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- If you have $10,000 to invest, you can spread your money across multiple investment types and accounts.
- Online brokerages, robo-advisors, financial advisors, and investment firms all offer investing accounts.
- You can invest $10,000 in stocks, bonds, mutual funds, real estate, retirement accounts, and much more.
So you've got $10,000 set aside to invest. What now?
"Investing is a critical part of growing wealth. It is important to invest savings that you have identified as long-term so your assets can grow over time," says Chloe Wohlforth, CFP and partner at Angeles Wealth Management.
You don't necessarily have to pump all $10,000 into a single investment account or investment type. You can diversify your portfolio and take advantage of many different wealth-building accounts and platforms, including a brokerage account, robo-advisor, retirement account, or education savings account. The best investment apps provide multiple investment options, human-advisor access, and account flexibility with low fees.
But before you get started, make sure you've got enough set aside in an emergency savings fund. The hope is that you'll gain money in investing, but there's always a possibility that your investments will lose value.
"Having an emergency fund to tap into when unexpected expenses arise allows for ultimate flexibility with short-term cash needs without derailing long-term financial goals," says Wohlforth.
Here's how you can invest $10,000.
Determine what kind of investor you are
This is perhaps the most important step to take before investing $10,000. There are generally two types of investors: hands-on and hands-off investors. These aren't mutually exclusive investing styles, though. You can practice both types.
Hands-off investors typically use buy-and-hold strategies, where they purchase certain investments and hold them for long periods of time. These individuals are also known as passive investors since they aren't actively placing trades. If you'd like to sit back and watch your investments grow, or utilize the help of a finance professional, investing through a robo-advisor could be a great hands-off strategy for you.
If the thought of researching investments and placing your own trades sounds good to you, hands-on investing, or active trading, could be a good fit. Hands-on investors take the driver's seat when investing. Brokerage accounts are perfect for DIY traders because they not only let you pick your own investments, but also usually offer commission-free trading on stocks, bonds, and other securities.
Also, consider whether you're looking to invest for the short-term or long-term as this will drastically affect the kind of investment options you'll fund. Short-term investments, such as bond ETFs or mutual funds, are designed for a faster turnaround and tend to be generally liquid (aka can be easily converted to cash). If you're planning on investing for the short term, an individual or joint brokerage account is probably best.
If you're looking to invest for the long term, consider putting your money in a retirement savings account, such as an IRA or 401(k). The money in a retirement account accumulates compound interest over time, plus you won't be able to access it until you're at least 59 1/2 years old. Real estate assets, such as REITs, are another long-term investment option. These are illiquid assets and usually need to be held for at least five years before becoming profitable.
How to invest $10,000
Set up a brokerage account
Online brokerages are investment platforms that typically offer investing accounts, retirement savings accounts, cash management plans, and other wealth-building tools. These investment apps are perfect for active traders and DIY-oriented investors since they give you the power to choose investments on your own.
"A brokerage account is different from a checking and savings account and if not self-managed, should have an advisor overseeing," says Wohlforth.
Commission-free trading on stocks, bonds, ETFs, and other investments is also common with online trading platforms. And some brokerages offer both active trading accounts and robo-advice. For instance, some of the best online brokerage accounts for beginners, like Vanguard or Charles Schwab, provide brokerage accounts and automated investing accounts.
Passively invest through a robo-advisor
Robo-advisors handle everything for you, so you won't be able to trade on your own. You may also have to pay a minimum deposit (these typically range from $0 to $500), monthly subscription fee, or annual asset-based fee to get started. But these investment platforms take care of all of the tricky parts of investing and retirement savings.
You can invest through one of the best robo-advisors, such as Fidelity Go or SoFi Invest, for automated investing, accessible customer service, and user-friendly platforms. Robo-advisors commonly offer ETFs, but may also offer index funds, mutual funds, and crypto.
Work with a human financial advisor
If you'd rather invest and work one-on-one with the help of a professional, a financial advisor or CFP could be right for you. But you'll want to be prepared for any fees you may run into. Financial planners can help with asset management, creating a financial plan, and wealth building.
If you're looking to invest some, or all, of your $10,000, you'll need to ask prospective advisors about their fees. Not all traditional advisors have a minimum account size requirement, but most advisors generally have larger account size requirements than brokerages or robo-advisors.
When it comes to financial advisor fees, you could end up paying asset-based fees, fixed fees, or hourly fees. Financial advisor asset-based fees can range from 1% to 3% of your portfolio's balance each year. As for fixed fees, you could pay between $1,000 and $3,000 per year. If your advisor charges hourly fees, you could pay between $100 and $300 per hour.
Ways to invest $10,000
Popular investment options
Stocks: Stocks are ownership shares of public companies that trade on stock exchanges. Companies generally issue out stocks to raise money for business expansion and other projects. In addition, these investments can generally gain or lose value, depending on a company's success. Many investors use stocks to capitalize off of short-term market fluctuations.
Check out the best stock trading apps>>
Bonds: Bonds are government and corporation-issued investments that allow you to earn regular monthly income, plus interest. Governments and corporations use these investments to raise money and fund projects, so when you invest in one, you become the lender. You'll be paid back for holding treasury bonds or corporate bonds within a period of time.
ETFs: Exchange-traded funds (ETFs) are investment funds that contain multiple security types (e.g., stocks, bonds, or commodities). ETFs trade on most stock exchanges, generally carry less risk than stocks, and are an easy way to diversify your investment portfolio.
Mutual funds: Mutual funds act as a bundle of various investment types. These funds pool investors' money together to invest in bonds, stocks, and other securities. Unlike ETFs, mutual funds have professional managers that handle investment orders and monitor the fund's performance.
Options: Options allow you to buy or sell a certain investment at a set price within a specific timeline. While not all online brokerages charge for options contracts, you'll typically pay between $0.50 and $0.65 per contract.
Alternative investments options
Real estate: Real estate investing is another option for putting your $10,000 to work. If you take the real estate crowdfunding platform route, you can take advantage of automated investment management for as little as $500 (though some real estate apps have minimums that can range from $1,000 to $25,000).
If you compare stocks vs. real estate investments, real estate is less liquid than stocks and usually requires at least five years to become profitable. If you're more of a DIY-minded investor, buying and flipping properties on your own may be appealing. However, this may not be the best option, as it could cost much more than $10,000.
Check out Insider's guide to the best real estate investing platforms>>
Cryptocurrencies: Cryptocurrencies — like bitcoin, ether, dogecoin, or litecoin — are a type of decentralized digital currency that can be bought and sold along the blockchain. Crypto doesn't have a physical equivalent and can often be traded on exchanges, but not all online brokerages offer them.
Precious metals: You can invest in gold, silver, platinum, and other metals through many brokerages and investment platforms. For instance, Interactive Brokers and Fidelity both offer an array of metal investments.
Retirement investing accounts
Employer-sponsored plans: Retirement plans such as 401(k)s, 403(b)s, and 457(b)s are also great investment vehicles. But the type of employer-sponsored retirement plan you're eligible for depends on your employer.
For 403(b)s and 401(k)s, you can contribute up to $22,500 in 2023, plus an extra $7,500 if you're age 50 or older. In addition, the total amount both you and your employer can contribute is $66,000, so it may be worthwhile to invest a portion, if not all, of your $10,000 toward retirement.
Read our guide to the best retirement plans>>
IRAs: Individual retirement accounts (IRAs) differ from employer-sponsored retirement plans in two key ways: (a) you don't have to be employed to open one, and (b) the contribution limits are lower. You can set up either a traditional IRA or Roth IRA, and you contribute up to $6,500 per year (or $7,500 if you're age 50 or older).
Another thing to consider is that you don't have to choose one plan over the other. You can generally contribute to both an employer-sponsored plan and an IRA.
"It is always a good time to start savings for retirement, but the earlier the better. This has to do with the power of compounding. If you start investing your retirement plan in your early 20s, the more likely you'll have a larger pool of money to support you in retirement than if you start saving and contributing to retirement accounts later in life," says Wohlforth.
Education savings plans
529 college savings plan: These state-sponsored plans let you save for certain educational expenses such as tuition, living expenses, and books and supplies. Plus, 529 plans don't have any strict contribution limits, and the money in your plan grows tax-deferred, which allows you to earn and withdraw tax-free money. Contributions and offers for 529 plans vary by state.
Coverdell Education Savings account (ESA): Coverdell ESAs are similar to 529 plans in that both let you save for your child's education costs. These accounts also let you invest in stocks, bonds, mutual funds, and other investments.
The difference is that ESAs only allow you to contribute up to $2,000 per child every year. And if you're single and make more than $110,000 per year, you can't contribute to one. Married couples can't set up ESAs if they make more than $220,000 and file taxes jointly.
Custodial accounts (UTMA/UGMA accounts): Many brokerages, like Fidelity and Charles Schwab, offer these custodial accounts. With a UTMA/UGMA custodial account, you're essentially setting up a brokerage account for your child/dependent. These savings vehicles have no contribution limits and let you transfer the account's holdings to the minor once they reach their state's legal age of majority (usually 18 or 21).
Investing $10k — Frequently asked questions (FAQs)
How can I invest $10,000 for a quick return?
You can invest $10,000 for a quick return by buying short-term stocks, bonds, and ETFs as these can be fairly liquid assets. You may also be able to invest in cryptocurrencies for a quick return. Assets such as REITs are generally illiquid and are best for long-term holdings.
What is a good investment for $10,000 dollars?
A good investment for $10,000 dollars can be anything from stocks, bonds, mutual funds, ETFs, or alternative investments like precious metals. But make sure to invest across multiple asset classes in a diverse investment portfolio.
You can also invest $10,000 dollars in a retirement savings account, like an IRA or 401(k). Or you can invest in a college savings account for future higher education expenses.
How can I turn $10,000 into $100,000?
You can turn $10,000 into $100,000 by investing your money in a diverse investment portfolio. Depending on your risk tolerance and the kind of assets you invest in, you may be able to turn your initial investment into $100,000. But it will likely take many years before getting such a high turnaround.
Keep in mind, there's no guarantee that you'll be able to turn $10,000 into $100,000. It's also possible that you may lose all or most of your money depending on how you invest.
Should you invest $10,000?
This is a question only you can answer. If you're considering investing $10,000, make sure to thoroughly assess your financial situation, including any assets or liabilities you have. It's important that you only invest money that you don't absolutely need at the moment.
And while self-managed brokerages, robo-advisors, and financial advisors are generally three paths for investing, you don't have to limit yourself to just one. If you want to actively trade investments, and also open an account with a robo-advisor or human financial advisor, you certainly can.