How to Invest $50,000: 11 Ideas to Help You Grow Your Money


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5 months ago

How to Invest $50,000: 11 Ideas to Help You Grow Your Money


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5 months ago
how to invest $50,000

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The more money that you have to leverage in your investment journey, the greater opportunity for both short-term and long-term growth that you’ll be able to see. However, just because you’re able to take on more risk and invest more money than others does not mean that having more will necessarily benefit you. All investments must be approached with caution if you are to see your wealth rise steadily and successfully.  

However, the first step to take is to figure out just where your money should be going, and which avenues are currently available to you at this level. If you have $50,000 to invest and you’re currently looking for ways to make your money work for you, here are 11 ideas to provide you with some direction as you move forward.

Grow Your $50,000 With These 11 Ideas

1. Use Some of Your Money to Establish an Emergency Fund or Clear Up Debt

Generally, those who are going to have $50,000 to invest are going to have a higher income and be relatively financially responsible as saving up this amount of money takes dedication. That being said, it wouldn’t be a great investment guide if we didn’t make these suggestions to help you truly thrive financially.

Although many know it’s important to save, those with higher incomes and potentially more expensive lifestyles should always have an emergency fund that they can tap into should emergency expenses appear. While you don’t have to put all of your money away, putting away enough to cover at least six months of expenses in a high-yield savings account can provide you with the security you need to manage any unforeseen problems you may encounter in the future.

Along the same vein, it can be helpful to use some of your money to clear up any debt that you may currently have. Despite some of the common misconceptions that many of us hold when it comes to higher incomes, there are plenty of individuals who make larger salaries and still live paycheck to paycheck because of major debt that comes from student loans, mortgages, and even personal debt like credit card debt. Although investing is an important aspect of your financial health and stability, taking care of these items is a greater priority.

Once you’ve established an emergency fund and cleared up any delinquent debt that’s impacting your financial health, we can start moving on to some more of the recommendations offered below!

2. Max Out Your Retirement Accounts for the Year (With Plenty Leftover)

Whether you’ve already started saving for retirement or are just starting to look into which options are available to you, the good news is that $50,000 is more than enough to help you get started.

As we discovered in our previous guide, 8 Investment Ideas for Investors With $20,000, you can easily max out accounts like your 401(k) or an IRA with the cash at your disposal. If you have a 401(k) with your employer that will allow you to benefit from matching contributions, you can max out your annual contribution for 2022 with $20,500 ($27,000 if you’re above the age of 50). If you don’t have a 401(k) and want to open up an IRA, whether it be a traditional IRA or a Roth IRA, you will easily hit your goal as the annual contribution limit for this option in 2022 is $6,000 ($7,000 if you’re above the age of 50).

If retirement is on your mind and you want to cover these essentials before you begin allocating your funds towards other investment types, use a portion of your investment to max out one of these accounts this year!

3. Consider Investing in Your Children’s Future

One of the best investments that can be made is that which supports your family down the road. But when you’re looking to invest in their future, what options do you have?

One option to seriously consider is a 529 plan. This instrument is a state-sponsored college savings plan that allows your child’s university fund to grow without being subject to taxes. However, there are two different types of plans to choose from.

The first, a savings plan, allows you to contribute generously to the plan and take advantage of no tax now as well as in the future when your child uses the money (as long as the money is being used for strictly educational purposes when they do withdraw it from their 529 plan). Another available option is a prepaid tuition plan, which offers a little bit less freedom but allows you to lock in tuition prices at the cost they are now so that your child isn’t subject to whatever the tuition price may be when they finally do pursue their education.

Another great way to protect your family financially is to consider purchasing a life insurance plan. While a life insurance policy can be an overwhelming investment as no one wants to think about a situation in which they are no longer around to care for their family, it is a safe investment to make in order to protect your family in the future should that be the reality. If it isn’t, your plan will have plenty of time to appreciate so that the payout will be able to cover various costs that you may leave behind in the event of your passing.

The future can be uncertain, which is why it’s so important to invest. Consider investing in the well-being of those around you by using the two types of investment opportunities listed above. Remember, it’s always better to be safe than sorry when it comes to the future of your loved ones.

4. Get the Most Out of Your Real Estate Endeavors With the Real Estate Syndication Model

Real estate is one of the most lucrative investment opportunities, especially since it helps you to develop passive income as you experience the constant returns offered by rental payments. However, in our previous guide, amounts like $1,000, $5,000, and even $20,000 only provided you with enough to scrape the surface of what’s truly possible with your money. While we’ve recommended tools like REITs, debt instruments, and crowdfunding, we now want to cover another vehicle that you can tap into at this threshold: real estate syndication.

In order to better understand what real estate syndication is, it’s helpful to review crowdfunding again. Real estate crowdfunding helps prospective or growing real estate companies gain access to the capital they need to invest in new properties. As an investor, this can be appealing for a number of reasons. Firstly, it allows you to start investing in real estate. Secondly, you can start unlocking passive income by receiving returns through loans or equity (similar to stake) in the property. However, these are largely short-term solutions and are not as effective for long-term investors looking to grow their wealth.

This is where real estate syndication comes in. Real estate syndication functions similarly to crowdfunding, with the exception that it’s designed for investors who will act as partners in the deal and receive equity in return for their substantial contributions. Because of this, those who decide to invest in a real estate syndication model get far more benefits than they would if they were to go the crowdfunding route, which is especially important if you’re serious about growing your wealth over the long-term.

Finding a real estate syndication deal can be more difficult than going the crowdfunding route or even deciding to invest in REITs or debt instruments. However, with a little research and a great deal of motivation, you’re sure to open the right doors so that you can begin receiving more benefits for investing in real estate.

5. Consider Buying and Flipping Properties on Your Own

Perhaps you’re not interested in finding syndication deals, but having your own properties that you can manage and rent out to get all of the profits from your efforts. If this is something that appeals to you, you may want to consider buying and flipping (or renting out) properties instead.

Property flippers make money by finding relatively affordable housing options, doing the work that’s needed in order to make the property livable as well as more attractive to house hunters in the area, and then finding new buyers to take the property off their hands. When it’s done right, you gain the profit that comes from the sale of the house (which is hopefully more than the initial purchase price along with any home renovations along the way). However, there are some elements against you.

At $50,000, it can be hard to find properties that you may think are worth investing in (although you do always have funding options like home improvement loans, mortgages, etc.). Additionally, a house can be as spruced up as much as you’d like, but if it’s in an area where no one really wants to buy, you’re going to be in the red until you finally sell it.

Another option you have is to rent your property out. Rental property makes for a great investment because it provides you with a steady stream of income in the form of monthly rental payments. While you will need to make enough in order to cover things like property insurance, your mortgage, property utilities, repairs, and more, the right rental price can help you get back into the green after you’ve put in the work and make it so that you’re regularly gaining more income that can then be reinvested into different options.

The only major disadvantage is that, should a family or individual move out at any point, you lose that passive income until you’re able to find a new renter.

Another option that you have if you have an amazing property near the city or in another desirable location is to rent it out through popular applications that offer short-term to long-term rental options to specific groups of individuals rather than having to deal with the renting and leasing all on your own.

For example, if you have a property in a popular vacation or party destination, you could start bringing in income by listing your property on apps like Airbnb. All anyone has to do in order to rent a home that’s close to the entertainment and experiences they’re looking for is list their property, connect with the individual who plans on renting it out, and let them have access to it for as long as they need. This is a great way to bring in hotel-style income if you anticipate that people will regularly flop to your location looking for stays (although, this can be just as risky as renting out a home since your income will depend on whether or not people are regularly booking your property). The more you have to offer, the more you can make.

Are you worried about renters partying and looking to cater to a more professional group of people? If so, you could always turn to a rental app like 2nd Address. 2nd Address is an application that helps working professionals find fully-furnished apartments and homes that they can stay in while they’re working in another city. Given that this is a more secure rental situation (in regards to both the people who will be renting your space and the fact that they’ll often need it for a specific period of time), it may be a better option for your needs.

Purchasing and flipping or managing properties on your own can be hard. But for some, they wouldn’t have it any other way. If you believe you have what it takes to start scouting out properties and transforming them into livable dwellings, consider using your money to help cover some of the expenses for houses you wish to sell or rent out to others.

6. Establish a Solid Investment Foundation With These Ideas

Investing can’t be done wisely if you’re not placing a great focus on the foundational tools needed to develop stable income and savings in the future. This is why, no matter which investment guide you find most applicable to your situation, you’ll want to always consider a select handful of investment types. If you have yet to set a foundation for your investment activities, consider putting your money into vehicles like:

  • CDs (with a focus on CD ladders): A certificate of deposit (CD) is a loan that one pays to a bank in order for them to use the funds for their business activities. In return, the bank agrees to pay a fixed interest rate over the agreed loan term, which acts as an incentive to take advantage of available instruments. One strategy that some investors will use is investing in CD ladders, where you invest in different CDs at different term lengths in order to receive regular returns as your CDs come to a close. The interest rates can vary on these vehicles, so it’s important that you do your research to ensure that you’re getting the most from your money.
  • Bonds (and other investments like bills, notes, and TIPS): Bonds are similar to CDs except that these types of loans are designed for the government. Bonds have the longest loan agreement terms (lasting around 20 to 30 years), while bills and notes can reach maturity in a matter of years. TIPS are designed to be a safer investment that hedges against inflation as your principal fluctuates up and down depending upon the health of the economy. If you’re more interested in investing in businesses, there are corporate bonds that will essentially help you achieve the same goal. A strategy that utilizes all of these instruments effectively can help you grow your funds with limited risk.
  • Index Funds like ETFs: Exchange-traded funds (ETFs) belong to a larger collection of funds known as index funds. Index funds are a collection of securities that track the performance of a specific index, like the S&P 500. When you decide to invest in an ETF, you’re able to diversify your portfolio relatively easily and invest in industries that interest you most. Whether you plan on investing in an ETF or decide to invest in individual stocks (as we’ll recommend a little further down), you’ll need to open up a brokerage account at companies like Merrill, TD Ameritrade, or E-Trade.
  • Mutual Funds: Mutual funds are funds comprised of a pool of investor money containing securities that are managed by real fund managers who have extensive experience creating successful portfolios. Because you’re getting hands-on support with your investment, you will have to pay a bit more in management fees. However, if you find a mutual fund that helps you get the most out of your investment so that you can see the returns you need, it may be worth it to pay more money for greater results. Keep these fees in mind when you begin working with any brokerage.
  • Individual, Dividend-Paying Stocks: Funds help you gain access to instant diversification. However, for individuals who are more interested in the stock market and believe that they can make money by investing in specific dividend-paying stocks or selling their stocks at a later date, investing in individual stocks may be a more appealing option. All you have to do to stay investing in stocks is to open up a brokerage account and begin trading!
  • Options and Futures: Options and futures aren’t necessarily foundational, but because they belong to these types of investments, we feel it necessary to make sure you know what these tools are. Options are contracts that can be made to purchase or sell a stock at a later date while futures are contracts that are signed (and must be followed through on) to purchase a stock or sell one at a later date. Options come with far less risk than futures, but you can still lose the premium that you have to sign when you sign an options contract. If either of these appeal to you, it’s crucial that you take your time to understand the benefits and disadvantages of signing these types of contracts. Otherwise, you can lose a great deal of money in the process.

If you need to find ways to invest in a more traditional capacity before you begin considering putting your money into alternative investment opportunities, the short list above should help you get started!

7. Business Savvy? Consider Putting Your $50,000 to Use Through These Business Opportunities

$50,000 provides you with plenty of startup funds to bring your ideas to fruition. But which business opportunities may be most appealing to you if you have $50,000 at your disposal. Don’t worry! We’ve come up with a few ideas to help you see what your future business may look like. Let’s dive into a few of these ideas.

  • Open up your own franchise location: Franchises are often the best option for those operating their first business as you’re already opening up a location with a major brand name backing your business. At $50,000, you have more options than you would with our $10,000 recommendation. That being said, you won’t be able to access major brands (some franchises can put you back $1 million just to get started).
  • Find a pet-based business idea you love: One market that often goes overlooked is pets. As long as people have pets (which is something that has exploded as people have sought companionship in the midst of the Covid-19 pandemic), they are going to rely on pet-based services to take care of them. Some pet-based business ideas that you can easily start with $50,000 include a brick-and-mortar or mobile pet-grooming business, a dog-training center, a kennel for pet owners who need to go out of town, or even your own pet goods store to cater to the local pet-owner population. If you are truly passionate about animals, this can be a great way to make a profit and a difference!
  • Look into CBD for greater profits: Cannabidiol (CBD) is a natural chemical substance known as a cannabinoid that’s found within the hemp plant. Most people are more familiar with another well-known cannabinoid known as THC. However, while THC is only legal at the state level in a handful of states, CBD products are legal at the federal level as long as they contain less than 0.3 percent THC. If this is something that interests you and you’re willing to do all the work that goes into getting your business established, you can tap into this massive market and start selling your own CBD products.
  • Start your own restaurant: This is a new year, and with it, new hope as we start to see greater levels of vaccinations and personal responsibility. While this may be a better investment idea for in the future, choosing to put your $50,000 into your own restaurant endeavors may be better than opening up a franchise. If you’re looking to take this idea mobile, you can also open up your food stand or food truck. When it comes to culinary business ideas, the opportunities are endless!
  • Flip an existing business: People who have extensive experience in business can see what’s wrong with a failing business, do what’s needed to turn it around, and bring it back to profitability. Although this sounds like a lot of work to some, it may simply be fun for others. Are you someone who is interested in turning businesses around? Besides consulting, you can also choose to buy up a business that currently has no potential and make it thrive. Whether you choose to buy up a business online or in your area, there are plenty of opportunities to buy into.
  • Launch a trade-based company: Finding a sustainable business idea is arguably the most difficult part of this process. But there’s one type of business model that’s always in demand, and those are trade-based businesses. Whether this means starting a plumbing business, a maid business, or a landscaping business, you’re always going to be able to find customers in need of your services. This can be more involved as you’ll need to get the proper licensing and find the right employees. However, with the right plan, you can see your business take off with relative ease.

Businesses are generally riskier than some other investment ideas in this guide. But when they’re done right, they can offer you active income that you can then use to begin investing in other vehicles that pull your interest. If you know that you can launch and run a business successfully, consider a few of the ideas that require more capital offered in this section.

8. Put Some Money Into Cryptocurrencies Like Bitcoin

It was in 2009 that the concept of Bitcoin was introduced. This digital currency, built on cryptographic techniques, made it possible to transfer funds without the need of a middle-man, such as a bank. In these early days, Bitcoin could be purchased for mere cents as its potential was not yet truly appreciated by the finance community.

Flash forward to today where one Bitcoin is now worth a ton, it’s easy to see why Bitcoin has become such a popular asset among new investors and experienced investors alike. The value that Bitcoin has lies in its volatility. Unlike other investment vehicles you’ll find here, Bitcoin can rise thousands of dollars or fall thousands of dollars in a matter of days, making it possible for those who are smart with their money to quickly make a profit, reinvest, and turn that profit into even more money with relative ease.

Of course, there’s a reason why many investors will caution against it, and this is due to the fact that many have been burned by this investment, losing a great deal of money if they decided to buy and not hold (or if they bought and the price didn’t rise in the past).

Here are a few tips we can offer to help you experience less difficulty if you want to invest in cryptocurrencies.

  1. Don’t limit your options to just Bitcoin: Bitcoin is arguably one of the most desirable and well-known cryptocurrency assets out there. However, it’s not the only one. There are numerous cryptocurrencies (known as altcoins) that function in a similar manner to Bitcoin but can be more affordable than this crypto gold or even offer greater potential profitability in the future. Some altcoins you may have heard of include Litecoin, Ethereum, and Bitcoin Cash, just to name a few. Make sure to take a closer look at both existing and new cryptocurrencies to see if there are any that appeal to you and could make for better investments in the long run.
  2. Know that cryptocurrency operates 24 hours a day: Unlike the stock market, the crypto market is one that never sleeps. This means that price swings can occur in the middle of the night if a new development occurs that greatly affects the price of cryptocurrency. If you’re someone who believes that you’ll experience greater results by holding onto cryptocurrency rather than looking to sell it immediately when the price rises, this may not be of consequence to you. If, however, you’re more interested in day-trading activity and selling as soon as possible so you can reinvest your profits, this is a major obstacle that you may experience during your crypto investing journey. Keep this in mind if you believe that you’ll be engaging in the latter activity.
  3. You can reduce risk by shifting some funds over to stablecoins: Cryptocurrencies, as you already know, are volatile. However, some developers have sought to eliminate this volatility by creating assets known as stablecoins. Stablecoins, much as their name suggests, are coins that retain a certain value over time (which is most often tied to the US dollar, like Tether or USDC). This is done either through producing a coin for each dollar held by the company, an algorithm that keeps the price stabilized, crypto collateral designed to diversify risk and allow users to buy back their coins confidently, or hybrid models that combine different elements of each. Regardless of which model is most attractive to you, this can be a great way to help you maintain the value of your investments so they don’t end up crashing should prices drop.
  4. Don’t buy into FOMO: Readers of this article are likely well-acquainted with the most recent GameStop fiasco that happened on Wall Street and Reddit. Despite the confidence that most investors had going into buying shares of GameStop, only to see the value plummet 80 percent in a short period of time. The lesson that can be learned here (that is especially important if you plan on investing in crypto) is not to buy into the fear of missing out or FOMO. Take your time, do your research, and understand the risks. No matter how promising an asset may look, it can burst at any time, leaving you with substantially less money than you anticipated.
  5. Look for ways to build your investments other than directly investing: Cryptocurrency may be of interest to you, but you don’t have to buy into it in order to get some of your own. One excellent way to earn a little bit of crypto before you start investing is to sign up with a crypto exchange like Coinbase. Coinbase offers its own program known as Coinbase Earn where you can learn more about different assets and earn some of your own as a reward. They’ll even offer you $5 worth of Bitcoin when you sign up with them. What’s better than free crypto?
  6. Education is a must: No matter what you’re investing in, education is a must. Seek out authoritative resources that help you learn more about cryptocurrency as a whole so you can feel more confident when you finally decide to purchase some of your own.

For some investors, you may not be as interested in cryptocurrency as you are in the underlying technology: blockchain. If this is true for you, you can also look for tech companies to invest in that are applying these technologies to various industries. When it comes to crypto, there is no shortage of investment opportunities for you to dip into!

9. Invest in Others Through Personal Loans or Business Investments

Bonds and CDs are the most popular loan options that are traditionally covered in investment guides. But if you have more money and are willing to engage in more risk, there’s another loan option that you should consider: peer-to-peer lending.

Peer-to-peer lending allows you to use your capital to help others with personal loans of all sorts. Because these individuals are going through alternative routes in order to access the money that they need, investors who use peer-to-peer lending platforms are usually able to tap into higher interest rates than they may see through other types of investments. That said, the risk with this type of investment is that users may default (although you can mitigate these risks by seeking out specific types of people based on factors like credit scores). Some platforms that you can begin using if you want to start lending to others include Prosper, LendingClub, and Upstart.

If you’re someone with more business experience and a deep understanding of startups, you could always choose to invest directly into businesses as well. Platforms like AngelList make it possible for you to find new startups, invest in them, and, hopefully, get rewarded for your investment. Their option called the AngelList Access Fund helps you develop a diverse portfolio of company investments starting at $50,000. With both of these instruments, it’s crucial that you exercise caution and do as much research as possible before you get started. However, if you invest with care and make sure that you don’t invest too much money into one company or individual, you should be able to see regular returns on the capital that you’re putting in.

Can Only Accredited Investors Use These Platforms?

Arguably one of the most important things to know as you navigate either of these options is that you’ll be often limited to how much you can invest depending on whether or not you are an accredited investor. But what exactly is an accredited investor? Put simply, an accredited investor is a citizen who makes at least $200,000 per year (and can prove that they have made this in the previous two years and expect to make it in the year they invest in certain vehicles) or someone with a net worth of greater than $1 million (it’s important to note that your primary residence can’t be calculated into this total). There are also new certifications that have been added that can qualify you as an accredited investor and status that can be achieved if you work with certain financial institutions or in specific financial positions.

If you’re a non-accredited investor, you may be blocked from some investment types entirely, whereas accredited investors can unlock access to investments that aren’t registered by the SEC. Whenever you approach any investment platform, especially ones involving peer-to-peer lending, do your due diligence to ensure that you qualify to begin investing with them.

If lending sounds like a great for you to build your initial investment, this is definitely one avenue worth pursuing.

10. Purchase Air Rights or Raw Land for Development or Future Potential

Developed homes give you easy access to rental properties and flipping opportunities that you can tap into quickly. However, these are not the only options when it comes to investing in land. If you’re looking to develop your own properties or even hold land with the intention of renting it out to others who need the extra land (although you can find more serious opportunities when it comes to renting land, just one idea that you can tap into with raw land that’s in a desirable area is using HomeCamper to find people in need of camping sites). You can even invest in farmland through platforms like AcreTrader or FarmTogether to help you receive regular cash payments from farmers as land is something that’s always in demand with a limited supply.

Another alternative investment idea that you can turn to is purchasing air rights. Air rights are rights to build above a certain limit in areas where real estate is highly inaccessible. Although air rights are a riskier investment than raw land (which is saying something given the risk that comes with investing in some forms of land), they can be a way to help you start diversifying your investments and putting your $50,000 into new vehicles if you’re looking for something different than most other investment ideas will offer.

11. Try Your Hand at Buying Domain Names or Flipping Websites

We all know that physical real estate has value. However, what we may not consider is that we can take advantage of virtual real estate as well. But how? Think of the website that you’re reading this on as a piece of real estate. In order for anyone to start their own blog, online business, or another type of website, they must acquire a domain name.

A domain name is so important because it’s representative of your brand. The closer it is to your brand name and the easier it is to remember, the better the chances you’ll have of marketing your new website more successfully. It stands to reason then that someone will pay good money in order to get their hands on a domain that they need for their business.

This is essentially the premise behind buying up potentially desirable domain names. Once you have that digital property, those who may want it will then come to you and negotiate a deal in order to acquire it. If you do this correctly, you can make a great deal of money in the process.

Of course, you don’t have to stop there. If you have a good eye for finding domain names that would sell as well as web development and marketing skills, you can take the flipping approach and buy new or existing domain names, making the website profitable, and finding people who would much rather buy a website than start their own from scratch.

Investing Doesn’t Have to Be Difficult

Investing with $50,000 can be daunting, but the good news is that there are plenty of profitable opportunities out there if you’re willing to do your research. If you’re ready to start investing your money but aren’t sure which vehicles would be best for you at your current investment level, use these 11 ideas to learn more about what you should be investing in, how you can break free of traditional investments to earn greater short-term profits beyond your retirement funds, and achieve a greater level of financial freedom both now and in the future.

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