5 places you can begin investing with just $10,000 in 2020
They say it’s never too early to start investing. But maybe you’ve only got $10,000 or so in your bank account. If you’re reading this, you’re probably wondering:
- Is $10,000 enough to start investing?
- Can I quickly turn $10,000 into $100,000 through investing?
Yes and probably no.
If you want fast money, investing probably isn’t for you. In fact, many experts say if you want more money in under 5 years investing isn’t for you. Prices go up and down and the path to riches is rarely a straight line.
There are two more things that should make you pump the brakes on your first investment:
- If you have any major debts eating away at your savings (college loans, credit cards, etc.) then use your money to pay those off.
- If you’re going to need that $10,000 back, then you should probably skip this guide and throw your money into a CD account.
But if you’re okay with the fact that you could lose it all, keep on reading.
If you’re starting with a small amount of money that you’re okay with losing, you can probably afford to be a little aggressive. But I want you to hold off on the day trades. There’s many easier ways to make great returns. You should get a feel for the market before you expand to something with higher stakes.
Here are a couple of different investment options to look at.
Matching employer investments and 401k’s
If you’re like most people, you want to have money when you retire. An extremely cost-effective way to save money for the later years is to pay into a 401K every paycheck. If you have an employer that matches contributions, always invest the maximum amount your employer can match. This is a 100% return on investment. And in the investing world, a 100% return is finding the holy grail.
If you’ve still got money left over, let’s get onto the fun stuff
Stocks, bonds, and other equities should always make up a large chunk of your portfolio. The stock market gives you great exposure to a wide range of investment vehicles of varying risk and international market exposure.
Reliable stocks, bonds, and index funds are nice backbones to your finances as they usually provide returns above the 2% inflation line. A nice, diversified investment portfolio during a normal economy can provide all the variables you need for successful growth.
However, stocks and bonds are heavily tied to the world economy and sometimes the whole market starts sliding like it did in 2008 or the first half of 2020.
Fortunately for you, it’s 2020 and you don’t need to only invest in the things your grandfather invested in.
When you can’t rely on stocks, you want to shop around for assets that aren’t so vulnerable to the markets.
Alternative investments are great to have in a diversified portfolio because they typically have a low correlation with standard asset classes. This means they often move opposite to the stock and bond markets.
Private equity, venture capital, hedge funds, real property, commodities, and tangible assets like art are all examples of alternative investments.
Because of high buy-in prices and hefty regulation, alternative investments have been the territory of only the ultra-wealthy for most of recent history. But the FinTech (Financial Technology) revolution is changing this.
Today there are many ETFs (Exchange Traded Fund) spreads that let even us unaccredited investors get our hands on some alternative options. For example, there’s ETFs that follow the Brazillian economy, private equities, and gold. All with a buy-in price under $100 per share.
And recently, there are a couple of new avenues you can hop onto too. For example, some online platforms have begun offering investors access to the lucrative field of Loan Origination and P2P lending. Investors like you can provide the investment capital needed to give loans to businesses and individuals in developing areas around the world and you get the interest.
Alternative investments can be a very reliable source of growth sheltered from the mainstream economy, but they are often extremely difficult to assess. Always start small and get a feel for new and different options before investing a large chunk of your savings.
With the rise of cryptocurrencies, lots of new capital has been pouring in to this exciting new asset class. In fact, a study from Fidelity showed digital assets making it into most institutional investor portfolios in the next 5 years.
Crypto gets much of the spotlight for digital assets. But did you know your social media accounts, digital music library, domain names, and lifetime subscriptions to software also count? Why not? They have value and can be transferred across the internet, the only problem is no one has figured out a way to monetize them into a means of exchange.
The crypto revolution has brought a series of recent breakthroughs in the digital asset space. MakerDAO, an autonomous organization on the Ethereum blockchain recently announced a vote to include non-crypto digital assets as backing for its crypto. These included supply chain invoices and future royalties stream.
And 2020 may be the breakaway year for this asset class. In January, NBA player Spencer Dinwiddie of the Brooklyn Nets tokenized his contract (but buy-in was around $150,000).
Just remember digital assets are a highly speculative region for investment, for every person who won it big there are two who lost money. Play around with a small sum first before going in with a larger amount. And do your research on crypto trading too before you get into that.
Monetize something you love
When we think of investing, we often like to think of passive options. But some active investments give you the most value. Today it’s never been easier for you to turn what you love into an avenue for earning through the power of social media.
Whether podcasting, vlogging, streaming, blogging, or just posting pictures of stuff you like, social media is constantly optimizing itself to make sure your original content is seen. And when your content is seen, you can monetize it into another stream of income.
One way to monetize is by joining an affiliate program. Companies will throw financial perks your way for spreading awareness of their products and services to your followers. There are hundreds of different programs. We even offer one for financial content creators.
There really is no limit to the amount of money you can invest in yourself. If you’re ready to put the work in, the potential returns are limitless.
It’s important that you are aware of your options and honest about your goals. While speculative assets can be risky they have the potential for some of the greatest returns. A diverse investment portfolio is important, but if you’re operating without a financial advisor you probably want to make sure yours is reasonably simple. Start with a small amount of money, diversify, and watch your first $10,000 grow.
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