Investing $50,000 is an exciting opportunity to grow your wealth and secure your financial future. Whether you’ve been saving diligently or have come into an unexpected windfall, deciding how to invest a significant sum of money like $50,000 takes careful consideration.
You’ve got plenty of investment options with $50,000 in capital, each with a level of risk and potential returns. Investment opportunities typically grow the more money you have.
Here are seven ways to invest $50,000, how this money can grow over time in different assets and money moves to consider before you invest.
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Most people can’t beat the market when it comes to investing and are better off investing in ETFs, but you may choose to invest a portion of your $50,000 in individual stocks of companies.
Stocks are considered to offer the greatest potential for growth over the long term. Historically, the stock market has delivered annual returns of about 10% — 7% or so after inflation. If you’re willing to take on more risk, spend time researching companies or don’t want exposure to certain stocks that may be included in an ETF, there may be a place in your portfolio for investing in individual stocks.
Hands-on investors who want to limit risk but still enjoy choosing their own investments may consider a fund-investing strategy — in particular, exchange-traded funds (ETFs). ETFs give you exposure to a basket of stocks, bonds, futures or other assets through pooled investments similar to mutual funds, but with generally lower costs. A single share of an ETF can instantly diversify your portfolio and potentially lower your risk exposure.
ETFs come in many types, but ETFs that match the moves of indexes, such as the S&P 500 or NASDAQ Composite, provide a simple way to invest and gain broad market exposure without requiring much market knowledge.
Examples of popular index ETFs include the SPDR S&P 500 Trust ETF (SPY), which tracks the performance of the S&P 500, and Invesco (QQQ). This ETF tracks the performance of the component stocks of the Nasdaq-100, an index of the largest 100 non-financial stocks listed on the Nasdaq.
The IRA is a foundational investment account that offers tax benefits for saving for retirement and should be one of your primary investment accounts until you reach the contribution limit.
Contribute up to $7,000 ($8,000 if you’re age 50 or older) to an individual retirement account (IRA) in 2024.
IRAs are versatile investment accounts in that they let you invest in everything from stocks and bonds to ETFs, options and futures, all while offering tax benefits for saving. Meanwhile, self-directed IRAs let you diversify your retirement savings with alternative assets, including real estate, gold, cryptocurrencies and pretty much every other investable asset that exists.
The best IRAs offer plentiful investment options, low costs and fees and a trading platform suitable for your experience and needs as an investor.
Alternative assets are those outside traditional stocks, bonds, ETFs or mutual funds and include things like real estate, private equity and fine art, among other things. In addition to the potential for outsized returns, alternative assets bring diversity to one’s portfolio. And since many alternatives offer low correlation to traditional markets, they can help reduce overall portfolio risk.
Today’s investing platforms make it incredibly easy to diversify your portfolio with alternative assets. Both Fidelity Investments and Interactive Brokers, for instance, offer precious metals investing. Meanwhile, investing app Public offers a growing list of alternative assets, including cryptocurrencies, non-fungible tokens (NFTs), fine art and collectibles.
You no longer have to buy physical property yourself to invest in real estate. Crowdfunding platforms like Fundrise, Yieldstreet, RealtyMogul and Ark7 have brought real estate investing to the masses with user-friendly platforms that let you invest in private real estate with just a few clicks. And with much less upfront capital.
These platforms typically offer fractional investments in private real estate investment trusts (REITs) and single real estate projects. REITs are companies that invest in income-producing real estate such as office buildings, shopping malls, hotels, resorts and apartment complexes, all without the burden of having to physically own and manage the property.
Crypto is a high-risk, high-reward asset class that continues to grow in popularity. First launched in 2009, Bitcoin is the face of crypto worldwide, with a level of popularity that drove the value of its coin through the roof — from a value of $0.0009 per Bitcoin in October 2009 with the first Bitcoin transaction to a peak of over $68,000 per coin in November 2021.
Unlike just about any other asset class, crypto trades 24 hours a day, 365 days per year. And while its price has pulled back dramatically from its high, Finder’s expert panel expects Bitcoin to exceed $100,000 per coin by 2025.
Fifty thousand dollars isn’t chump change and may be best left in the hands of a professional with expertise in various aspects of investing, especially if you don’t have the time or interest to manage your own investments. Even if you don’t want to outsource portfolio management entirely, an advisor’s knowledge can help you make informed decisions and navigate the different markets.
Financial advisors get to know you and your goals and how much risk you’re willing to take. They build a personalized, holistic financial plan tailored specifically to you. Advisors of this sort typically charge a one-time planning fee or annual management fees if they manage your portfolio on an ongoing basis. This fee is typically between 0.5% and 2%.(1)
If you want to outsource the management of your $50,000 portfolio, you may consider hiring a trusted financial advisor.
With $50,000, you can start building serious wealth with smart decisions and enough time. Here’s how it might grow in three common investment classes.
| $50,000 saved or invested | High-yield savings account | Bonds | Stocks |
|---|---|---|---|
1 year | $52,955 | $52,550 | $53,500 |
5 years | $66,628 | $64,119 | $70,128 |
10 years | $88,785 | $82,224 | $98,358 |
15 years | $118,311 | $105,441 | $137,952 |
20 years | $157,656 | $135,215 | $193,484 |
25 years | $210,085 | $173,396 | $271,372 |
30 years | $279,949 | $222,357 | $380,613 |
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 as benchmarks only and consider risk as well as return.
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What you should invest $50,000 in depends on your time frame and risk tolerance. Investors typically turn to bonds and other fixed-income products for reliable returns, while stocks can provide higher returns but with more risk.
How much interest $50,000 earns in a year depends on where you invest the money and that investment’s rate of return. If you invest your $50,000 in a bond that earns 5.1% in yearly interest, you can expect $2,550 in interest in a year.
While there’s no guarantee, you can typically turn $50,000 into more money by saving and investing.
One way to create passive income with $50,000 is to invest in income-producing assets, such as dividend stocks and real estate.
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