6.5 Ways To Invest $10,000 ASAP

What's up Grandma? It's guys here. So I recently found out that the African-American household has nearly ten thousand dollars saved in their bank account, and that gave me an idea: we should go over the six and a half best ways that you could invest ten thousand dollars right now in a way that's both quick, realistic, and most importantly, profitable.

Because, after all, ten thousand dollars is a sizable amount of money that can make a significant difference long term if you don't mess this up. It's important to utilize this money properly. For instance, just getting an extra two percent return on your ten thousand dollars could wind up making you an extra eighty-one hundred dollars in profit over the next 30 years.

I'm pretty sure if you watch this video to the very end, you'll find at least one way to maximize your money to get that extra two percent return, if not way, way more. So, I guess in a way, just watching this video could be worth an extra eighty-one hundred dollars, all for the low cost of just smashing a like button and subscribing for the YouTube algorithm. That way, it pushes the channel to a brand new audience who could also subscribe and hit the like button to push it out to an even bigger audience, and the cycle continues.

First, let's start with one of the most boring, basic, safest, and practical approaches that everyone should be doing if they have ten thousand dollars, and that would be starting an emergency fund. For those unaware, as the name would suggest, an emergency fund is simply the cash you have sitting on the sidelines to be used only in the event of an emergency.

Ideally, the size of this fund should be equal to three to six months’ worth of your expenses and kept easily accessible in cash. Just in the small chance that you fall on hard times, having this type of three to six month emergency fund means that you're not going to have to rely on credit cards to pay your way through an unexpected event. You're not going to have to sell your stocks for other investments during a time where they may have declined in value, and you won’t have to take on any high-interest rate debt in the event something were to happen.

So, obviously, there will be people out there who complain that the money is losing value to inflation, it's not making you anything back in return, and it's just being wasted away. But from my perspective, an emergency fund can actually save you money and act kind of like an insurance policy in the event that poop hits the fan. Just consider that it's a lot better to lose seven percent to inflation than lose fifteen percent in the market if you have to sell your investments during a time where everything is down and you can't hold on any longer.

For myself, I've been using Ally Bank for my emergency funds because they pay you a half a percent interest rate, and they have an easy-to-reach customer support team who always picks up the phone in a minute because I'm impatient. But besides them, there's also a ton of great other high-yield savings accounts out there. So if you're curious which ones are my favorite, I'll link to them down below in the description.

I think I should also include a step one and a half here as well because besides an emergency fund, you could also use this as a savings fund for anything that you want to buy in the next one to four years. Goals like saving up for a house, car, vacation, or a business could fit in here. Generally, it's a good idea not to invest the money that you'll know you'll need in the next few years because there's always a chance that the market goes down, a recession hits, and you won't have enough time to wait for Elon Musk to buy out your favorite pet companies so they finally pump to the moon.

That's why holding on to cash isn't always a bad thing. For peace of mind, an emergency fund or a savings account is absolutely worth it, just to know that whatever happens, you'll be okay. Although from there, once you've got your emergency fund and your savings account for that Tesla Roadster you've been eyeing, we could finally move on to the next option.

The second, another somewhat unexciting but very profitable way to invest ten thousand dollars is by paying down high-interest rate debt. See, the thing is, obviously if you have any debt—whether that be a credit card, auto loan, personal loan, or a mortgage— that debt costs you money. Of course, some debt is good to have, like if you have a low-interest fixed-rate mortgage that's tax deductible, it's probably better not to pay it off and invest the money elsewhere instead.

But if you have high-interest rate debt that's not making you any money, then that debt needs to be paid down as soon as humanly possible. Here's my reasoning on this: on average, if you were to invest your money, you would make approximately six to twelve percent every single year before paying tax. On the other hand, if you have high-interest rate debt, paying down that debt is like getting a guaranteed return at whatever interest rate you're paying down.

For example, paying off a 20 percent interest rate credit card is like getting an immediate guaranteed 20 percent return on your money, without any risk whatsoever. The same math applies with pretty much any loan that you might have. Even if you have a personal loan at eight percent interest, why invest in the stock market for the possibility of making eight percent before tax when you could pay down the loan and make a guaranteed return right now?

My basic rule of thumb is just this: if you're paying above a five percent interest rate on your debt, it's probably best to pay off that loan as soon as possible because you're getting a similar return as to what a good investment would make you after taxes. Consider this like a guaranteed return on your money—a really good use of ten thousand dollars.

And then, once you've done that, we can move on to the next step. Third, here's where the magic begins: start using some of that ten thousand dollars to invest in your retirement accounts. When it comes to this, I'll be going over three different options, and then afterwards, we'll go over the specific investments that you can make within those accounts depending on how much risk you want to take.

But first, I think it's no surprise that overall, my favorite retirement account for some of that ten thousand dollars would be a Roth IRA. This is a retirement account that you could invest your money into, and then all the profit you make within that account is completely tax-free after the age of 59 and a half.

That means if you invest a thousand dollars at the age of 20, and then it's worth twenty-one thousand dollars at the age of 65, well, all of that is completely yours to keep without paying any tax. As of now, you're able to contribute six thousand dollars a year to a Roth IRA if you're under the age of 50, and seven thousand a year if you're over the age of 50. If you're eligible to do this, I would always do it. In fact, right now, like, don't put this off—go and do it!

Yes, I am talking to you right now because I regret not doing this the moment I turned 18, and it took me a few years to figure out what I was doing. You could literally open up an account with a variety of brokerages right now for free; it's going to take you less than 15 minutes, and this alone could easily save you thousands or even tens of thousands of dollars in the future if you just do it.

In this case, a ten thousand dollar investment means that you could max out a Roth IRA for the entire year and have money left over for the next option. That would be a 401k. This one is kind of like the opposite of a Roth IRA because it's an account that you invest pre-tax money into, and then you're taxed on those profits once you begin taking them out after the age of 59 and a half.

Not to mention, with this, you're able to contribute up to nineteen thousand five hundred dollars a year. So, for example, if you invest ten thousand dollars into a 401k, you'll be taxed as though you've just made ten thousand dollars less; in a 22 percent tax bracket, that means you'll save a pretty quick twenty-two hundred dollars. That means you now have an extra twenty-two hundred dollars that you could invest today to begin working on your behalf instead of giving it to Uncle Sam.

Now, unfortunately, like I mentioned, the catch here is that you do have to pay taxes on this money once you begin taking it out in retirement. So really, from my perspective, it only makes sense in a few scenarios. The first is when your employer offers what's called a 401k match. This is where they will match your contribution dollar for dollar up to a certain amount. Essentially, this means that you double your money immediately with zero risk whatsoever.

The rule of thumb when it comes to doing this is that you should always do it no matter what. Like, seriously, don't even put this off—always contribute to get up to the employer maximum on the contribution and never a penny less. Second, a 401k also makes sense if you're in a high tax bracket now, but you expect to retire later in a lower tax bracket and then you could profit the difference.

Now, the variable here is that if you end up making more money in retirement, you could end up paying more taxes later than you would have just paid today, or if tax rates go higher, then you could also end up paying more. But for most people out there, I would probably recommend contributing enough to get the 401k match from your employer and then putting everything else into a Roth IRA.

But after that, we have one of the best options of them all, and you could use some of that ten thousand dollars towards what's called an HSA, which stands for a health savings account. There are some qualifications that you have to follow, and you can find that out pretty quick with a Google search. But assuming you qualify, you can contribute up to three thousand dollars completely tax-free into this account.

This is specifically used to pay for any out-of-pocket medical expenses that you incur, and if you don't use it one year, you could roll it over to the next, and the next, and the next, and the next. Many people believe this to be one of the best tax-advantaged accounts in the world because, first, you don't pay any tax on the money you contribute to the account, so that's tax-free.

And second, you don't pay any tax on the money that you spend on medical expenses, so that's also tax-free. It's basically like you're getting completely tax-free money that you can invest however you want, and that you won't ever have to pay tax on when you spend it on medical expenses, which all of us are going to have at some point or another.

So again, if you qualify, there is no reason why you shouldn't use some of the ten thousand dollars towards this. Fourth, in terms of which investments you could make within a retirement account, of course, we've got index funds. Bet you didn't see that one coming!

Anyway, an index fund is basically an investment that encompasses the overall market. By paying one low price, you'll get the benefits and diversification of owning a small amount of everything. Historically, an investment in something like a total stock market index or an S&P 500 index has returned between eight and ten percent annually when you reinvest the dividends.

For most people watching, it's probably the best risk versus reward in terms of how much money you could make. The other advantage is that index funds often have very low or even zero management fees, which means you get to keep even more of your money to reinvest to make even more money. It's been shown that index funds outperform 92 to 95 percent of professional portfolio managers over a 15-year period.

Plus, doing this is really, really easy; you don't have to spend hours trying to find an undervalued stock to buy. You don't even have to perfectly time your entry point. All you need to do is click a few buttons, buy into a total stock market index on a regular basis, and that's it. You're done.

Even for myself, I prefer investing in index funds, and this is what I've been doing since the very beginning. Oh, and for anyone wondering which index funds to buy into, look into what's called the three-fund portfolio. That means there's just three different funds to buy into, and you're set. It's the total stock market, international stock market, and a very small portion of bonds for the safety. Boom, you're done: ten thousand dollars well spent.

Of course, if index funds are too boring for you and you don't mind taking on a little bit more risk for a little bit more reward, you could use some of that ten thousand dollars towards investing in individual stocks. There, I said it! This is by far the riskiest from everything that I have discussed, but the payoff could be a lot larger.

That's because you're placing a significant amount of your money within a few specific companies, and your entire investment is dependent on how well those businesses do. Now, I personally recommend doing this within a Roth IRA or a 401k to avoid paying taxes on those profits, unless you plan on holding on for a while to get those sweet, sweet long-term capital gains tax rates.

But that isn't required; you could just as easily open an account with public using the link down below in the description with the code Graham to get a free stock worth all the way up to a thousand dollars and reap some pretty good benefits. For instance, Twitter is up 17% this year, Exxon is up 30%, and Lockheed Martin is up 25%.

So if you pick some winning stocks, you could do tremendously better than investing in an index fund. However, just keep in mind that if you choose incorrectly, you could wind up completely devastating your portfolio, and that's a risk you have to take.

Now, of course, as a disclaimer here, the average investor is really, really bad with picking stocks, and they tend to underperform the overall market. This means that most investors will average less than an eight percent return long term, and a good portion of those investors will end up losing money over a period of days, weeks, months, or even years. So if you want to dabble with this, by all means, go for it—just know your odds, don't go all in, and understand that if you want to be good at this, you really have to put in the time and the research.

Now, I don't think I could mention stocks without taking it to the next level in terms of risk versus reward, and this would be the Grand Master of them all: cryptocurrency. It's no surprise that throughout the last decade, both Bitcoin and Ethereum have broken records as some of the best performing assets. They've surpassed just about every other investment in existence, and there's always the potential that further adoption could drive the price even higher.

Plus, I'm not naive to the fact that both millennials and Gen Z are buying into cryptocurrencies more than any other generation, so it makes sense that we include them as an option on the list. Now, in terms of being reasonable with ten thousand dollars and not just throwing it all into the next Discord pump and dump, it's important to make a smart investment based on science and facts.

Here is what statistically is most likely to make you money. First, based on past performance and my own analysis, the chance of you picking a random non-top 10 cryptocurrency making money from it is really, really slim. In reality, in the last year, only five had a return above ten thousand percent out of 200 different options. So if you're randomly investing, you only have a two-and-a-half percent chance of picking the right one, with the others losing about 90 to 100% of their value.

Now, second, when factoring in the losers, you would have made more money just investing in Bitcoin and Ethereum, and that's it. And third, studies show that you don't need a huge allocation to something like Bitcoin to see a positive return in your portfolio. In fact, Fidelity found that just a five percent allocation to Bitcoin would have boosted the cumulative return of the traditional portfolio by 65% since 2014, even despite the sell-offs along the way.

That's why I've taken the stance that I invest less than eight percent of my entire net worth in a 50/50 split between Bitcoin and Ethereum. I'm prepared for it to go to zero, but I'm also very optimistic to see what's going to happen over the next 10 to 20 years.

Those are my best options to invest ten thousand dollars in a way that's easy, profitable, and realistic. It certainly depends on your risk tolerance, how much work you want to put into this, and the time frame for investing. But between those six and a half options, you'll be well on your way to investing that ten thousand dollars to make a lot more money in the future.

Just by subscribing and hitting a like button for the YouTube algorithm, if you haven't done that already. So with that said, you guys, thank you so much for watching. Also, make sure to add me on Instagram or on my second channel, The Graham Stephan Show. Thank you so much for watching, and until next time!