Where to Invest $10,000 – Making an Age-Based Decision

When you’re trying to decide where to invest $10,000, your decision should in large part hinge on your age and stage of life to determine what type of risk you can and should take. We’re here to help you make that age based decision in order to execute the best investment for your situation.

If you’re an investing newbie, the options really seem endless and complicated. From savings to mutual funds, stocks, bonds, securities, CD’s, IRA’s, futures and commodities, it’s no wonder so many people suffer from “analysis paralysis” when it comes to investing. Regardless of which instrument catches your attention the most, you must first analyze where you are financially, where you want to go and how long until you need to get there. This will help narrow your options. Once you have that answer, you must then ask yourself how much risk you are comfortable taking. If you feel that you can’t afford to lose money, then your investing style is going to be very conservative as you are risk- averse. If you are more comfortable taking a gamble with a shot at earning greater returns on your investment, you can take on greater risk.

For the extremely risk averse, there is a savings account. A savings account is truly the easiest way to invest $10,000 and still have access to your funds. Shop around extensively to find a bank that offers the best interest rate and park your money there. Many banks now have a tiered interest system where the more money you have in your account, the higher interest rate they pay. Don’t automatically discount online banks, either. Because these institutions have less overhead than a traditional bank, they often offer higher rates as well. Just be sure that your deposits are FDIC insured.

If you’re willing to take on a bit more risk, you can put your money into a certificate of deposit, or a CD. CD’s are timed deposits in essence. You decide how long you want to deposit the funds and can immediately know the rate of return at the end of that time period. Most CD’s can range from four months to more than five years. The longer your funds are in the CD, the greater the rate of return.

A very moderate investment is the Roth IRA. Regardless of age, a Roth is a great way to park money tax- free for after retirement. Contributions are capped per year depending on age and you can begin to withdraw funds from a Roth without penalty at 59 ½ years.

The next option would be to invest in a mutual fund. This spreads risk as a mutual fund is a pre-selected and diversified portfolio that intends to get the best return on investment. They have the added benefit of being easy to cash out.

Finally, and most risky, you can set up an account with an online brokerage and buy stocks. These companies have become increasingly popular and are easy to use. So long as you research the stocks very well, this can be a great and lucrative way to invest $10,000. Just know that there are no guarantees and you can easily lose all that money quickly.

Always do extensive research and explore all options. Rather than make a hasty decision if you’re having trouble deciding, consult an expert for advice. Diversify and stay in touch with your investment and you’ll find that over time your $10,000 investment can grow by leaps and bounds.

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