-interest savings account could be exactly what you need.
Let’s take a deeper look at the different suitable options for investing $10,000, and their pros and cons, below.
Before you can choose any investments you need to consider whether or not you want to invest in a registered account. These accounts can be linked to other investment types, like stocks, ETFs and GICs, so it’s important to first decide if one of these accounts will suit you best before choosing the type of investment.
Registered accounts offer tax advantages and are designed to help you reach specific goals. Here are some popular options:
Pros
Cons
The next option is to use your $10,000 to build a diversified portfolio of stocks. You could focus on Canadian stocks if you wish, or broaden your horizons to invest in US companies and other international stocks.
Alternatively, you could invest in exchange-traded funds (ETFs). Units in ETFs can be bought and sold on stock exchanges just like individual stocks, and they provide access to a basket of securities. This makes it easier and more affordable to build a diversified portfolio.
The first step to investing $10k is to choose an online broker. Look for an online trading platform that has low fees and is easy to use, and that also provides access to all the markets you want to trade. Learn more about choosing a broker in our guide to the best stock trading apps in Canada, and don’t forget to look for the best brokerage signup bonuses.
You can then research the stocks or ETFs you want to invest in, and buy them via your broker’s online platform or mobile app.
Pros
Cons
To make comparing even easier we came up with the Finder Score. Trading costs, account fees and features across 10+ stock trading platforms and apps are all weighted and scaled to produce a score out of 10. The higher the score, the better the platform—it's that simple.
Index funds are ETFs or mutual funds that track the performance of a market index, for example the TSX 60 or the S&P 500. They achieve this by investing in the stocks that make up the relevant index.
With an index fund, it’s easy to invest in a diversified portfolio of stocks across a range of market sectors. They also have low management fees and provide a set-and-forget option for investors.
Learn more in our guide to investing in index funds.
Pros
Cons
A mutual fund is a professionally managed investment fund that pools together money from investors. Mutual funds invest in a basket of securities. They can be index funds that aim to track the performance of a specific index, or they can be actively managed with the aim of outperforming the market.
Unlike ETFs, mutual funds are traded at the end of each trading day. They also come with higher management fees than ETFs, but they’re an option worth considering if you’re searching for the best way to invest $10,000.
Cons
Bonds are loans made by investors to borrowers. Essentially, investing in a bond involves providing a loan to the government or to a company. That government or company then pays you interest on the loan, and returns the full principal amount when the bond reaches maturity.
Bonds are worth a look if you want to earn a steady income and preserve your capital. But they do have high investment minimums, so an alternative way to gain exposure to the bond market is to invest in bond ETFs or mutual funds.
Pros
Cons
A guaranteed investment certificate (GIC) is an investment product that pays a guaranteed rate of interest on the money you deposit. In return, you agree to deposit your money for a fixed period, with GIC terms ranging anywhere from one month to 10 years.
If you’re looking for a safe investment option with minimal risk, GICs are a solid choice. And with $10,000 to invest, you could potentially use a GIC laddering strategy to help maximize your returns.
Pros
Cons
The next question is whether you want to take a DIY approach to investing, or whether you want to let someone else choose investments on your behalf.
With self-directed investing, you have complete control over where your money goes. It’s easy to open a trading account with an online broker, and you can select the investments you want based on your investment goals and appetite for risk.
The downside is that choosing investments takes time and effort, and if you don’t know what you’re doing, there’s a risk of making the wrong choices.
Traditionally, the alternative to self-directed investment was to use a financial advisor. But rather than a real person, you can now let a robo-advisor choose your investments.
Robo-advisors are automated platforms that manage your investments based on your financial goals. You simply tell the platform your financial goals, time frame and risk tolerance, and it uses algorithms to create a balanced investment portfolio on your behalf.
This takes the hassle of managing a portfolio out of your hands, but you’ll also need to pay extra management fees. Learn more about how these platforms work in our guide to robo-advisors.
Before you start searching for the best way to invest $10,000, consider these simple steps:
When you’re ready to invest your $10k, here’s what you need to do.
Start by setting clear financial goals. What do you want to do with your $10,000? Do you have a specific goal in mind, such as saving for a house deposit or investing for your retirement, or do you simply want to generate wealth for whatever the future holds? Think about how much money you want to make and in what time frame.
Compare the pros, cons and potential returns of different investment types to decide which is the right choice for you. Remember to keep your investing goals and your risk tolerance in mind at all times.
Now it’s time to choose an online broker or investment provider. Compare fees, potential rates of return, and the ease of use of any trading platform before deciding if it’s right for you. You can use our table above to compare different investment platforms.
You’ll need to sign up for an account with your broker or financial institution of choice. You can do this by providing your personal information, contact details and proof of ID. If you’re signing up for a self-directed investing account, you might also need to provide information about the source of your funds and your prior investing experience.
The final step is to pull the trigger on your investment. So place a buy order or deposit the necessary funds, then sit back and watch your $10k grow. Be sure to monitor your investment and reassess regularly to make sure it still aligns with your goals.
There are many different ways you could invest $10k. Whichever option you choose, your investments should align with your needs and financial goals. You may even decide that choosing a mix of the investments featured in this guide is the right approach for you. Make sure you understand the potential benefits as well as the risks involved before deciding on the best way to invest $10,000.
We put Questrade and BMO InvestorLine to the test to find the best commission-free trading platform.
Steps to owning and managing BBAI, with 24-hour and historical pricing before you buy.
Steps to owning and managing FIGR, with 24-hour and historical pricing before you buy.
Steps to owning and managing CRWV, with 24-hour and historical pricing before you buy.
Find out how to buy a Drone Delivery Canada Corp. stock, it’s stock price and stock performance over time.
Steps to owning and managing Oklo stock (OKLO), with 24-hour and historical pricing before you buy.
Steps to owning and managing RIOT, with 24-hour and historical pricing before you buy.
Learn how to choose a free trading platform in Canada to buy and sell stocks.
Steps to buying Coinbase stock in Canada with 24-hour and historical pricing before you buy.
These are the best renewable energy stocks to buy now in Canada.
