Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
You have $20k sitting in the bank and you’re wondering how to take that nest egg and turn it into even more money. Here are five ways to maximize returns on a $20k investment.
Your investment portfolio is a reflection of your financial goals. You could invest in stocks if you won’t need the $20k for another 10 years, but stocks are higher risk – with higher potential returns.
If you’ll need the money in three years, you may consider a less-risky investment type with modest returns, such as a CD or bond.
Here’s one example of how a 20k portfolio might look if you’re aiming for higher returns over a longer period of time:
| Investment type | Percentage |
|---|---|
| CDs and bonds | 0 to 40% |
| Stocks, ETFs and mutual funds | 50% to 75% |
| Real estate and alternative investments | 0 to 25% |
To make the most of your investments, you may need a new brokerage account.
Make unlimited commission-free trades in stocks, funds, and options with Robinhood Financial.
| Available asset types | Stocks, Options, ETFs |
|---|---|
| Stock trade fee | $0 |
| Option trade fee | $0 |
| Annual fee | 0% |
Before you invest $20k, make sure you have the following in place:
Your employer deducts 401(k) contributions straight from your salary, so you’ll need to increase your contribution percentage to invest more money. This will make your take-home pay smaller, but you can supplement the missing income with your $20k investment.
Calculate your RMD by taking your account balance as of December 31 and dividing it by your life expectancy factor on the IRS Uniform Lifetime Table.
There are several different options for retirement accounts, including options that aren’t employer-sponsored.
If you don’t have access to a 401(k), don’t fret. Individual retirement accounts, or IRAs, are another option for those looking to invest and prepare for retirement.
IRAs come in several forms, the most popular being Traditional and Roth IRAs. Traditional IRAs allow you to make tax-free account contributions up until you’re 70 and a half years old. The catch? Your account withdrawals are taxed once you start receiving distributions.
Roth IRAs, on the other hand, tax your contributions going in but withdrawals made once you retire are tax-free. Roth IRAs are particularly popular among younger investors and are sometimes also available in 401(k) form.
If you’re considering opening a new retirement account and don’t know where to start, a financial advisor may be able to help you pick the right one.
If you want professional guidance on how to invest without forking over money for a financial advisor, a robo-advisor may be what you need.
If you’re more of a hands-on investor, $20k is more than enough to get started with a major online broker.
*Signup bonus information updated weekly.
There are several crowdfunding sites that let you invest in real estate with as little as $5k or $10k.
With peer-to-peer lending, you loan your money out to other individuals in need.
There are a lot of different ways you could invest $20k. Your best option depends on your current financial situation and goals.
Prioritize paying off high-interest debt and establishing an emergency fund first. Then narrow down your top picks and start comparing top investment accounts.
Want to buy bitcoin but don’t know where to start? This comprehensive guide provides step-by-step instructions on how and where to buy BTC in the US.
Features and feedback to consider before you sign up for Vanguard Digital Advisor.
What you need to know to start building your retirement nest egg.
These Roth IRAs stand out for their competitive fees, intuitive platforms and practical research tools.
Opt for a direct 401(k) rollover to avoid penalties and fees.
Earn passive income with the right investment.
Check out the best IRAs with the lowest fees and the most useful features.
National databases can help you uncover lost funds, but you’ll want a safe place to store them.
Custodial brokerage accounts for kids — because it’s never too early to start saving and investing.
Put your money where your mouth is by rethinking how you invest to support BIPOC, LGBTQ+ and other marginalized communities.
