One question I get asked quite a bit is, “What would you do if you had $___ to invest.” That number varies widely, but $25,000 is a number that is mentioned quite often, so I decided to go with that for this post.
Unfortunately, that's a hard question to answer because there are so many places that I'd want to invest that money. If I were pressed for one answer though, I'd probably put it into real estate crowdfunding. However, that's a personal decision based on my current situation and goals.
If you're in that situation, first of all, congratulate yourself! While most of the country struggles to save anything substantial, you've put aside some funds with every intention to put it towards building your future. Delayed gratification isn’t easy. Trust me, when I walk in the parking lot at work and I walk by Porsches, Teslas, and Bentleys, it takes a fair amount of discipline to stay focused on the larger priority – financial and time freedom.
So, in thinking about where to put $25,000, I think it first helps to define your goals and the time frame for when you need it. I’m going to assume you don’t need to touch it for a minimum of 3-5 years. Anything shorter than that, you should put it in a safe place (minimum volatility) and with easy access (liquidity).
Here are 18 ways to invest $25,000:
1. Pay Down Debt
Okay, I know this isn’t truly an investment, however, it is in a way a guaranteed return – you’re saving yourself from having to pay future interest on that debt.
For example, if you have credit card debt sitting there at an interest rate of 15-19%, there aren’t too many investments you can make to safely match that ROI (Return On Investment).
If you have a significant amount of student loan debt, consider refinancing if that’s an option, then weigh whether it’s better to pay down that amount or invest. For a deeper discussion, check out White Coat Investor’s recent post, Pay Off Debt or Invest.
2. Increase Your Savings – High Yield Savings Account or CD
Unfortunately, interest rates are still quite low for High Yield Savings Accounts or CDs. I still remember the days when you could easily find an online savings account that would pay you 5% APY. However, online savings accounts & CDs blow away the interest rates of brick and mortar banks. As of the time of this writing, you can get 1.3% APY and CDs are actually quite similar. The benefit is that it is the safest place to put your money and backed by the FDIC up to $250,000.
However, considering the rate of inflation averages 3-4%, stashing away money in only a savings account long-term is similar to continually filling a bucket of water with a tiny leak in it. Over time, the purchasing power of that money is slowly diminishing so better to have some funds elsewhere as well. For some great current options, check out below.