No matter how much money you make, $50k is a decent chunk of change. Invest it wisely with any of our top five picks. And with an amount this large, you have the freedom to choose as few or as many of these options as you’d like.
What should your $50k portfolio look like? It depends on several factors like your age, goals, risk tolerance and timeline.
Your investing goals will likely be more aggressive in your 20s and 30s than they will be in your 50s. If you’re in your 30s and looking to build a portfolio aimed for growth, this is what it may look like:
CDs and bonds
5% to 20%
Stocks, ETFs and mutual funds
50% to 75%
Peer-to-peer lending, real estate and alternative investments
0 to 25%
To make the most of your investments, you may need a new brokerage account.
Our pick: Interactive Brokers
Interactive Brokers offers an impressive range of tools and low fees for active or professional investors.
Create watchlists, set alerts and follow news on the Trader Workstation platform
Choose from IBKR Pro or IBKR Lite depending on your investing style
All users older than 21 must meet a $20,000 liquid net worth requirement for a cash account
There are a few financial boxes you should check off before you invest $50,000:
Build an emergency fund. We recommend keeping three to six months of expenses in a high-yield savings account, so it’s available when life throws an unexpected curveball.
Save for your kid’s education. If you have children, consider setting aside a portion of the $50k to save for their college education.
Create a vacation fund. Pay for your next adventure in full by keeping some money in a high-yield savings account.
Pay off debt. It’s always best to pay off high-interest debt before you invest because you pay more in interest than you’d earn in any investment vehicle.
Invest in a 401(k)
Fifty-thousand dollars is enough to max out your 401(k) and still have at least $24,000 left over. You can increase your contribution percentage and use part of the $50,000 to supplement the gap in your take-home pay. But keep in mind, your 401(k) portfolio should also be diversified based on your age, risk tolerance and goals. Your 401(k) portfolio should be part of your stock, bond and other investments mix.
Tax-deferred contributions. You get a tax break in the year you contribute to a 401(k). But you’ll pay taxes later on when you withdraw funds.
Employer match. You get free retirement money if your employer matches your contribution up to a certain amount. It’s best to get the maximum contribution possible from your employer in your 401(k).
For all investors. Many 401(k) plans offer low-cost index funds and target-date funds, which are great options for hands-off or novice investors.
Contribution limits. The maximum contribution limit for a 401(k) for 2020 was $19,500 or $26,000 if you’re 50 or older.
No lump-sum payments. 401(k) contributions can only be funneled out of your paycheck, so you can’t make a one-time payment to this account.
Plan could have high fees. If your employer-sponsored plan has hefty fees or an unimpressive range of investment options, you may not want to max it out.
Remember, if you have an employer-sponsored 401(k), as well as an outside retirement in a brokerage firm or bank, you should consider the combined accounts as well as other investments as your total portfolio. This means your allocations to stocks, bonds and ETFs comprise your entire market asset mix. The two accounts should not be considered separately since they affect your risk exposure and may hinder your diversification strategy.
Invest in the stock market
The stock market can be a great way to grow your wealth. But the stock section of your portfolio should be diversified across different sectors and market caps or company sizes. You don’t need to spend all your time hand picking individual stocks. You can invest in total market ETFs or a few broad index funds. Both types invest in diversified baskets of stocks and are professionally managed.
Low-cost online brokers. Many online brokers offer low fees, small minimum investments and commission-free trades.
Comprehensive options. You can invest in a range of stocks, bonds, mutual funds and ETFs.
Easy to diversify. Spread out your risk by investing in ETFs and low-cost index funds.
Beats inflation. The stock market produces an average 8% yearly return, making it a great way to accumulate wealth and stay ahead of the cost of living.
Liquid investment. It’s easy to sell off some of your portfolio when you need it.
Volatility. The stock market is very volatile and experiences daily dips and swings.
Can be risky. If you throw all your money in stocks instead of making a plan to diversify, you could lose all your money.
Watch out for fees. Some brokers charge hefty fees and commissions, which could eat into your profits.
Investing in stocks is only one part of holding a diversified portfolio. Having concentrated positions in only a few individual stocks is very risky. The better way to own stocks is by buying stocks in a variety of sectors (technology, consumer staples, industrial), market capitalizations (small- and large-cap) and styles (value, growth). The best way for less-experienced investors to get this diversification is to buy ETFs and low-cost index funds. These provide a pre-packaged, professionally managed stock portfolio that tracks a specific index, such as the S&P 500, Russell 2000 or European stocks. There are thousands of ETFs and low-cost funds available. The key is to make smart selections that will deliver portfolio diversification that matches your risk level and time frame.
Compare stock-trading platforms
To invest in stocks, you’ll need to pick a broker.
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Invest in bonds
If you plan on making a big purchase in the near future, such as buying a home or sending the kids to college, it may make sense to invest your money in bonds. Terms typically range from a few months to 30 years.
Little risk. Bonds are considered stable investments and carry less risk than other securities.
Tax efficient. You typically don’t pay federal taxes on local, state and federal bonds.
Provide passive income. Bonds produce a steady, fixed income and offer higher returns than other safe investments like savings accounts.
Risk varies. Government bonds are typically safer than corporate bonds, although this isn’t always the case. You’ll want to check what letter grade it was assigned by the credit rating agencies.
High investment minimums. Bond prices usually start at $1,000. But some can cost much more than that.
Could lose value. Your bond could lose value if the issuing entity defaults or interest rates rise when you’re ready to sell.
Invest in real estate
There are several ways you could invest in real estate with $50k. You could purchase real estate investment trusts (REITs) through a site like Fundrise, invest directly in a commercial property through RealtyMogul or put a downpayment on a house and rent it out yourself.
Passive income. Real estate is an attractive investment because it produces a steady flow of income.
Plenty of options. With $50k, you can choose to invest in REITs, commercial properties or your own property.
Safe options. If you want to invest in real estate in the safest way possible, you can purchase REITs, which are made up of hundreds of different properties and trade like stocks.
May need accreditation. Some crowdfunding sites won’t let you directly invest in real estate without qualifying as an accredited investor.
Possible risk of default. If you choose to invest in a single property, you could lose your money if it defaults.
Illiquid investment. Real estate can’t be easily sold or converted to cash, so it may not be a good option if you’ll need your money soon.
Invest in gold and other precious metals
When the stock market goes down, gold tends to go up. So it can play a strong role in your portfolio as a hedge against market downturns and inflation. (Other metals like silver can be used the same way.) But gold in particular is something people tend to fall back on during times of massive economic or geopolitical strife. In fact, the price of gold reached record highs between 1998 and 2008. Those dates roughly represent the start of the dot-com bubble’s bursting and the dawn of the global recession.
These days, precious metals like gold and silver are also used by leading sectors like tech and healthcare. So their demand goes beyond individual investors and has become vital to entire economies.
You can buy physical gold, gold-industry stocks or buy shares of ETFs that invest in gold.
Gold tends to rise when other assets and currencies drop.
Gold can protect against inflation and deflation.
The demand for gold and other precious metals has been rising in emerging markets.
Physical gold is a tangible object that you have to keep safe on your own. A thief can take it if you’re not careful.
Unlike stocks and bonds, physical gold doesn’t pay interest or dividends.
It may sometimes take years for gold to go up in value, and it can drop in value when other assets advance.
Stocks related to gold are still subject to the metal’s ups and downs.
Invest with a robo-advisor
If you want your investments to be picked and managed for you, consider investing a portion of your $50k in a robo-advisor. These are automated investing platforms. After you answer a survey, the robo-advisor recommends a portfolio based on your risk level and goals. It then manages this portfolio for you. But robo-advisor portfolios are usually built with a couple of ETFs, which invest in stocks. So make sure you’re investing the rest of your $50k in other asset classes.
Inexpensive. Required fees and investment minimums are much lower than with a traditional financial adviser.
Goals-based investing. Robo-advisors make algorithmic recommendations based on your goals, risk tolerance and investing timeline.
Requires minimal time or effort. Robo-advisors keep your portfolio in tip-top shape by performing routine tax-loss harvesting and automatic rebalancing.
Some offer human assistance. Robo-advisors like Betterment give you access to a human adviser for an additional cost.
Limited flexibility. You typically can’t choose your own investments.
Not entirely personalized. Robo-advisors give advice based on the questions they ask you. But they can’t ask follow-up questions if your situation is unique.
Relatively new. Robo-advisors came on the scene after the Great Recession, so we don’t know how they’ll help investors during the next economic downturn.
Anyone with $50,000 to invest should consider low-risk investments and some degree of diversification.
The best illiquid investment vehicles are certificates of deposits, with varying maturity dates. Many individuals may select a single certificate of deposit, but distributing funds across multiple CDs provides added flexibility and ensures that, in the event of an emergency, it isn’t just one CD that needs to liquidate.
Mutual funds are also a good investment, but should not represent over 25% of an investor’s portfolio. Although mutual funds are usually well-diversified, a macro downturn will lead to a reduction in savings and can create a perfect storm as job security vanishes and savings dry up.
Consequently, any investment tied to market fluctuations should be kept to a minimum and only considered if the money invested there can be lost without creating significant issues.
Investing $50k can be exciting but also scary. If you have multiple goals you’re trying to reach, splitting it up among different investments may be the best option for you. Take some time to map out your goals and risk tolerance. Then compare investment platforms until you find the best options for you.
Frequently asked questions
If you know you’ll need your money in the near future, consider keeping it in a CD, savings account or in short-term US government bonds.
It depends. If you live in a low-cost area, $50k may be enough to cover the down payment, closing costs and some of the repairs. But flipping houses is one of the riskiest ways to invest in real estate, so make sure you do your research.
Cassidy Horton is a writer for Finder, specializing in banking and kids’ debit cards. She’s been featured on Legal Zoom, MSN, and Consolidated Credit and has a Bachelor of Science in Public Relations and a Master of Business Administration from Georgia Southern University. When not writing, you can find her exploring the Pacific Northwest and watching endless reruns of The Office.
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