Having a savings account and stashing away plenty of money for emergency situations is a must in today’s economy. But at a certain point, saving becomes ineffective. This is due to the fact that, while saving is essential, it’s not the right way to grow wealth or provide you with the financial stability that you’ll need later on in life. In order to grow the money that you have, you must begin looking for the right investment opportunities.  

With $20,000, you have far more spending power than the average investor, and, depending on your current financial situation, are likely to be able to take on a bit more risk with the potential for greater rewards. If you’re looking to prepare for the future, here is how to invest $20,000.

1. Join the Crypto Craze and Invest in Bitcoin (or Other Altcoins)

Most investors, whether current or prospective, have heard of Bitcoin. But what exactly is it, and what are the benefits and disadvantages of choosing to invest in this type of asset?

Put simply, Bitcoin is a form of digital currency (although not quite, more on that later) that eliminates the middle man. This asset can be held on various devices like smartphones and laptops by using a type of software known as a wallet. Once purchased, you can then transfer it to other users who have a wallet. The most impressive part? Bitcoin and most other altcoins are entirely decentralized, meaning they run on a system supported by the collective users of the network and controlled by no one. You may have heard of the underlying tech supporting these assets, known as blockchain technology.

It’s important to note, however, that while Bitcoin was intended to be a currency, it has become more of an asset with a largely speculative value. In 2020, Bitcoin’s price was only at about $9,000. This volatility is what makes it such a valuable asset for investors who are able to buy in at the right time. But its volatility is what makes it such a tragic loss for others who invested at the wrong time.

With that in mind, while Bitcoin is certainly one of the investments worth looking into, there is no shortage of alternatives to choose from if cryptocurrency interests you. Some of the most popular assets that you may also be interested in investing in include Litecoin, Ethereum, Bitcoin Cash, and Dash, just to name a few.

But where exactly are you supposed to purchase cryptocurrencies? Some of the best exchanges to consider if you’re interested in purchasing crypto include:

• Coinbase (This can be a great exchange to start with as they offer Coinbase Earn courses where you can learn more about various assets and earn some in the process. They also offer free Bitcoin when you sign up with them!)
• Binance
• Kraken
• Gemini

One final note in regards to cryptocurrency is how to protect your investments from volatility. While diversification isn’t as effective in this market because of the wild price swings, there are some ways that you can avoid some of the risks that come with investing in crypto.

• Use stablecoins as safeguards: Most cryptocurrencies have fluctuating prices because they’re speculative assets. Stablecoins, on the other hand, operate a bit differently. Aptly named, these assets use a wide variety of strategies in order to stabilize the price so that it stays exactly at or relatively close to $1. The only problem? These assets are mostly centralized. However, this is only something few investors may be interested in. Keep these assets in mind if you’re looking to retain the value of your crypto when the market is acting bearish.
• Consider investing in blockchain rather than crypto itself: Blockchain has already proven to be a valuable piece of tech outside of finance, with applications in places like healthcare or in supply chains for various companies. If you’re interested in the technology behind crypto and want to invest in something a little less volatile, consider seeking out stocks in tech companies working on blockchain.
• Look into several crypto investment vehicles outside of the central asset: Much like it is with commodities, there are multiple investment vehicles within crypto that allow you to get involved. For example, there are crypto ETFs, Bitcoin options, Bitcoin futures, and even interest-bearing savings accounts out there that can help you get more out of your investment activity. With that in mind, it’s important that you do your research on any type of vehicle you plan on approaching as well as the company that’s providing you with these opportunities. While regulations have become stricter since Bitcoin was introduced, there are plenty of scammers out there looking to benefit from new investors who do not know what they’re doing quite yet.

Overall, cryptocurrency can be a great investment if you manage to buy low and sell high. However, it is one that comes with as much risk due to its volatility, and new investors will want to do as much research as possible in order to better understand these assets before they get started. However, if crypto holds some appeal to you, the guide above should provide you with a better overview of what these assets are, where you can get started and which ones may be the best options, and how you can protect yourself from some of the volatility that you’ll inevitably encounter along your journey.

2. Consider Investing in Your Continuing Education

All investments carry some capacity for risk, even ones in which you’re investing in yourself rather than an instrument that increases your wealth over time. That being said, sometimes the risk can come with great reward, especially if your chosen investment comes with far more benefits than disadvantages. One excellent investment opportunity that you may wish to consider pursuing is leveraging the $20,000 that you currently have towards your continuing education.

But isn’t college expensive? Generally speaking, yes. But it all depends on what you’re looking to accomplish through your educational endeavors, how far along you are on your learning path currently, and where you decide to go should you find that continuing education is a good investment.

For those who are looking to get the most out of their investment, one of the best and most affordable options at your disposal are community colleges. In fact, in comparison to public four-year universities, for which the average yearly tuition is almost $10,000, two-year universities typically charge around $4,000 per year, making it easy to clear your general education requirements and put you on the path towards a degree.

This helps you save a lot of your investment, which can be used towards other costs in the meantime, like paying for your rent as well as other living expenses you’ll need to juggle as you start taking classes. You can also save money towards your education by using tips like:

• Applying for scholarships and grants, which you won’t have to pay back
• Applying for loans that you anticipate being able to pay back rather quickly so that you can save money for your everyday expenses
• Finding work-study programs that help you earn while receiving your education
• Using College Level Examination Program exams to test out of any classes that you feel you do not need to take
• Taking advantage of free resources and student discounts that abound for people who are getting their education
• Getting as many credits at a time as possible in order to speed up the process and get finished in less time
• Looking for roommates to help you cover the cost of living expenses or renting out space if you already have your own home (This can definitely be a pain for older individuals, but it’s often very helpful when you anticipate spending more than your current budget allows for on your education.)

Of course, there are also some other alternatives besides going to community college and transferring to a four-year or just going to a four-year university directly. Depending on where you are currently in your educational, personal, and professional life, some other avenues worth looking into are:

Taking Online Courses That Offer Certificates

Investing in your education doesn’t always mean going to college for the first time or even returning to college to continue your education. Sometimes, improving your knowledge can be as simple as taking short online courses that offer value in the form of experience and certificates. But exactly what should you be looking for if you plan on taking online courses and seeking out certificates in return for your efforts. The most important thing to look for is authoritative platforms that will be worth your time and money. Certain platforms like Coursera and edX offer classes created by major universities as well as certificates that can enhance your employment opportunities (when they demonstrate that you’ve learned how to perform certain skills). Looking for something more tailored to your current career path? You could also turn to platforms like Microsoft Learn or Adobe Digital Learning Services to unlock certifications that you can use to advance in your current role. Put simply, if you only need a minor boost in your career and are not looking to take on the responsibility that comes with college, there are plenty of free and paid opportunities out there that can give you the edge you’re looking for.

Attending Fully-Remote, Online Colleges

In today’s post-pandemic world, going to college is not as appealing as it once was. In fact, considering that you won’t be getting the traditional “college experience” that many others seek, it may not be worth your time to scour local colleges at all. The solution? Rather than trying to find online programs at colleges you would otherwise be physically attending, you could choose to look for online colleges instead. Online colleges are generally much cheaper because they don’t come with all of the additional costs that a physical school would ask you to pay. Additionally, you can generally get your degree in the same amount of time as you would a degree at a local institution, and even pursue higher learning opportunities through these accredited options. Make sure to set aside some time to do your research and find the best online schools that may hold some appeal to you.

Looking for Programs Designed for Professionals in Your Field

There may also be extra learning opportunities like boot camps that can help you excel in your specific field. These types of opportunities are a little bit more difficult to find, but one excellent example of this is General Assembly. They host boot camps, online courses, in-person courses, and other learning opportunities for those looking to hone their skills and receive an edge in their field. With the right amount of research and dedication, you’re sure to find ways to upskill so that you can grow professionally. You may even want to consider more serious options that are similar to the above, like going back to school to receive your MBA and increase your earning potential.

Investing in yourself is never a bad idea, especially when the rewards result in greater income, which can then be used to improve your life and invest even further in the future. If you wish to boost your education, use the resources listed above to save money and find opportunities that are the perfect fit for your needs.

3. Lend Money to Others Through Peer-to-Peer Lending Platforms

With $1,000 or $5,000, it’s hard to see large returns on interest over time. With $20,000, however, it becomes far easier to send your money out into the world and watch it grow regularly and over time. One item that we have not covered yet is peer-to-peer lending.

Peer-to-peer lending, as its name suggests, is the practice of lending out your money to others with the goal of receiving returns in the form of interest rates as the borrower pays back the loan. Rather than turning to a bank, you use the lending platform to pool your resources with other investors so that borrowers can get access to the funds that they need. Additionally, borrowers may approach you for any number of reasons, whether they’re seeking out loans to help them start or support a business, loans for personal reasons, or even loans for things like home renovations.

The advantages of this investment vehicle are that it’s relatively easy to get started with, and it often provides higher returns than you may be able to receive when you choose to put your money into low-risk alternatives like CDs or bonds. However, peer-to-peer loans can be risky as well. Those who are approaching these types of platforms are likely doing so as a way to get the money they may not be able to receive from other traditional lenders. This means that, sometimes, they’re at higher risk of default, which can put your own anticipated returns at risk. Of course, most peer-to-peer lending platforms come with features so that you can browse available borrowers based on credit scores and other factors.

Ready to get started? Some peer-to-peer lending platforms to take a closer look at include:

• LendingClub
• Peerform
• Propser
• Upstart
• Kiva

Like most investing opportunities, certain lenders may not be able to invest in the platform depending upon financial regulations and various terms and conditions on different platforms that you come across. Make sure that you go through their lending sections to understand whether or not it’s a right fit for you or if you’re allowed to invest through them before you get started.

4. Use Your $20,000 to Open and Max Out Your Retirement Accounts for the Year

Saving for retirement is always a good idea, and with $20,000 at your disposal, you have a lot of power to begin creating a more financially secure future. Generally, we recommend these options as a way to get started investing. But with the amount listed above, you may actually be able to hit your annual maximum and start turning your attention towards other investments on this list afterward.

If you have a 401(k) with your current employer, the best way to invest your money is to start by maxing out this account. This year, the maximum contribution that you can make if you’re below 50 is $20,500. If you’re over 50, the annual contribution limit for 2022 is a bit higher, coming in at $27,000. Don’t have a 401(k)? Don’t worry! Instead, you can choose to open or contribute to an existing traditional IRA or Roth IRA. These maximum contribution limits are a bit lower, with the highest possible contribution being $6,000 for those below 50 and $7,000 for those 50 or above.

It’s never too late to start saving for retirement, and $20,000 is a solid amount to help you start your retirement savings journey.

5. Look for Cheap Properties to Flip

Real estate is one of the best investment opportunities, and this is due to the fact that these investments open the door for passive income, which provides you with consistent returns over the years (something that is essential for long-term wealth growth). Up to this point, we’ve mostly discussed options like REITs, real estate crowdfunding, and various debt instruments. However, $20,000 may just be enough to open up another avenue for you: flipping.

$20,000 isn’t a lot in certain states and areas. For example, you may not be able to do much with this sum in a state like California, especially as you get closer to some of the bigger cities. However, if you do your research and find a property in locations with more affordable costs of living, you may find properties within your budget that you can buy and flip to make a profit.

Of course, flipping is not an activity that is cheap or without its risks. It takes quite a bit of capital to handle the renovations that most houses need in order to become desirable and livable. Additionally, cheap properties don’t mean that you’re getting a great deal. There can be serious issues with the home itself that would take more than you have to fix. On the other hand, you may be purchasing a home in an undesirable area where it’ll be hard to increase its overall value. Buy into one of these deals, and you can be looking at serious losses that do not justify the initial investment. Long before you begin approaching the concept of house flipping, do your research to understand exactly what it entails and how successful flippers go about it.

Additionally, $20,000 can open the door, but you’ll often need way more in order to get the house in order. For those who are truly serious about their house flipping journey, take a closer look at different funding sources like conventional loans, hard money loans, private lenders, and crowdfunding, just to name a few options at your disposal.

House flipping isn’t for everyone, but for those who are passionate about it and believe they can make a profit fixing and flipping homes can make it happen if they feel ready. Before you get started, consider the above points to ensure that you’re willing to take the risk and accept any consequences that may come with your investing activity.

6. Dive Deeper Into Alternative Investments

Most investors at this point have heard of traditional investment classes like stocks and bonds. However, there are other types of investments that fall outside of these basic options and have the potential to help you grow your wealth with greater speed. Of course, like most investments, not all alternative investments are the same, which is why it’s important to go over your options and take a closer look at what these instruments have to offer.

So, what is an alternative investment? You may have actually seen a few in this list as alternative investments are anything that fall outside of instruments like stocks and bonds. However, the full list is more than just what we have to offer. Some real-life examples of alternative investments include:

• Hedge funds
• Venture capital (providing funds to small businesses in return for the stake of the company)
• Collectibles, like art, fashion, and other items that may retain their value or increase in value over the years
• Oil or gas limited partnerships (LPs)
• Real estate or even more hyperfocused land investments like farmland and timberland
• Commodities like precious metals and crops
• Intellectual property

As you can see from the above, alternative investments cover a wide variety of investment vehicles, which means that this recommendation isn’t necessarily designed to provide you with a specific direction. Rather, the point of including it in this list is to open you up to a wide variety of potential investments that you may not have otherwise heard of.

If you find yourself interested in instruments that fall outside the norm of lists that you come across, do your research to learn more about them and how successful investors have managed to generate wealth through these various tools.

7. Use Your Money to Start a New Business

Some investments are made as a way to slowly grow your wealth and provide you with more stability in the future. However, others can be helpful as a way to increase your income and boost your wealth now. That being said, while some of these will come in the form of passive income, others are active income, like investing your $20,000 into a new business idea.

Fortunately, there’s no shortage of great business ideas that can help you make the money that you’re looking for. If you’re looking to start your own business, here are a few suggestions to help you get started.

• Consider franchising a restaurant or another business: Opening up your own franchise can be an excellent way to put your $20,000. Whereas you have to worry about developing a positive reputation once you start your own business, a franchise comes backed by the company that you choose to work with. All you have to do is ensure that you have everything you need to get started and begin marketing yourself to the local population as well as online. While you may be limited as to which franchises you can open (some of the more well-known companies can charge as much as $1 million to open up your own franchise), it is an idea worth considering to help you start a business with ease.
• Develop your own product-based business: Got a great idea for a product that you think others will want to buy. Use your $20,000 to start working on developing that product and putting it out into the world. Another idea is to use your $20,000 to pay for the materials that you need to make homemade goods and sell them on platforms like Etsy or even your own website. No matter what you may be interested in creating for people, turning your passion into a reality with your investment can be a great idea to help you afford the major initial startup costs.
• Resell items (wholesale or flipping): Have a knack for finding high-quality items at a much cheaper price? You may be able to start flipping major goods, whether these be products like books, collectibles, or even major home appliances (with a few repairs and replacements first). With platforms like Craigslist, Facebook Marketplace, 5Miles, and OfferUp, selling to people in your area is simple. If you’re looking to sell your items a bit further from home, you can also use sites like Amazon or eBay to get the job done. Of course, that’s not your only option when it comes to reselling. If you’re interested in e-commerce and believe that you can establish a successful online marketplace, you may want to start looking into wholesaling. Wholesale products (both new and old) give you the opportunity to get massive discounts when you buy in bulk and then turn around and sell those same items at a profit. Whether they’re home goods or electronics, this can be an excellent way for those with digital marketing experience to make a solid income.
• Create a digital product: Digital products are excellent to sell on their own and many of them offer you the ability to tap into passive income as you can continue to make money from their sales after you’ve done the work of creating them. But what are some digital products that are worth crafting? Some ideas to help you get started include writing an e-book, producing your own online course (these can be very lucrative, especially if your brand has a good reputation and you can offer results to your audience), or even creating and selling printables like planning sheets and calendars that others can use to improve their lives. While some of your investment may go towards the various tools and programs you will need to make the best products possible, you should also consider setting some of this money aside to pay for your essentials as you’re working on your projects since this type of work does not pay you immediately. There’s also another option, and that’s private label rights products. These types of products are produced by other companies, put up for sale, and can be purchased by you so that all you have to do is rebrand in order to make the product your own. This can save you a great deal of time since you won’t have to do all of the work needed to craft your ideal digital goods. If this sounds like something you’d be interested in, you can get started with a producer like PLR.me.
• Start your own food truck (or find another culinary endeavor): In light of recent developments, we’re all looking for something that makes us happy and brings us a little closer together. One such suggestion is food. For those who love making food for others as well as for themselves, starting your own food business is certainly one avenue that will not be going away anytime soon. One excellent suggestion is starting your own food truck or food stand that can cater to your local population. If you have the money and are able to do so easily, you can also start your own restaurant (although it may be better to wait until pandemic lockdowns have become a thing of the past). Interested in food but want to stay safe? You may even be able to pursue a food-based business from the comfort of your own home! Some great home-based cooking ideas include starting your own cooking website and providing virtual classes, making meals and delivering them to people who may not feel safe going out or may not be able to go out, starting your own catering business, or even making baked goods and shipping them all across the country. As long as you have a passion for food, a desire to see your idea to fruition, and determination, being able to do what you love as a business is always an opportunity for you.

No matter what your business idea may be, make sure that you take plenty of time to research your chosen industry, develop a comprehensive business plan, and set yourself up for success so that you experience as little risk as possible in the future.

8. If You’re Just Looking to Invest Without the Hassle, Consider One of These Basic Suggestions

Sometimes, the simplest suggestions work the best. If you’re an investor who’s interested in getting started but doesn’t want to potentially put their money into any instruments that come with greater risk than should be expected, here are some of the more traditional suggestions worth looking into.

• Individual Stocks: Open up a brokerage account with platforms like E-Trade or TD Ameritrade to begin trading individual stocks. Keep in mind that there are dividend-paying stocks, stocks that will offer you value when the price rises, and even preferred stocks, which pay consistently regardless of the stock performance (unless things within the company should take a turn for the worst).
• Index Funds: Much as the name suggests, index funds are a collection of securities that follow a specific index, like the S&P 500. If you’re looking to track a specific index and its performance, this type of investment would be a great fit for you.
• Mutual Funds: Whereas instruments like index funds or exchange-traded funds (ETFs) can be purchased and managed with relative ease, mutual funds offer a basket of securities in the form of shares you receive by contributing to the fund. These funds are managed by actual fund managers, making it so that they follow their own analysis and experience rather than being managed through a Robo-advisor. While these investments can be great, it should be noted that you will need to expect extra charges like management fees when you decide to pursue this type of investment.
• ETFs: ETFs, on the other hand, are a type of index fund that can be easily automated to save you money. If you’re just dipping your toes into the stock market and aren’t looking to heavily commit just yet, consider making an ETF your first investment.
• Bonds (Government or Corporate): Bonds act as loans to various entities. With the government, you’re able to purchase a bond (generally over the period of a few decades) and loan them that money, receiving interest over a period of time. Corporate bonds act similarly, with the exception that the risk of default can be much higher. You should also look into similar offerings like notes, bills, and TIPS, which offer varying loan repayment periods.
• Options: Options and futures contracts can be very confusing to new investors. But once you understand their function, the name will make a lot more sense. Option contracts are contracts that give you the ability to purchase or sell a stock at a later date. In order to do this, you will sign a contract (which sets the strike price or the price that you will agree to pay for or sell the stock at during the contract term), pay a premium, and wait for the market to go in the anticipated direction. The good news? You don’t have an obligation to buy or sell. Instead, you have the option to do so and can pull out if things don’t go your way. The only downside is that you will lose your premium if you do cancel your contract.
• Futures: Futures, on the other hand, require that you follow through on the contract that you sign. Generally, these types of investments are used for commodities like oil when those purchasing these goods anticipate the price rising in the future. However, savvy investors may be able to make money with a solid understanding of the stock market and the ability to choose out stocks they want to buy or sell before the market moves in a certain direction.
• High-Yield Savings Accounts: Last but not least, it may be a wise decision to put your money into a high-yield savings account for the time being. Although this certainly won’t grow your money effectively (and you will also need to think about inflation as time goes on), it can be a great way to build a safety cushion in case any unexpected bills come your way or a safe place to store it until you’re more familiar with some of the other investment tools and strategies listed above. Remember, it’s better to invest only when you’re ready!

Additional Considerations

The guide above will provide you with plenty of suggestions to help you get started on your investment journey. But with $20,000 at your disposal, things can go very wrong very fast if you don’t make the right decisions. To ensure that you experience success, here are a few additional considerations to make when you begin your investment journey.

Don’t Place All of Your Eggs in One Basket

$20,000 is a lot of money, and while you may feel especially attracted to one investment idea on this list, it can be foolhardy to put all of your money into one type of investment vehicle.

Diversification is necessary because it safeguards your asset against risks. No matter what you may be interested in on this list, do your research to fully understand it and only invest as much money as you’re willing to lose (unless you feel that your investment is very secure). Additionally, look for investment types that will protect you against risk so that, if you do experience losses, some of your money is still safe. If you plan on investing, never invest everything you have into one instrument unless you’re sure of your future growth.

Invest With a Plan in Mind

Investing, like saving or spending, should come with a plan of action. If you’re early in the investing journey, you’ll want to go with safer investments that help you develop wealth over time and contribute to your future. If you’ve started investing and believe that you can work on developing short-term income and taking on greater risk, you may want to look at some of the options we’ve provided on this list that are designed to help you grow wealth quickly.

Before you start allocating your funds to various vehicles, sit down, create a plan, and act accordingly!

Your Financial Health and Security Come First

Some people get anxious about not investing because they believe that it’s something they need to do and now. Unfortunately, a fear of missing out (FOMO) can cause you to make a lot of bad choices. The most important thing to focus on is your financial health and security. If you still have lingering debt or have yet to develop an emergency fund for financial security, you’ll want to take care of these items first. Don’t worry, there’s still plenty of time to invest later on!

Pay Attention to Taxes and Fees

Seeing returns on your investments can be exciting. That is until you start seeing your growth go lower and lower as you have to pay for things like portfolio management fees or taxes on short-term and long-term gains. No matter what type of investment piques your interest, pay close attention to any financial obligations that you have when you invest in your chosen vehicle if you’re looking to avoid unexpected expenses.

Start Investing Your $20,000 Now!

Figuring out how to invest your money can be difficult, especially with a large sum like $20,000. Fortunately, we have some guidance to help you make the right decisions. If you’re ready to start investing, use the eight ideas listed above to learn about which opportunities may be right for you and gain further insight that you’ll need to confidently start your investment journey!