How to Invest $10,000 in 2021

Before you bounce right off this page because you read the title and are thinking, “I don’t even have $1,000 to invest and may never have $10,000,” just hear us out. First, we understand. Our founder came from a very humble beginning and was not born into wealth. The methods that we are giving you in this blog are the same ones that allowed him to become a self-made millionaire. 

Secondly, one of the most important lessons you can learn on your wealth journey is that acquiring wealth is not just about managing your money. It is also critical that you learn how to manage your mindset. 

Hopefully, we have given you the inspiration that you can do this! We are on this journey with you to teach you how it can be done. We want to help you develop the mindset that wealth is in your destiny. Then, we want to help you develop wealth-building habits. Downloading the WealthStack app means you'll have the tools to secure your financial future.

You think all of your favorite sports stars and rappers got rich off of just their work alone? Nah. They’re all investing in something. Up until now, investing in the stock markets has been the primary way most Americans work to increase their income somewhat passively and save for long-term goals.

And, up until now, those investing strategies have been totally inaccessible to most of the country’s population aside from the standard, rich Wall Street guys and their families. We’re changing that. WealthStack is a platform dedicated to teaching you how first to understand financial terms. Then, we help you use those to learn how to invest in yourself.

Still, it probably feels pretty overwhelming to find the best way to invest your money, right? You’re not alone. It’s what holds most people back (including a few of us in the beginning). If you have the cash (doesn’t have to be $10,000) and want to invest in something other than just throwing it in savings, here are a few great ways to start.

Should You Invest or Save During the Pandemic?

If you had $10,000 right now, what would you do with it? Most people would use the $10,000 to pay off debts or bulk up their emergency fund. During the economic crisis we’re facing due to the pandemic, that’s totally understandable. It’s understandable even when we’re not in a recession, too, honestly.

One survey from Bankrate showed that 42% of Americans say the pandemic has changed their investment approach. About 26% said they would invest less aggressively. We’d guess that that number looks a bit different in minority communities since the pandemic and economic downturn have hit these communities harder.

So, if you’re feeling like you’d rather hoard your money than invest it, we’re here to tell you that we understand, and we’d like to help.

6 Ways to Invest $10,000 in 2021

Build Your Emergency Savings Fund

If you don't have an emergency fund yet, this is the first step on your investment journey. Put at least part of your money in a savings account, as cash available in an emergency is a necessity. 

We go over a few good saving and budgeting strategies in our post on the Best Budgeting Apps of 2021. However, we can definitely suggest the 50-30-20 rule. This means that you put 50% of your earnings towards necessities, 30% towards things you want, and 20% towards savings or debt. If your main goal is to save, this is the way to do it.

This strategy may not be profitable for you, as savings account interest rates are generally low. Still, if saving means avoiding borrowing, having cash on hand is a good investment since your return comes from avoiding high-interest payments.

Pay Off High-Interest Loans

In addition to creating an emergency cash fund, getting rid of high-interest debt is critical. Liabilities and interest payments can affect your income and profit growth. Money that is sent to a bank in the form of interest payments reduces what you can save for the future.

For example, a mortgage on a house generally has a very low interest rate, and paying it off before the agreed term can be a good use of money. You’d save thousands in the long run, which we dive into in our guide to Can Homeownership Really Increase Wealth?

Prioritize any debt with a higher interest rate. These are usually things such as credit cards, as they generally carry interest rates that are way higher than a mortgage.

Fund Your Retirement Account

Regardless of what you think about "retirement” (millennials and minorities are trending towards a different retirement style than your standard boomer), a retirement account can support your long-term financial needs as you get older.

There are a few options you can use to save for retirement. Individual Retirement Accounts (IRAs) can be ideal for a lump sum of money, and we talk about those in our article about How Retirement Accounts Help You Build Wealth.

You’ll get a tax deduction with a traditional IRA, but Roth IRA accounts don’t offer a tax deduction. On the flip side, when you withdraw funds from a Roth IRA, they’re tax-free as long as you meet certain requirements. So, it’s a trade-off. The main point is that you’re investing your money in a way that grows faster than in a traditional savings account.

It should be noted that both accounts are designed to be withdrawn after age 59½, although Roth contributions (but not earnings) can be withdrawn early without penalty. 

Remember that you can only contribute up to a certain amount each year, which means that if you have $10,000 to invest, you can’t invest all of it into a retirement account. If you’re under 50 years old, the contribution limits for an IRA are $6,000 this year (which goes up to $7,000 if you’re over 50).

Invest in an Index Fund

Investing in index funds can be a great and relatively stable way to start investing, especially if you are interested in making money without actively managing a portfolio (even hearing those words gives beginners bad vibes, and we totally get it).

While we don’t really suggest robo-investing, it’s an option. Instead, though, we suggest taking a look at the WealthStack platform. Join the waitlist for the app; once it’s launched, you’ll have the opportunity to learn from our free financial courses, set goals, and access financial products that’ll help you become a better investor.

Start a Small Business

There are plenty of business ideas you can come up with that don’t require you to have much money to start. If you have $10,000 to invest, you can do quite a bit in terms of building something big for yourself.

The first thing to determine is whether it will be an alternate activity or a full-time job. Working full-time? Make sure you have some extra savings set aside. This will help back you up in case things don't work out (or if they don’t work as quickly as you’d like which, from experience, we can tell you that they likely won’t happen as fast as you need or want).

Do your research first about what niche industries people are interested in. Then, you’ll have to pay a couple of hundred dollars for website hosting and design. From there, you can create social media channels and start posting blogs that’ll help you gain visibility. Then, focus on slow, sustainable growth. Check out our small business management section for more specific tips on this.

Invest $10,000 in Yourself

Really, the best investment you can make with $10,000 in 2021 is in yourself. This means investing in your career development, taking courses to advance your personal knowledge of investing or investing in going back to school.

You can even take your money and use it to learn as much as possible about how to invest. Really, the only thing standing between you and the ability to choose great businesses or startups is the right education. However, lucky for you, there is a way to learn about how to invest without paying a penny. It’s WealthStack. We’re it!

Build a Smart Investment Plan with WealthStack

You can do quite a bit with $10,000. And as tempting as it might be to stash it away for a rainy day, you can actually increase your rainy day fund even more if you’re able to invest it wisely. All you have to do is understand the investing principles (and a smart financial coach or app doesn’t hurt either).

How do you get to the point where you’re ready to invest your money? We’re offering free resources, guides, and additional materials for those who download the Wealth Stack app.

Get the app for free on the App Store or on Google Play. Once you download it, you'll be able to receive help with budgeting, saving, and investment needs, plus so much more.