We’ve discussed what living off a million dollars would look like, but what if you receive a smaller amount of money like $30k? What are the best ways to invest $30k?
Pay Off Debts
When it comes to money and investing the number one 100% guarantee is paying down debts, especially credit card debt. If your interest rate on your debt is 5% or lower then investments will make more than paying off the debt, however if it’s more say 15% then paying that off first will save you more money then any passive investing of $30k will do.
Lets say you have $10k in credit card debt at 15% that means you’ll pay $1500 a year in interest. Many people have even higher interest rates so consider that when deciding the best way to invest $30k.
Create An Emergency Fund
This isn’t at all an “investment” producing money but one that produces peace of mind. If you only have your credit cards for emergencies and are unable to pay them off then the interest cost more than any investment.
You may even have to call around and beg friends and family to borrow even small amounts of money if you don’t have an emergency fund in place. Usually 3 to 6 months of pay is good to have but depending on your job it may be more or less to make you feel comfortable.
Buy Low Cost Index Funds
If you’re only interested in investing for a few months to a few years than it’s best to just keep the money in a savings, money market, or CD. However if you are looking at a 10 year or longer outlook then there are far better options.
In my opinion the best way to invest $30k is to start a business, however that’s incredibly active investing. For investing you can do once, check on a few times a year and when you need it has grown you need to invest in low-fee index funds.
Vangaurd is widely known as the best fund manager there is and offers many options. Depending on exactly what you’re looking for. You can invest in the total market index fund, a real estate index fund, a dividend producing index fund, target date funds, and others.
For most people the target date fund will be the best. Figure out the point in which you will want to withdraw your investment whether that’s for retirement or anything else and pick the target date fund the corresponds with that date.
Have A Robot Do It
In the past the only way to invest in the stock market was to call a stock broker and have them place an order for you. Now with the internet you could have a huge portfolio and never once speak with a broker. Even better is the recent increase in robo investors.
If you really don’t want to think at all about your investment and just want to receive the interest then the best way to invest $30k is one of these robo investors.
Places like Betterment and Wealthfront will take some information about you then invest your money for you with you not needing to think about anything. For those trying to invest without having to think about it you don’t get any more hands off.