Do you have $10,000 and wonder how to make the most of it? Don't waste it on another pair of sneakers or a fancy gadget. There are ways your money can work for you so that you don’t have to keep working so hard for your money. In this blog, I will share, based on my own experience, the 10 absolute best ways to invest that $10,000 in 2024.
I am not a financial advisor; what I share is for informational purposes. Always consult a financial advisor before making investment decisions. Remember, there is a risk to everything I am about to share. Do so at your own risk. No risk, no reward.
1. Build an Emergency Fund
An emergency fund is money set aside for unexpected expenses, equivalent to 3 to 6 months' worth of living expenses, and kept easily accessible. This fund prevents you from relying on credit cards to manage expenses, selling investments at a loss, or taking on high-interest debt during emergencies, making it a needed investment.
Options:
- Ask your financial advisor about a high-yield savings account so that this money will work for you as opposed to placing it in a regular bank account.
- Just go to Google Gemini, use the free version, and search for a high-yield savings account in your country.
- For those in the USA, Wealthfront and Ally Bank are good options.
2. Investing $10,000 in Airbnb Arbitrage
Airbnb arbitrage involves renting a property long-term and then subletting it on a short-term basis, like Airbnb, for a higher nightly rate. Here's how you can potentially turn your $10,000 into a profitable venture:
- Look for furnished 1-bedroom apartments or studios in gated communities without HOA restrictions against short-term rentals.
- Aim for monthly rents around $1,200.
- Ensure the property is attractive to potential Airbnb guests (location, amenities, etc.)
- Negotiate a longer lease (1-2 years) for stability and potential rent discounts.
- Set a competitive yet profitable nightly rate of $175 per night in this scenario.
- Begin with one unit and use the initial profits to cover the first few months' rent.
- Every 3 months, add another unit until you reach your target of 4 apartments.
Potential Returns:
- Assume 22 nights booked per month at $175/night, with $300 monthly expenses per unit.
- Make back $10,000 in a year assuming things go as planned.
- Risks include the possibility of not getting rented. These are just projections; actual profits can vary due to factors like occupancy rates, seasonal demand, and unexpected expenses.
3. Index Funds
Index funds are a type of mutual fund or ETF that aim to match the performance of a specific index, like the S&P 500. They offer diversification (spreading your money across many investments) and have low fees.
Options:
- S&P 500 Index Fund: Tracks the 500 largest U.S. companies.
- Total Stock Market Index Fund: Includes all publicly traded U.S. companies.
With an average annual return of 7%, $10,000 could grow to approximately $19,672 in 10 years.
4. YouTube Automation
Imagine turning $10,000 into a semi-passive income stream. Here's how it could work with a faceless YouTube channel riding the wave of viral trends:
- Freelance Video Production on Fiverr: 3 videos/week $20/video = $60/week or $240/month.
- Aim for YT monetization after one year, assuming a $5 CPM and projected viewership growth.
Risk:
- YouTube is highly competitive. Videos must be engaging and well-produced, even with trending topics.
- Monetization takes time, and so does building a substantial audience.
If you're willing to put in the work and learn the ropes, a faceless YouTube channel can be a lucrative investment. Treat it like a business, not a lottery ticket.
5. Invest in Retirement Accounts
You cannot rely on your kids and you don’t want to be welcoming people at Walmart unless you want to because that is your way to socialize. Retirement investment will ensure you are okay when you can no longer work.
Options:
- Roth IRA: Contribute after-tax money, and all profits grow tax-free. Contribution limits are $6,000 per year if you're under 50, or $7,000 if you're over 50.
- 401(k): Invest pre-tax money, which reduces your taxable income. For 2024, the contribution limit is $19,500. If your employer offers a match, contribute up to that match amount.
- HSA (Health Savings Account): Contribute up to $3,500 per year tax-free to pay for medical expenses. It's a great tax-advantaged account, offering tax-free contributions and withdrawals for medical expenses.
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6. High-Interest Savings Accounts, CDs, and Bonds
High-Interest Savings Account: A bank account that pays a higher interest rate than a regular savings account. It's safe and you can access your money anytime.
CDs (Certificates of Deposit): A savings account where you commit to leaving your money in the bank for a set period in exchange for a higher interest rate.
Bonds: Loans you give to the government or a company in exchange for interest payments over time.
Options:
- Government Bonds: Very safe loans to the government.
- Corporate Bonds: Loans to companies with higher interest but more risk.
- Municipal Bonds: Loans to state or local governments, often tax-free.
Potential Growth:
With an average annual return of 3%, $10,000 could grow to approximately $13,439 in 10 years.
7. Pay Down High-Interest Debt
Paying off high-interest debt is like getting an immediate, guaranteed return.
Example:
- Imagine you have a credit card with a $10,000 balance and an interest rate of 18%.
- If you only make minimum payments, it could take years to pay off, and you could end up paying thousands of dollars in interest.
- By using your $10,000 to pay off the credit card balance, you eliminate this debt and the high interest that comes with it, effectively "earning" an 18% return on your money.
- This not only frees up cash flow for other investments but also improves your credit score.
8. Stocks
Individual Stocks: Investing in individual stocks can be riskier but also potentially more rewarding. I only invest in dividend-paying stocks like Apple or Wisynco if you live in Jamaica.
Options:
- Invest in well-established companies with a track record of growth (e.g., Apple, Amazon).
9. Real Estate Investing
With $10,000, you can potentially start investing in real estate by using it as a down payment on a property. This approach requires a good credit score and enough income to support the loan but offers multiple ways to earn, including rental income, property appreciation, and tax benefits.
Options:
- REITs (Real Estate Investment Trusts): Invest in a diversified portfolio of real estate holdings without needing to buy property.
- Rental Properties: Purchase a property to rent out and generate monthly income.
- Real Estate Crowdfunding: Participate in real estate projects through platforms like Fundrise.
Potential Growth:
With an average annual return of 8%, $10,000 could grow to approximately $21,589 in 10 years.
10. Peer-to-Peer Lending
Peer-to-peer lending involves lending money directly to individuals or small businesses through online platforms, cutting out traditional financial institutions.
Options:
- LendingClub: A platform for personal loans.
- Prosper: Another peer-to-peer lending platform.
- Funding Circle: Focuses on small business loans.
Potential Growth:
With an average annual return of 5%, $10,000 could grow to approximately $16,288 in 10 years.
Conclusion
These methods depend on your risk tolerance and investment timeline. One of these strategies will help you maximize your returns and grow your wealth over time. If you found this helpful, please like and comment for the YouTube algorithm, and if you haven't already, subscribe for more financial tips and tricks.
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