Saving $10,000 is an outstanding accomplishment, so if you’re reading this because you have such hard-earned money in your bank, congratulations! You belong to the top 30% of wealthiest Americans.
In today’s world, people can barely allocate money for their emergency funds. Let alone for savings. Statistics showed that most young people possess a negative net worth. About 69% of the adult population in the United States have less than a thousand in their savings account, and sadly, about 34% have no savings at all.
There are a lot of things you can do with $10,000. You could possibly turn this amount into hundreds of thousands, or even millions!
Can you imagine how much you could’ve made if you had invested even just $1,000 in today’s mega-corporations before they went public?
For instance, if you placed your money in the American electric vehicle and clean energy company Tesla back in March 2011, your $1,000 would now be worth more than a hundred thousand dollars, with a yearly return of 61.26%. So, if you had invested $10,000 back then, you would be swimming in millions of dollars.
However, investing in Tesla back then was a big bet. Its reputation is hitched to Elon’s success, and its value is only hooked to what it can “potentially” achieve in the next 5 to 10 years. Most investors who placed their bets on Tesla took the risk because of their fear of getting missed out, but they made huge profits anyway.
The rest is history. We cannot go back to turn back the clock to invest a few thousand dollars, so let’s just get into the main point— if you have an extra $10,000 sitting in the bank, where should you invest in this 2022?
Disclaimer: This writeup isn’t a piece of financial advice, and everything that will be tackled is purely for educational purposes only.
High-Risk Individual Stocks
Investing in stocks is a wonderful action, especially if you’re going for a valuable startup company that could potentially create a big stir in a particular industry. History has shown us that the stock market grows tremendously, not just about 10-20% but more than a thousand percent!
Amazon is one good example of a stock that has grown astronomically in the past few years since its launch in public back in 1997. It has unbelievably grown to 212,922%. If you had invested $10,000 in Amazon when it went public, its value could’ve gone up to $21,292,200 this 2022.
Another example of a stock that insanely grew these past few years is Best Buy— increasing at a hundred and eight thousand percent, about 26.2% annually. Hence, a $10,000 investment made back in 1990 would amount to $10.9 million today.
You might have missed these hot stocks, but you don’t need to worry since the world is continuously progressing, and along with this progress comes the emergence of the next big thing.
One thing you could do with your $10,000 is to invest it in a tech company that has the potential to disturb and revolutionize the industry. However, you should not put your eggs in only one basket. Diversify your money into three or four companies to ensure that another stock will serve as your cushion when the other falls hard.
Hold it until an opportunity comes.
The money you hold in your account becomes less valuable every single day that you just let it sit without having it work. This is because inflation devalues the real value of your money, and at the same time, you’re missing the potential returns you could be making.
Yet, despite these, there’s still a valid reason why you should hold your money in your bank account. That is to ensure that you have readily available money when a truly profitable opportunity comes.
Avoid pushing yourself to put your money in investment vehicles just because you don’t want to miss out on a market rally. Remember that the market is on a rollercoaster ride that goes up and down all the time, so you could get in the investment again, though quite late.
Don’t use up your money to take advantage of all small-time opportunities that come your way. Instead, set your eyes on opportunities that will give you big gains.
Berkshire Hathaway CEO and chairman Warren Buffett leave us with these lessons:
- Don’t lose money
- Never forget rule number one.
Buffet’s rule is pretty simple, isn’t it?
Invest your money only when the opportunity that comes feels like a once-in-a-generation opportunity and when you are extremely confident that it could turn into thousands or even millions of dollars.
Roth IRA
Wealthy people have created a wide variety of complex schemes just to avoid taxes. However, the truth is, that even an ordinary citizen can also avoid taxes. We aren’t just well-versed about this.
IRA, or Individual Retirement Account, is an investment vehicle where you won’t need to pay taxes. Before doubting if it’s truly tax-free, here out the explanation first!
Salaries are all taxed, so you’re already paying tax to the government whenever you receive your income. Hence, if you put up that money into Roth IRA, your income isn’t going to be taxed again, no matter how immense your investment becomes.
For instance, you put up a Roth IRA account back in 2011 and invested $1000 in Tesla, which grew to $120,000 this 2022. Unfortunately, if you want to get your profits immediately, you will need to pay some taxes. But if you hold the amount until you reach 59.5 or 60 years old, you won’t have to pay a single penny for taxes.
If you are 20 years old and invest $6,000 every year in the S&P 500 through your Roth IRA account, you will get more than three million dollars by the age of 60.
Launch a business
For a heads up, you shouldn’t take this difficult path if you’re spending a lot of time taking care of your family because establishing a profitable business is too demanding. But if you are single and have all-time in the world to do anything you want, this could be a really worthy venture.
You have little to no control over investment vehicles like stocks, cryptocurrencies, and securities. The profitability of your money will depend on how other people will work to make it grow. But if you launch your own business, you will have more control in managing and growing your money.
Of course, $10,000 isn’t a lot of money, but it’s enough to get you started, especially now that businesses are going online. You don’t have to pay rent and other expenses that come along with running a physical store.
Real Estate
Investing in real estate might seem impossible with just a small amount of money— but it’s actually not. Indeed, $10,000 isn’t enough to keep you going, but if you formulate a strategic plan, you could actually make a real estate investment without paying that much.
Get a mortgage, rent it out and let your tenant pay it for you. Rent the place a little higher than the actual mortgage amount, so you’ll get to enjoy returns. Real estate value appreciates over time, so aside from your monthly profit, you could sell the property at a much higher price in the long run.
Historical data has proven that real estate prices always go up, so this investment is worth the gamble.
