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Best ways to invest $10k right now

Got $10k to invest? Check out our top picks for the best investments right now.

If you’ve got $10,000 and don’t know what to do with it, we’ve got you covered with these top five investment ideas to help you grow that money.

5 best ways to invest $10k right now

The more disposable money you’ve got, the more options you’ve got, and with $10,000, you’ve got plenty of investment choices at your disposal. Here are some of the best ones to take advantage of right now.

1. Invest in an index fund

Why it’s a good option now: The stock market keeps setting record highs despite the ongoing COVID-19 pandemic. The S&P 500 has grown about 96.84% since March 2020 and 20.79% in 2021 alone. Likewise, the Nasdaq Composite has climbed more than 122% since March 2020 and almost 19% in 2021.

Index funds are designed to track and achieve roughly the same return as a particular market index, such as the S&P 500 or the Nasdaq Composite. It does this by investing in the securities of companies included in the selected index. And since index fund managers only need to track a fixed index of securities, management is more passive, resulting in fewer fees and expenses passed on to the investor.

What to watch out for: While investing in an index fund gives you the upside when the market is doing well, you’re also vulnerable to the downside when it’s underperforming. Since index funds invest in many of the same securities as the index it’s tracking, the fund will be subject to the same risks as the securities contained in the index. So if a company included in the fund becomes overvalued or undervalued and you’re invested solely through an index, you won’t be able to adjust your exposure to that particular stock.

Also be aware of a fund’s track record and fees. You’ll find both mutual funds and exchange-traded funds that track indexes, but generally lower fees and minimums make ETFs attractive at this investment level.

Robinhood

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2. Work with a human financial advisor

Why it’s a good option now: The pandemic has been tough for many people, and your financial situation may have changed drastically from where it was just a couple of years ago. Even in normal circumstances, properly managing your money and investments and making the right financial decisions takes time, skill and discipline.

Bringing on a financial advisor to get educated about your investments, retirement plans and wealth management options can be a great investment if you don’t have the time or interest to do it yourself. Financial advisors typically charge either an hourly fee of between $100 and $300 or a fixed fee to implement and maintain your financial plan. This can be anywhere from $1,000 to $3,000.

What to watch out for: Trust is key, and not all advisors are held to the same standards. So do your own due diligence to make sure you’re hiring someone you can trust. Ask plenty of questions, and be aware of any advisor that prioritizes their paycheck over yours.

3. Max out an IRA

Why it’s a good option now: You can make IRA contributions up until the tax-filing deadline of the following year, and we’re now in the last stretch of 2021. So if you want to take advantage of its tax benefits, now might be a good time to invest in an IRA. You can invest in a traditional IRA, a Roth IRA or both, but the total you can contribute to all your IRAs in 2021 is $6,000, or $7,000 if you’re 50 or older. If you’re married and you and your spouse file a joint return, you can each contribute to separate IRAs. So with $10,000, you could max out one spouse’s IRA and use the remainder to fund the other.

If you need help choosing an IRA account, check out our guide to the best IRAs.

What to watch out for: IRAs are intended for retirement, which means you could get hit with a penalty if you take your money out before retirement. Distributions prior to age 59 ½ can trigger a 10% early withdrawal penalty.

4. Fund a 529 account

Why it’s a good option now: State 529 plans are tax-advantaged investment accounts that can be used to pay for future education costs. Earnings grow tax-free and withdrawals are tax-free as long as you use the money to pay for qualified education expenses, such as tuition, books and school supplies. Contributions are made after tax and are not federally tax-deductible, but many states offer deductions from state income tax.

If your kid is young and you’re years away from needing the money, you have time to aggressively invest in 529 funds. If the market starts to pull back, you can buy securities at a discount.

What to watch out for: If you don’t have time on your side, investing 529 funds in volatile securities like stocks can be risky. You might want to consider keeping the money in cash or other more conservative assets.

5. Ladder CDs

Why it’s a good option now: A certificate of deposit, or CD, is a savings vehicle that allows you to save a fixed amount of money over a fixed period — while earning interest. This can range from a few months to five years. Competitive CD rates are usually at or above the rates you’ll find with a high-yield savings account, usually between 0.5% and 0.8% APY, depending on the term you choose. A CD ladder is a savings strategy that allows you to spread cash equally between multiple CDs to take advantage of the highest rates while also freeing up money in shorter intervals. With $10,000, it could work like this:

  1. Open five CDs between one- and five-year terms and deposit $2,000 into each one.
  2. As a CD matures, reinvest that money into a new five-year CD to continue earning the highest rate offered.
  3. Continue as long as you want to keep your money invested in CDs.

If rates go up, you can take advantage of the higher rates when a CD matures. Since CD rates are locked in for the duration of the term, a drop in rates won’t affect your return. If rates are too low for you when a CD matures, you don’t have to reinvest it in CDs.

What to watch out for: CDs lock up your money for some time, so they aren’t as liquid as sticking your money in a high-yield savings account. If you withdraw your money before the term expires, you might get hit with an early withdrawal penalty.

How $10,000 can grow

With $10,000 to invest at once, you have any number of options and may want to consult an investment pro. It’s not a fortune but over time it can be substantial. Here’s a look at how it might grow in three common investment classes.

$10,000 saved or investedSavings accountBondsStocks
1 year$10,100$10,600$11,000
5 years$10,510$13,382$16,105
10 years$11,046$17,908$25,937
15 years$11,610$23,966$41,772
20 years$12,202$32,071$67,275
25 years$12,824$42,919$108,347
30 years$13,478$57,435$174,494

For this table we assumed a 1% annual return on savings in a bank account, CD or money market fund (which is optimistic these days); an average 6% return for bonds or bond funds; and 10% on stocks, the market’s long-term annual return. Bond returns vary widely based on bond types, and the stock market has down years while individual stocks can go to zero. So consider these benchmarks only and consider risk as well as return.

Before you invest

Before you throw your $10,000 into investments, consider these other money moves as well:

  • Put it toward a down payment for a house: If you’re getting ready to jump into the real estate market, consider putting the $10,000 toward a down payment. Mortgage lenders typically require a down payment of at least 20% of the mortgage amount.
  • Add sweat equity to your house: If you currently own a home, $10,000 is a good chunk of money that can be put toward improvements or expansions that increase your home’s value.

Alternative investments

Not all the investments listed in this article will be right for you, so here are a few more investments to consider:

  • Start or grow a business: According to recent estimates, microbusinesses cost around $3,000 to start. This can vary depending on the type of business and whether it is based in a physical location or online.
  • Build out your home office: If you work from home full-time, consider investing in building out your ideal workspace. Having the right desk, chair, computer and other technology can do wonders for productivity.
  • Free your time: While you don’t need to drop the entire $10,000 to accomplish this, freeing up your time so that it can be used on more important matters can be a worthwhile investment. If you can hire a cleaning service to clean your home, you can spend that time working and making more money. And if you can make more than what you’re spending on the help, then you’re coming out on top.

Compare investment platforms

However you choose to invest, you’ll need a trading platform that handles that asset. A few popular ones are listed below.

Name Product Asset types Option trade fee Annual fee Signup bonus
Robinhood
Robinhood
Stocks, Options, ETFs, Cryptocurrency
$0
0%
Free stock (chosen randomly with a value anywhere between $2.50 and $200)
Sign up using the "go to site" link
Make unlimited commission-free trades in stocks, funds, and options with Robinhood Financial.
J.P. Morgan Self-Directed Investing
Stocks, Bonds, Options, Mutual funds, ETFs
$0 + $0.65/contract
0%
N/A
INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
Sofi Invest
Stocks, ETFs, Cryptocurrency
N/A
0%
Get one free stock worth up to $1,000
Open an account
A free way to invest in stocks, ETFs and crypto.
Vanguard Personal Advisor
Stocks, Options, Mutual funds, ETFs
N/A
$20 per year
N/A
Financial advice powered by relationships, not commissions.
TradeStation
Stocks, Bonds, Options, Mutual funds, ETFs, Cryptocurrency
$0 + $0.50/contract
$0 per month
$50
Deposit qualifying assets of $5,000+
A platform built for all kinds of traders and all styles of trading
Moomoo
Stocks
$0
$0 per year
Get a free stock valued up to $350
Open your Futu brokerage account via Moomoo
Trade stocks on the US, Hong Kong, Shanghai and Shenzhen markets.
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Compare up to 4 providers

*Signup bonus information updated weekly.

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