Smart Ways to Invest $50,000: Top Strategies for Safe Growth

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When it comes to growing your wealth over time, the stock market often comes to mind. This makes sense given that more than half of American households (61%) have some investment in the stock market, according to the latest Gallup Poll. However, if you’ve saved up $50,000 for your next investment, the stock market isn’t your only option. Depending on your risk tolerance and investment preferences, there are various ways to make your money work for you. Here are some of the best ways to invest $50,000.

Best Strategies to Invest $50,000 Starting Today

1. Top Off Your Emergency Fund
   Risk Level: Low
   Having a fully-funded emergency fund should be your top priority. It’s vital to have extra cash for unexpected expenses like car repairs. A recent Bankrate survey found that only about 48% of adults can cover a $1,000 emergency expense. Keep your emergency fund in a high-yield savings account for easy access. It’s also smart to have some cash on hand ($500 or $1,000) in case of emergencies that shut down electronic systems, including ATMs.

2. Series I Bonds
   Risk Level: Low
   Series I Bonds provide a low-risk way to invest extra money, though you’re limited to $10,000 per year per person. Interest rates are set by the government and fluctuate based on inflation. Currently, the rate is 9.62%, higher than typical savings accounts. Interest is compounded semi-annually and is exempt from state and local taxes. However, you must wait at least 12 months before cashing out, and if done within five years, you’ll lose three months of interest.

3. Paying Off Debt
   Risk Level: Low
   Many Americans carry significant debt, with an average of $21,800 excluding mortgages. Paying off high-interest debt like credit cards can save you a lot in interest payments and bring mental peace. Use a debt payoff calculator to see how much you’ll save by clearing your debt now.

4. Top Off Your Retirement Contributions
   Risk Level: Varies
   Many Americans aren’t saving enough for retirement, with only 14% planning for expenses more than five years away. In 2024, you can contribute up to $7,000 ($8,000 if 50 or older) to IRAs, or up to $69,000 to SEP IRAs and Solo 401(k)s if self-employed. The risk level depends on the investments you choose, from low-risk CDs to higher-risk stocks. If you have a workplace 401(k), use that; otherwise, consider IRAs or retirement accounts for the self-employed.

5. Open a Taxable Brokerage Account
   Risk Level: Varies
   A taxable brokerage account offers another avenue for investment, similar to an IRA but without the tax advantages. You can invest in a variety of assets like stocks, bonds, mutual funds, and ETFs. This account allows for more flexibility in withdrawals, though you’ll pay capital gains taxes on earnings. It’s a good option if your emergency fund is set and you’ve maxed out retirement contributions.

6. Invest in Dividend Stocks
   Risk Level: Varies
   Dividend stocks can provide a steady income stream and can be reinvested to grow your wealth faster. Generally, these stocks are offered by companies with a history of strong profits. While dividends aren’t guaranteed, they are a safer investment than some other stock options. Platforms like Robinhood and M1 Finance are great for dividend investing without trading fees.

7. Invest in ETFs
   Risk Level: Varies
   ETFs are portfolios of stocks, bonds, and other securities that follow an index. They are easy to buy and sell and come with low expense ratios. ETFs offer a diversified, passive investment option with tax benefits. Betterment is a good platform to start investing in ETFs, as it helps you plan for retirement and other goals.

8. Invest in Real Estate
   Risk Level: High
   Real estate has seen significant gains in recent years. While $50,000 may not buy an entire property, it can be a substantial down payment. Alternatively, you can invest in REITs for exposure to real estate without the hassle of property management. Platforms like Fundrise allow you to invest in real estate with just $10.

9. Invest in Crypto
   Risk Level: High
   Cryptocurrency is volatile but offers the potential for high returns. You can invest in digital assets through platforms like BlockFi and earn interest through crypto savings accounts. Understand the risks and do your research before diving in.

10. Consider Alternative Investments With Yieldstreet
    Risk Level: High
    Yieldstreet offers access to alternative investments like art, real estate, and more. While high returns are possible, these investments are often illiquid, meaning you can’t access your money easily.

11. Invest in Art With Masterworks
    Risk Level: High
    Masterworks lets you invest in art, claiming an average return of 14.3%. While this can be a good diversification strategy, the art market is highly unregulated and can be risky.

12. Invest in Annuities
    Risk Level: Varies
    Annuities are geared towards retirement and come with various terms and penalties for early withdrawal. They can offer steady income but require thorough research to understand fees and penalties.

Your Investment Style

After setting up your emergency fund and paying off debt, deciding how to invest $50,000 depends on your comfort level and investment goals.

DIY Investor: If you prefer hands-on management, a brokerage account will save you on fees but requires wise and informed decisions.

Robo-Advisor: These use algorithms to manage your investment based on your goals, offering a cheaper, less emotional alternative to hiring a professional.

Financial Advisor: For a more hands-off approach, financial advisors manage your investments and provide comprehensive financial planning, albeit at a higher cost.

Conclusion – Best Ways to Invest $50,000

If you have $50,000 to invest, multiple options can help you reach your goals. You don’t need to stick to just one; you can diversify your investments. Just don’t let the money sit idle for too long; the sooner you invest, the quicker it can grow.