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Investing

6 of the Best Ways to Invest $10,000

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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You have $10,000, and your bills are paid. Do you (a) fly to Tahiti to sip mai tais on the beach, (b) stick it in the bank and save it for a rainy day or (c) make some strategic low-risk investments?

While the first option is tempting and the second option is safe, it’s the third option that’s most likely to help you build a solid financial future. The answer to the next question, however, isn’t so obvious. How should you invest that money?

6 of the best ways to invest $10,000

There’s no one strategy that’s right for everyone, but there are some solid low-risk options that can help you turn that $10,000 into a great deal more over the years. Here are six ways to consider investing $10,000.

1. Focus on your retirement

Even if it seems like an eternity away, starting to save for retirement today is one of the smartest moves you can make for your long-term financial health. If your employer offers a retirement plan like a 401(k), that can be an easy and effective way to save.

401(k) plans allow you to regularly contribute a portion of your salary to an investment account where your funds can grow tax-deferred (a traditional 401(k) plan) or tax-free (a Roth 401(k) plan) until you reach retirement. Because the funds usually are automatically deducted from your paycheck, it’s a good way to put investing on autopilot.

Some employers even offer matching contributions up to a certain amount. If your company does, you should contribute at least up to that amount so you’re able to take advantage of every cent of free money. There are penalties for early withdrawals (before age 59 and a half and before the account is five years old), but for long-term savings, these plans are great options.

If your employer doesn’t offer a 401(k) plan or you’ve maxed out your annual contributions, you may want to consider an individual retirement account (IRA). IRAs offer many of the same benefits as 401(k)s, but you can open on an IRA on your own through a bank or brokerage firm. While IRAs offer more flexibility in some cases if you need the funds before retirement, there are income stipulations for Roth IRAs.

2. Research index funds

When it comes to investment payoffs, it’s hard to beat the stock market, and you don’t need a huge amount of money to dive in. While you can lose big time if you sink all your money into one “sure thing” gone wrong, diversified long-term investments in the stock market historically have paid off. Add the beauty of compound interest, and you could grow that $10,000 into a significant sum over a long enough time span.

While you can pick and choose individual stocks to invest in if you have the time and desire to do a lot of research, index funds offer an easy way to diversify your portfolio. In the simplest terms, index funds are mutual funds that pool your money and the money of other investors to buy a variety of assets. They aren’t actively managed like other mutual funds; instead, they’re invested for the long term based on a market index like the Nasdaq 100 or the Dow Jones Industrial Average.

Because an index fund is more of a set-it-and-forget-it investment, you may be less tempted to buy and sell based on the short-term whims of the market. And the fees associated with index funds typically are low.

3. Consider ETFs

Exchange-traded funds (ETFs) are similar to index funds in that your money is pooled with other investors’ money and used to purchase a mix of assets. ETFs also can diversify your investments, they’re often a good tool for long-term savings. However, there are some significant differences between the two.

For starters, you typically need less money to invest in an ETF, as you can buy as little as one share. You also can purchase ETF shares at any point during the day, and where the market is at that particular moment will be reflected in the price at which you buy or sell. The price of an index fund, on the other hand, is calculated only at the beginning and end of the selling day.

4. Review real estate

While $10,000 may not be enough to scoop up a prime property of your own, it could be enough to invest in a real estate investment trust (REIT). These funds pool your money with the money of others and invest it in real estate properties.

You can choose from a variety of specialized REITs, including residential, commercial, and lodging and resort properties, and your profit (or loss) is determined by how well they do on the market. It’s a simpler way to invest in real estate without having to be a landlord.

Other lower-cost options for investing in real estate you may want to explore include using online real estate crowdfunding platforms and participating in real estate investment groups.

5. Invest in yourself

Depending on your career, an advanced degree or additional certification could boost your earning potential. Or perhaps it’s time for a new and better-paying career path. As you prepare to follow your passion, research your current or desired industry to evaluate just how much your new education could pay off in actual dollars down the line.

6. Increase your emergency fund

How much is in your emergency fund right now? If it’s not enough to cover three to six months’ worth of living expenses, consider stashing some more cash in your savings. While the payoff won’t be huge (the interest rates on the best online savings accounts usually clock in between 2% and 2.5%), an emergency fund can prevent you from digging yourself into a hole in the event of an unexpected financial setback like a job loss or major car repairs.

In fact, most financial experts advise you to make sure you have an adequate emergency fund before you focus on other investments.

Figuring out what to do with $10,000 is a great problem to have, and there are plenty of options to consider. Before you choose one (or more), evaluate your financial goals, consider your unique situation and seek professional guidance as necessary. With some strategic moves and a little luck, it could become a recurring problem.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Julie Ryan Evans
Julie Ryan Evans |

Julie Ryan Evans is a writer at MagnifyMoney. You can email Julie here

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Investing

How to Invest $50,000 Wisely

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

You’ve paid off your debts and built yourself a nice little nest egg of $50,000 — and you may be wondering what you should do with it. Although the phrase “a penny saved is a penny earned” holds truth, you may want to start investing your money.

Investing is an excellent option because of the growth potential of the money you invest. Unfortunately, you run the risk of losing purchasing power if inflation eats away at your savings. Even if you choose to hold your money in a high yield savings account, you may not be able to outpace inflation.

Getting started with investing can be a daunting task for new investors. Let’s take a look at the different types of investment styles and determine the best way to invest $50,000.

Determine your investment style

The first thing you’ll need to do is decide how you want to invest.

Do it yourself

DIY is an option for almost everything in life, although painting your own home and building your investment strategy are two very different tasks. The idea is that you will complete the process without any professional help.

If you choose a DIY investment strategy, it is important to map out your investment strategy with careful research and planning. After you are comfortable with your plan, you will need to open a brokerage account to purchase investments.

The obvious advantage to this tactic is that it’s typically less expensive than many other options. However, you need to be comfortable making large financial moves without any professional assistance.

Robo-advisor

Robo-advisors vary widely based on the brokerage firm. However, the service generally manages your investments based on an algorithm. Although some firms offer lower fees, many offer fee structures that are comparable to traditional financial advisors.

Although you will not receive personalized attention, a robo-advisor is tailored to your investment interests. Plus, many robo-advisors offer lower entry fees than traditional financial advisors. In fact, some robo-advisors, like Betterment, have no minimum balance requirements.

With a robo-advisor, you may need to double check that your strategy aligns with your goals. A physical person won’t be managing your account, so you will need to ensure that the robo-advisor understands your goals and builds your strategy appropriately.

Hire a professional

It may be a good idea to hire a financial advisor if the idea of managing your money without help is scary. A professional will help you to get the most out of your investments with minimal effort on your part.

If you choose this route, make sure you research your future financial advisor carefully, as some don’t have your best interests in mind. Find an advisor with credentials and recommendations that check out.

5 smart ways to invest $50,000

Once you’ve decided how you will start investing, you need to choose your investments. If you chose to work with a professional, they’d be able to guide you with your investing decisions.

There is no single best way to invest $50,000. The best investment strategy for you will vary based on your unique situation. However, investing your money can be a wise choice for your financial future. Let’s take a look at five smart ways to invest 50,000.

1. Create an emergency fund

An emergency fund is a great way to safeguard against the unexpected. Everyone faces unexpected expenses at some point in their life, so it makes sense to be prepared. These unexpected expenses can be anything from losing your job or an unexpected health problem. These heart-stopping moments will be slightly less traumatic if you have a nice emergency cushion.

You’ll also want to consider placing your emergency fund in an account that won’t charge fees for withdrawals. It’s important to have quick access to cash for anything life throws at you

If you have a solid emergency fund, but would like extra savings available, then you may want to consider placing your money in a CD. Although you would not have immediate access to your money without fees, you may be able to plan your CD deposits around large purchases. The CD will help your savings grow while you prepare to make a large purchase (like a home or vehicle).

2. Max out your retirement options

If you ever plan to stop working, then you’ll need to maximize your retirement savings, especially if you have available cash to invest. Luckily, there are numerous options when it comes to retirement savings.

First, if your employer offers a 401(k), you should contribute as much as you are allowed. Other common types of employer-sponsored retirement accounts include 403(b), 457 and the government thrift savings plan. Some employers will contribute matched amounts to your retirement account. You’ll want to maximize this option if it is available.

Unfortunately, not every employer offers a retirement savings plans. Don’t worry; there are other options available.

An IRA (Individual Retirement Account) will allow you to deduct the investments you make from your income. Opening an IRA will allow your funds to grow tax-free until you withdraw them. A Roth IRA is very similar to a traditional IRA. According to Chad Manberg, a CFP at the Strategic Income Group in Arizona, the number one reason to prioritize a Roth IRA over a traditional IRA is “tax-free growth.” However, he added, “Ideally, someone would have both a Traditional and a Roth IRA by the time they get to retirement.”

“The major time to prioritize one over the other is if the 401k is offering a match. In this case, the 401k should be prioritized,” said Rick Vazza CFP at Driven Wealth Management. Other than that period of prioritization, a diverse strategy between both IRAs and a 401k may lead to a good investment portfolio.

Visit the following resources to learn more about contribution limits:

3. Invest in the stock market

If your retirement accounts are maxed out, you may want to start investing in other ways. Here are a few ways to get started:

  • ETFs. Investing in a low-cost exchange-traded fund (ETF) could be a good option if you want less fees more flexibility with your investments. ETFs are traded like stocks, so you will have the ability to get started with just one share.
  • Mutual funds. Mutual funds are another great way to get started investing in the stock market. Instead of buying a share, you buy into a fund.

Both of these are a good starting point for stock market investments.

Fees
$0.00 per trade

Per Trade Stock Trading Fee

Account Minimum
$0
Promotion

Cash bonuses are available for new accounts. Bonuses start at $50 if you deposit or transfer $10,000+.

Fees
$0.00 per trade

Per Trade Stock Trading Fee

Account Minimum
$0
Promotion

Get up to $600 when you open and fund an account within 60 calendar days of account opening, depending on deposited amount.

Fees
$2.95 per trade

Per Trade Stock Trading Fee

Account Minimum
$0
Promotion

Up to 100 free trades

4. Invest 50k into a 529 account

If you have children then you may want to consider investing that money in a 529 account. A 529 can help cover your child’s education expenses. Anything from private K-12 to graduate education can be paid for through this account.

According to the College Board, the average annual cost to attend college was between $9,970 and $34,740 for state and private schools respectively for the 2017-2018 academic school year. A 529 savings plan will allow you to invest in mutual funds and other investment vehicles through the plan. There are also some tax advantages associated with 529 accounts.

Investing $50,000 into a 529 may be a solid plan now if you intend to pay for your child’s higher education later on.

5. Create the best mix for your financial future

Everyone’s financial situation is unique, so there’s no one-size-fits-all investment strategy. Instead of investing the full 50,000 on one investment vehicle, it may be wise to have a healthy mix of investments.

As you go through the investment process, make sure to analyze and adjust your portfolio along the way. Investors should rebalance their investments on a regular basis to maximize the effectiveness of their portfolio.

Think about your goal

Before you get started, think about why you want to invest 50k in the first place. You have plenty of options to build the right investment portfolio, but you’ll need to create a portfolio that will take you where you want to go.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Sarah Sharkey
Sarah Sharkey |

Sarah Sharkey is a writer at MagnifyMoney. You can email Sarah here

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Investing

USAA Investments Review 2019

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

USAA is known for their great workplace and customer service. One in four employees are veterans or military spouses. These are attractive traits to draw in customers who are military service members.

USAA offers a slew of different products, including car, health and homeowners insurance. They also have checking accounts, mortgages and personal loans available as well, though this review will focus on the company’s investing products. While most of USAA’s offerings target military service members and their families, anyone can open an investment account.

USAA Investments
Visit USAASecuredon USAA Investments’s secure site
The Bottom Line: Unless you’re already a member of USAA and want to keep your investments within one company, you don’t need to put your money here.

  • A $3,000 minimum balance is hefty.
  • High costs per trade and other fees.
  • Longevity is attractive but costs are a turnoff.

Who should consider USAA Investments?

Online brokers are a great way to let you manage your money, whether you’re new to investing or you’ve been handling them for years.

If you’re already a USAA member, enlisting them to be your online broker is enticing. Keeping your money all in one place can be a convenient option, and you can talk to real, live people when you have investment questions or concerns.

If you’re looking for a specific kind of account, such as a custodial or SIMPLE IRA, you can find it at USAA. Their long list of various account types can be a big draw if you need something in particular.

USAA Investments fees and features

Stock trading fees
  • $8.95 per trade
Amount minimum to open account
  • $500.00
Tradable securities
  • Stocks
  • ETFs
  • Mutual funds
  • Bonds
  • Options
Account fees (annual, transfer, inactivity)
  • $70 full account transfer fee
  • $20 partial account transfer fee for a security through the Direct Registration Service (DRS); $0 to transfer a security that is not eligible for DRS.
  • $10 if less than $100 in account and no activity for 12 months
Commission-free ETFs offered
Mutual funds (no transaction fee) offered
Offers automated portfolio/robo-advisor
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • 529 Plan
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • Custodial Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors Act (UTMA)
  • Custodial IRA
  • SEP IRA
  • SIMPLE IRA (Savings Incentive Match Plan for Employees)
  • Trust
  • Guardianship or Conservatorship
Ease of use
Mobile appiOS, Android
Customer supportPhone, 4 branch locations
Research resources
  • Earnings press releases
Fees
$8.95 per trade

Per Trade Stock Trading Fee

Account Minimum
$500.00
Promotion
N/A
Fees
$0.00 per trade

Per Trade Stock Trading Fee

Account Minimum
$0
Promotion

Get up to $600 when you open and fund an account within 60 calendar days of account opening, depending on deposited amount.

Fees
$0.00 per trade

Per Trade Stock Trading Fee

Account Minimum
$0
Promotion
N/A

Strengths of USAA Investments

Extensive choice for different accounts: You’ve got your choice of different accounts to choose from when signing up for a USAA brokerage account. If you’re a business owner and need an SEP or SIMPLE IRA (Savings Incentive Match Plan for Employees), you can take your pick. If you need a Custodial IRA or 529 Plan, they’re available. There’s also joint accounts, trusts and conservatorship accounts.

Great customer service: While a machine answers your phone call, it doesn’t take much time or effort to get to a human representative. Whether you have a question about certain stock performance or less-risky exchange-traded funds (ETFs), the easy customer experience spans across USAA’s product offerings.

A robo-advisor option is available: To complete with robo-advisor companies, USAA offers their Digital Investment Advisor. If you like the idea of a robo-advisor and a brokerage in one, USAA has the best of both worlds for you. Keep in mind that the annual fee for the robo-advisor is 0.50% a year — that’s double other leading robo-advisors like Wealthfront or Betterment.

Drawbacks of USAA Investments

High trading costs: $8.95 per trade is pricey. Other companies charge anywhere from $4.95 to $6.95 per trade. This could deter new investors from making any transactions and active investors might find this too costly for their taste.

Lots of fees: There’s a fee for almost everything. A transfer fee, whether partial or full, can range from $20 to $70. If you aren’t active in your account for a year, you’ll get charged $10 and then your account will close. Make sure you fully understand the rates and fees, or you might get stuck paying way more than you expected.

Restricted expansion to other products: While USAA Investments is open to the general public, it’s hard to get access to their other products — such as health insurance or loans — unless you’re in the military or related to a service member.

Limited info available online: If you have specific questions or concerns regarding your investment account, you may have trouble tracking down answers on USAA’s website. Though many competitors have detailed FAQs to help consumers, you may need to speak with a customer service rep to find answers at USAA.

Is USAA Investments safe?

Investing in any form carries risk. As you look into different investment accounts, it’s important to see if a company has security measures in place in case fraud or other theft takes place.

USAA doesn’t have a policy in place that ensures members get their money back in the event of fraud, identity theft or other malicious activity. The most you can do is call to report suspicious activity, but there’s no guarantee you’ll get a refund for the lost cash. However, USAA is a member of the SIPC — Securities Investor Protection Corporation — which means your money is insured if the company goes under.

Final thoughts

For current USAA members, having your investments under the same umbrella as some other products you use could be a useful option. But for those who don’t serve in the military or those who aren’t related to servicemembers, you may find better options elsewhere.

A high account minimum with high trading costs means you can find less-expensive options elsewhere.

Open an USAA Investments accountSecured
on USAA Investments’s secure website

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Dori Zinn
Dori Zinn |

Dori Zinn is a writer at MagnifyMoney. You can email Dori here