The Best ways to spend $10,000
You have just come into a spare $10,000 and you would like to put that money to the best use, but it’s not enough is it, for any kind of real investment? don’t many financial advisers have investing minimums? Are not all good investment back loaded where the profits come in the last ten years? What if you’re new to investing? Where do you start?
You feel smart because you consciously know you don’t know where to start, that’s why you are here – well done! Like they say in the best seller, ‘Richest Man of Babylon’:
“Cash is the most ardent worker for itself”
Knowing this is at least a good start. However, you can start your adventure to wealth with $10,000.
Here are the Top Five Ways to Invest $10,000
1. Choose Investments Yourself Using an Online Trading Platform.
If you’re the do-it-yourself type, and you have some investing know how, you might want to think about picking investments yourself using an internet trading platform.
Places like Scottrade, E-Trade, TD Ameritrade, TradeKing and Motif, all offer instant day trading.
You may want to spend a little time researching discount brokers out there and seeing which discount broker is the best fit for you.
Tip: If you’re going to be picking investments yourself using your $10,000, you might want to pick out some Exchange Traded funds (ETFs). ETFs are known for their low cost and diversification benefits.
2. Invest/Lend to Startups and Earn Some Interest
If you want to invest into the lives of others and earn some interest, there’s a new way that’s both exciting and reasonable: peer-to-peer lending (P2P Lending) or equity debt: offer to buy shares that you can sell back later at cost, but make sure you earn a dividend or interest on the debt. The share is your IOU – either cash them in for a short term gain or hold them and wait to see what happens in the future
Many years ago before the advent of the internet, the Bank Manager would make a decision to lend you money for your business based on how well he knew you personally, and he would call a few of your friends and colleagues you work or trade with for his own financial assessment. Now banks are nigh on impossible to borrow from unless you can prove you don’t need the cash. But, if you knew the person and you trusted them to work hard and you had some level of patience, then it could be very fruitful for you.
Peer-to-peer lending is the practice of lending to borrowers through an online service and it can be a great way to bridge the gap for startups who requite cash in between the time it takes to get investors and proper funding. P2P lending lets you earn some short term return on your cash.
It is also very exciting to be part of some garage startups that could go global and your $10,000 buys you a Beverly Hills mansion in a few years time.
3. Invest in a Roboadviser and Let Professional Trading Algorithms Manage Your Money
If you’re not very experienced at investing, then again who is, and you’re hesitant to loan money out to random businesses online, a safer option to consider is investing in a Robo Advisor.
Robo-advisors are investment companies who create automated software designed to manage your investment portfolio based on certain criteria. For example, when signing up for a Robo service, you will be invited to fill in a very short risk questionnaire to determine your risk tolerance level and investment goals.
Robo-advisors make investment management available to the masses, since they typically have very low account minimums and low fees.
You get a financial adviser, a hedge fund manager, a trading algorithm and an investment platform all rolled into one. 4 services for the price of 1.
Additionally, many Robo-advisors have easy to use user interfaces to help you obtain relevant information about your investment performance and current stock holdings, giving you the chance to learn about investments.
Robo Advisors are probably the safest way to invest for novice investors. Even seasoned investors like Warren Buffett, considered the best stock picker of all time, has told his heirs to park his monies into an index fund, such as the ones bought and sold by Robo Advisors, for protection as it is so difficult to beat the market.
The only way Warren Buffett successfully managed to do this was often by knowing members of the board of the companies he was going to invest in and spent countless hours researching and crunching data.
Tip: If you’re ready to get a comprehensive, in-depth financial plan in place, you’d probably do better to sit down with a financial planner or you can contact an IFA through a roboadvisor such as The Money Pouch. It’s worth a look!
4. Invest in Your Kids’ Education
Every parent wants their kids to be successful in life. One path to success is college.
But, there’s a problem; University is expensive and is showing no sign of slowing down. Forbes contributor, Mike Patton, points out that college tuition has been increasing by a whopping 5.2% for the last 20 years.
If you want your kids to go to University and you aren’t cash rich right now, you should probably think about saving for their higher education.
$10,000 is a great start for an education savings plan, and depositing the money in such a plan will help you get the technical details of the account worked out so you can continue to contribute. For example, you might be held back by the fear of the unknown. Making a decision to start saving for college today will make it much easier psychologically to invest tomorrow.
Tip: If you’re going to contribute to your children’s college education, it’s wise to start as early as possible. The time horizon for college is usually short: a maximum of 18 years. If you’re starting when your children are older, you have even less time. We can’t stress enough . . . start as soon as possible. You need all the time in the markets you can get to grow that education fund through compound growth.
5 Go the Casino
If you want a real fast turn-around of money and the excitement of the tables and blackjack, be our guest…. let us know how that goes!