We find ourselves in a situation where we have some savings and wish to make more out of it. So you find different ways to invest it like stocks, property, other securities, or maybe gold. Something that could help you make more out of it.
What if this amount is $50,000? The amount can be overwhelming, and people may get confused as there could be multiple options. What is more confusing is to decide if you want to invest the whole amount in a single place or at numerous locations. Or should you invest the entire amount in one go or support it little by little, maintaining a buffer.
Plan Before Investing 50k
When you want to invest 50,000 dollars, there are a few things that you should keep in mind. First, as it is a considerable amount to invest, one must be careful with the plans they make and at the same time be sure about all the things affecting the decision to invest.
The simple reason to invest to gain returns is to safeguard your future. Many people invest in having a buffer or keeping earning when they don’t have a job or any income source when they get old. But is it okay to safeguard your future when you are facing a financial crisis at present?
Let’s look into some of these questions that the financial advisors recommend; one must ask themselves before investing 50k.
- Do you have any overdue debts?
A debt is something that feels like a burden that you need to pay off. It can reduce your savings and income, especially when you have to pay higher interest rates on it. If you find yourself in a situation where you have money to invest, your first step should be to pay off all your debts. Paying off these debts can save you many you have been paying off as interest. And you can again find yourself with some savings that you can invest in the future.
- Do you have funds for any unforeseen events or emergencies?
There are situations when people find themselves stuck in cases where they need emergency funds but cannot get them. In such situations, one must have enough liquid funds that could cater to the needs. Experts advise that one must have at least three months of expenses that are needed for a living. These funds will help them be stable in case of medical emergencies, unemployment, natural disasters, and many more.
One important thing to remember here is that these funds must be available in a liquid form or in a form where they can be quickly put into use. These should be kept safe and must be checked from time to time.
- What category of investors do you fall in?
By category of investors, we mean the type of investor you are or the type of investment you are comfortable in. You have a variety of investment categories you can choose from. For example, if you wish to have a single and safe source of income, you can plan to invest in a stock that you think is stable from the charts or maybe choose a broker or a financial advisor who can advise you on the investment decisions.
If you don’t want to invest your entire 50,000 in a single place, you can invest in mutual funds or create a portfolio of some promising stocks and securities. There are plenty to choose from, ETFs, Target-date funds, CFDs; all you have to do is understand your investing style.
- What are your objectives for investing 50k?
Apart from considering your investing style, emergency funds, and financial condition, before investing 50,000, other factors need your consideration too.
These factors involve your plans, age, expectations from the investments, and the time you are willing to give to the investment. Some people plan their investments with a goal. These goals could be to buy a car, a house, or save for higher studies of their young children.
According to these goals, people can plan on the investment time, long or short, or the risk they are willing to take. For example, if someone wants to purchase a car in a few months or within a year, they may not take enough risk as they do not have enough time up their sleeve. On the other hand, if a person wants to invest to gain funds for the future of their young children or to buy a house, they may invest for the long term and are willing to take risks to some extent.
- What type of investment do you want?
One can find many ways and ideas to invest 50k. If you look at the options available to you, you may get confused about choosing just one. The best way is to consider what type of investment do you want?
According to how an investor invests in a market, it can be classified into two types, i.e., Active Investment and Passive Investment.
Active investment is a way that suits someone willing to take risks for higher returns. It is a hands-on approach to investment where investors, or someone else on their behalf, actively buy or sell securities in the market. This type of investment requires total concentration on the market. Therefore, one must have done enough research before getting into this type of investment.
Passive investment, on the other hand, involves lesser risks but requires time to generate favorable returns. Investors create portfolios of different securities and hold the investments. This type of investment is best suited to invest $50,000.
If an investor wants to try, having a passive and active investment mix can also be an excellent decision to invest $50,000.
- Are your investments safe and secured?
Investments can be hazardous, primarily when you are investing in a stock market. Markets are uncertain, but investors should always secure their investments and be ready for anything that may come uninvited.
One must always safeguard their investments. It could be by using a broker for the stock market, using encrypted websites while trading, or using a VPN. Before investing 50k entirely, create a reserve fund that may be used in case of any loss due to such risks.
Where to Invest 50k?
Once you have received answers to the above questions, you will be very clear about your investment expectations and financial goals. You will be able to create a clear picture of what you want to do with $50,000.
As the investment sector is booming day by day, it is attracting more and more people. As a reaction to this growing demand, people now have plenty of options available to invest. But, which of these options available would fit your goals to invest $50,000.
Read on to find out some of the best ways to invest 50k, and check if these options suit your goals.
- Invest in Stocks
Stocks or individual stocks mean investing in stocks of a particular company. It is suitable for those who are looking for long-term investment and a stable income. Stocks not only help you earn capital gains but also offer dividend payments at equal intervals.
The returns on this type of investment depend upon the company whose stocks you purchased. If the company is performing well in the industry, it will help you earn profits. But, if the company is incurring losses, so will your investment.
So, before investing in stocks, make sure to have a good check on the company’s past and future of this company in terms of demand, current growth, and market position.
- Invest in Mutual Funds
If you are unwilling to trade actively and want to invest passively, then mutual funds are the answer for you. You can hand over your investment to a fund manager and brief them about your investment needs. Then, the fund manager pools your investment funds along with others and creates a portfolio accordingly.
Mutual funds are beneficial because the investment is made in a diversified way. In simple words, the fund manager creates a portfolio that has more than one type of securities. For example, it could be equity, bonds, CFDs, ETFs, etc. Furthermore, the portfolio is created in such a way so that it establishes favorable outcomes for the investors.
A drawback in mutual funds could be the cost it includes. The fund manager charges fees to make the investments on your behalf, reducing your earning shares. Also, mutual funds are subject to market risk, for which the fund manager is not responsible.
- Invest in Bonds
Bonds are similar to lending money. When you lend money, your income is the interest you get in return. Bonds work similarly; only, you get the interest twice a year till the maturity of the bond. And you get back the bond’s face value when it reaches its maturity.
Bonds are usually issued by big companies, MNCs, and federal governments. They issue bonds to raise capital. These bonds have a face value depending upon the position of the company in the market. Those who purchase these bonds pay the face value of the bonds for a fixed maturity period and a fixed rate of interest.
You can make money by buying bonds with your 50k in two different ways. You can either retain the bonds till the maturity period and earn by receiving the interest. Or you can resell the bonds at a price higher than the face value to get more than what you paid. One must always be aware of how the company (issuing the bonds) performs in the market.
- Invest in Property or Real Estate
Real estate is a booming industry. With little ups and downs, there is visible growth if we look at the charts. Investing in real estate has helped many people to gain on their investment.
But can you invest $50,000 to purchase a property? This amount may not be enough to own a property completely. You can choose from many available options to invest in real estate with the spare $50,000 in your hands. You can either invest in Real Estate Investment Trusts (REITs), where stocks of properties like retail space, office buildings, housing societies, and many more are sold. Instead of owning the entire property, you own a fraction of it by buying its stocks. Or you can also go for crowdfunding which is also similar to REITs.
You can always study about the options available to you and choose the best suitable to your plans.
- Invest in CDs
If you plan on investing your $50,000 just for some time and want to get a higher return than any other option available to you, then CDs are your option.
CDs or Certificate of Deposit is fixed savings account that most banks offer to their customers. You lock your funds with the bank for a specified period till maturity. At the end of maturity, you get a higher interest rate, more than any savings account can offer you. The benefit of CDs is that you can lock your funds for some time suitable to you. For example, you can lock it for a few months to even years, as per your requirements.
Before investing in CDs, make sure to know the interest rates offered by the bank and compare them with other available investment options in the market. Also, pre-withdrawal of CD accounts can cost a penalty. So, set the period of maturity according to your needs.
- Invest in your Children’s Future
It is said that your children are your future. Therefore, how you raise them, what type of education you give them, and the morals they learn directly or indirectly affect your future.
What is a better investment than securing the future of your children? Planning about their higher education, saving funds for their tuition fees are also a sort of investment.
Professional courses and degrees look promising in terms of financial gains and status. But they may cost a fortune. So, if you want your child to go for professional studies like Doctor, Lawyer, Engineer, etc., try saving for it from the very beginning. Your $50,000 saved now would help you build a stronger future.
- Invest in ETFs
Exchange-traded funds or ETFs are a bunch of different securities that have qualities of both stocks and mutual funds. Like Mutual funds, they are pooled together by professional funds managers. And like stocks, they are traded in a securities exchange throughout the day.
If you do not wish to put your money in a long investment, like in stocks, you can go for ETFs. They involve a low cost of trading and can be easily traded in the securities exchange.
- Invest in Retirement
Sometimes the motive of savings is to safeguard old age. After your retirement, your income sources reduce, and your needs rise. This is when people want to relax and have a comfortable life, after working hard their entire life.
The best way to ensure a relaxing future is to invest your 50,000 worth of savings somewhere, which can offer you a better return in the future. Some companies provide their employee’s ways to form a retirement account in which both the employer and the employee contribute. You can also choose from the many government-run policies for retirement.
Having $50,000 worth of savings is highly fortunate. But, if you want to make more out of it, do your research, find ways to invest it, and choose wisely.
There are plenty of options available to you to invest $50,000. All you have to do is set your goals, make your investment plans and wait for the returns.