SoFi Invest
- Trade stocks for $0 and no annual fee
- Start trading with a $0 minimum deposit
- Get up to $1,000 when you fund a new account within 30 days
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How to invest $20,000 largely depends on your age, goals and personal finances. Based on past performance, we selected seven strong investment options to consider.
Traditionally, equities have outperformed other asset classes. So the sooner you invest your 20k — or part of it — to use on the stock market, the sooner you can reap the benefits.
SoFi Invest
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With $20,000, you should be thinking about the mix of investments you’re made, what else you own and if you’re taking too much or not enough risk. Here’s a look at how your money might grow in three common investment classes.
20,000 saved or invested | Savings account | Bonds | Stocks |
---|---|---|---|
1 year | $20,200 | $21,200 | $22,000 |
5 years | $21,020 | $26,765 | $32,210 |
10 years | $22,092 | $35,817 | $51,875 |
15 years | $23,219 | $47,931 | $83,545 |
20 years | $24,404 | $64,143 | $134,550 |
25 years | $25,649 | $85,837 | $216,694 |
30 years | $26,957 | $114,870 | $348,988 |
For this table, we assumed:
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.
ETFs come in all flavors — you can invest 20k in index funds — ETFs that match the moves of indices such as the S&P 500 or Nasdaq. Which ETF you choose depends on how close you are to retirement and how much risk you’re willing to take. In the past, index ETFs, blue chip ETFs and dividend ETFs have consistently performed well with relatively low risk, making them a good choice to invest in.
Maxing out your IRA early in the year is probably one of the best investment decisions you can make. If you don’t have an IRA account yet, consider opening one. A maximum contribution for an IRA in one year is $6,000, which is 30% of your $20,000. Since you can invest in individual stocks and ETFs, you can consider this your main investment vehicle.
If the previous option seems too complicated or you don’t have the time to research, an excellent option is to invest your 20k is with a robo-advisor. These computer algorithms allocate your funds based on specific parameters you set.
Crypto can be lucrative, but it’s also highly speculative and should only be explored if your portfolio can weather the volatility. Because of this, consider investing a small amount of your 20k.
If you’re wondering where to invest 20k aside from the popular options, consider alternative investments such as non-fungible tokens (NFTs), historic works of art and more.
Although $20,000 may not be enough to purchase a property directly, you can buy part of it and even earn rental income through REITs. This option is often reserved for those who want passive income and low risk — and especially those who invest for the long term.
Before you invest your $20,000, make sure your finances are in order and you have a clear goal of what you want to accomplish.
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Read more…Information on this page is for educational purposes only. Finder is not an advisor or brokerage service, and we don't recommend investors to trade specific stocks or other investments.
Finder is not a client of any featured partner. We may be paid a fee for referring prospective clients to a partner, though it is not a recommendation to invest in any one partner.
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