12 Wise Ways To Invest $20k in 2023

So you’re sitting on a pile of savings; excellent work!

Since you’ve set aside $20K, you have many options for investing. 

If you do it wisely and methodically, that $20K will grow even more! 

Whether you’re starting a business, acquiring an existing one, or dabbling in stocks, you will need a plan. 

Many entrepreneurs would say that growing money is the easy part.

However, please keep in mind that it’s not without its challenges. 

This post will look into wise ways to invest $20k to make $100k or more!

We’ll discuss the most reliable, time-tested approaches to making a fortune with minimal effort. 

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What To Consider Before Investing 

It’s easy to daydream about doubling, tripling your money, or retiring on a yacht.

But let’s take a chill pill and think things through! 

Your hard-earned savings deserve some careful consideration.

You wouldn’t want all that effort to go to waste. 

You need to evaluate the potential risks involved in any scheme that promises a fast buck or a passive income stream. 

What you want to achieve with your initial investments can immensely impact the kind of venture you pursue. 

Maybe your main goal is to wipe off some pesky debt.

In that case, you’ll want a low-risk option that can help you make enough to get that monkey off your back. 

Maybe you dream of building a solid savings account for your little ones’ education.

Then, you will want higher returns, but you’ll have to be patient and let it ride longer. 

In that case, you should look for investments that offer lower risks.

Choosing investment options that make sense with your personal finance strategy is best.

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Some Of The Wise Ways To Invest $20k

Real Estate 

Do you want to invest but don’t want stock market jitters?

Then, investing in real estate could be a more secure option for you. 

Here’s how it typically goes: 

You buy a rental property, find tenants, and earn money from rent payments and the appreciation of the property over time. 

But there’s a snag in this plan. 

Buying a property outright can be pricey, so how can you start with $20k? 

Fortunately, platforms like Fundrise let you team up with other investors to purchase real estate as a group venture. 

Each investor gets a cut of the dividends as the properties increase in value. 

Plus, the risk is spread out, making it a safer entry point into real estate. 

And the best part?

You don’t have to invest your entire 10K into one property.

You can spread your money across different ventures and diversify your portfolio. 

Investing in real estate is usually a long-term game unless you have the funds to flip houses. 

But you can also check out REITs or real estate investment trusts, where organizations purchase real estate and pass on profits to their investors through dividend stocks.

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Peer-to-Peer Lending 

Peer-to-peer lending is precisely what it sounds like.

It’s a way to loan money directly to people who need it.

It’s almost like operating as a small private bank. 

Platforms like Lending Club or Prosper Marketplace can help match you with people who want to borrow money. 

Of course, these businesses take a small fee for their services, but you will need a third party to facilitate the lending process. 

The cool thing about peer-to-peer lending is that you can earn higher interest rates than you would by leaving your money in a savings account. 

However, there is some risk involved. 

For instance, if a borrower stops making payments, you risk losing your investment in that loan. 

You could start small and work up to lending more significant amounts, though.

So, if you’re looking for a unique way to assort your investment portfolio, peer-to-peer lending is a viable option. 

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Index Funds 

We can think of the stock market as a big casino where you can “gamble” and turn your 20k into 100k in a few years. 

But don’t worry; you don’t have to be a financial expert to play this game. 

One way to invest your money and limit your risk is using index funds.

These are groups of stocks that follow a bunch of companies, like the S&P 500. 

Investing in index funds can make the most out of your money and earn great returns. 

Historically, index funds have been a safe bet, returning about 8% to investors each year.

Plus, you don’t need a fancy financial advisor to get started. 

Index funds give you a diversified portfolio with low fees, so investing won’t weigh on you financially in the long run. 

If you want to start dabbling in index funds, I suggest using a platform like Acorns.

It’s a practical service with an intuitive app to boot! 

You can also buy and sell your investments from a more traditional brokerage firm.

Some index funds even average 12% returns annually, making them the best ways to watch those dollars multiply.

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Product and Website Flipping

This method is a little more hands-on but still considered investing.

I’m talking about reselling products for higher prices than you bought them, also known as flipping. 

Here’s how it works: 

You scour the internet for deals on items that you can resell for a profit on platforms like eBay or Facebook Marketplace. 

Of course, you can also hunt for deals in person, like thrift shops, flea markets, and garage sales. 

With this kind of investment, there’s a risk that you won’t find a buyer willing to pay your asking price. 

But since you’re buying items for a bargain, any losses will likely be small.

Some items you source might not be in tip-top shape, so repairing or sprucing up will help. 

If this sounds like too much physical labor or you don’t have the space to store products, another option is to try flipping websites. 

This will take a bit longer, but the payoff can be substantial.

With website flipping, you buy an old (possibly abandoned) site for a low price, then improve its functionality, design, content, and SEO to make it more profitable. 

It’s a lot more involved than some might think, but you could luck out and find an eager buyer for your hard work, especially if you land hot domains. 

Either way, flipping is an excellent way to make some extra money on the side.

It’s not the most passive income source, but it’s a way to grow money faster than putting it away in a savings account. 

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Retirement Account

I assume you’ve already got your emergency fund tucked away and probably gotten rid of your high-interest debts.

If that’s the case, it might be worth investing your $20k in a retirement account. 

Not only could this give you tax benefits, but it also will let your money grow in the long run.

Of course, the caveat is you can’t touch this money until you reach retirement age. 

Just remember that all investments come with risk, and past performance doesn’t guarantee future returns.

Still, a retirement account is a generally safe and foolproof way to make your money work. 

Why? 

Investing longer can lead to massive growth thanks to compounding returns. 

There are several ways to invest $20K in a retirement account, and you must be aware of annual contribution limits.

You’ll probably need to invest gradually rather than all at once. 

Investing in a 401(k) or workplace retirement plan is one way to start saving for your future.

Some employers even match up your contributions up to a certain percentage. 

You could miss out on free money if you’re regularly employed and not taking advantage of this. 

But what if a workplace retirement plan isn’t available to you?

What if you’re an entrepreneur or a freelancer?

No problem!

You can open other types of retirement accounts. 

An individual retirement account (IRA) is a standard option.

It doesn’t come with income restrictions. 

Conversely, with a Roth IRA, your contributions may be proportional to your income. 

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Cryptocurrency 

Digital currencies, or cryptocurrencies, are an exciting new way to store and transfer value. 

They use complex mathematical algorithms to secure their transactions and manage the creation of new units, making them incredibly safe and decentralized. 

This means that they are not subject to the control of governments or financial institutions, making them attractive to many people looking for a new investment opportunity.

Cryptocurrencies are also known for their potential to increase in value very quickly.

That’s how it got the attention of many young professionals. 

Take Bitcoin, for example.

Its value has soared by more than 1,000% since its introduction to the public in 2009. 

If you’re interested in investing in cryptocurrencies, there are a few different ways to get started. 

One option is to buy them on an exchange, which allows you to trade them for other currencies or assets easily. 

Another option is to mine them, which involves solving complex mathematical problems in exchange for cryptocurrency tokens.

However, it’s important to remember that investing in cryptocurrencies carries some risks, and you should always do your research and take a cautious approach. 

While there are opportunities to make significant gains, you can also lose money if you’re not careful. 

So be sure to take heed and only invest what you can afford to part with. 

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Robo-Advisors 

All this investment talk can be a lot for beginners.

While you’ll still have to learn the ropes of investing, I’m sure you’d appreciate some guidance as you invest your first $20k. 

One strategy you can use is to leverage robo-advisors like Betterment, SoFi, or Vanguard. 

Robo-advisors are automated investment services that manage your portfolio for you.

They typically do this for a fee substantially lower than what you would pay an in-person financial advisor.

Plus, most financial advisors limit their clientele to those showing a minimum of $100,000 in investable assets.

It’s not entirely an inclusive service. 

On the other hand, the minimum investment required by most robo-advisors is significantly lower, and in some cases, none at all. 

So, how do you get started investing with a robo-advisor? 

Signing up with one often involves answering questions designed to calculate your comfort level with risk. 

You’ll also be asked about your preferred investment strategies and personal details. 

The program will then employ algorithms to build an optimal portfolio for you. 

Exchange-traded funds (ETFs) are a common type of investment suggested by robo-advisors. 

ETFs are low-entry and diversified, perfect for beginner investors trying to avoid too much risk. 

Robo-advisors typically also offer tools to improve investment management and returns. 

They can help you with tax harvesting, asset location, and portfolio readjusting. 

So, with robo-advisors, you can invest your $20k with a more hands-off approach.

By investing as soon as possible, you can extend your funds’ investment period, giving them more time to grow! 

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Brokerage Account 

Okay, what if you want more control over your investments and don’t want to chalk them up to algorithms? 

The solution is to open a brokerage account. 

A brokerage account is much like a regular bank account except that it lets you trade assets like stocks, bonds, mutual funds, and ETFs. 

You can set one up with different services, from fancy-schmancy full-service brokers to more affordable online brokers. 

However, brokerage accounts are taxable, so any money you make from your investments will be taxed as capital gains. 

But if you hold on to your investments for over a year, you can take advantage of some pretty sweet long-term capital gains tax benefits.

This can often lead to even more money in your pocket. 

Fortunately, setting up a brokerage account these days is easy. 

You can sign up in a snap online and don’t need much money to get started.

Many brokers will let you open an account with no upfront deposit. 

Of course, you’ll need to add money to your account before you can start buying stocks.

This is very easy to do. You can transfer funds from your checking or savings account or another brokerage account.

Once you’re all set up, your broker will facilitate all the investing you want. 

And don’t worry about any limits.

There’s no restriction on the number of brokerage accounts you can have or how much money you can to a taxable account every year. 

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Dividend Stocks 

Many thriving companies have found an effective way to give back to their investors — by offering them the chance to earn a share of the company’s profits.

This is called a dividend stock. 

This strategy requires you to invest $20k in well-established and highly profitable companies. 

In return, you will receive a portion of the company’s revenue. 

As with any form of investing, there is always an element of risk involved.

This method is no exception. 

But, generally, investing in companies that offer dividend stocks can be a wise choice.

Most of these companies operate within robust sectors that can weather economic challenges. 

Besides, only highly successful companies can offer this type of trading stock.

Think Verizon or IBM. 

When you invest in dividend stocks, you essentially purchase a stake in the company.

In other words, you own a part of it. 

These dividends can be an excellent source of passive income and can help diversify your investment portfolio. 

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Online Business 

Investing $20k in an online business can be a killer way to mix up your investment portfolio and potentially make some serious coin. 

It’s no secret that online businesses are all the rage these days, with eCommerce and the digital economy booming like never before. 

The great thing about investing in an online business is that overhead costs are usually pretty low compared to a traditional brick-and-mortar store. 

No rent, utilities, or maintenance means more money to pump into marketing and growth strategies. 

And since you’re not stuck in one physical spot, you can market your goods or services to customers all over the globe 24/7. 

Plus, online businesses often have lower barriers to entry than traditional businesses.

This makes it easier to get started and try out fresh ideas. 

If you have the right plan and work hard, an online business can be a cash cow, providing a solid investment return. 

Again, like with any investment, there are risks involved. You have to do your research and make sure you know what you’re in for before you go all in. 

But if you play your cards right, investing $20k in an online business can be an intelligent move leading to severe gains. 

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Existing Business 

If you don’t want to launch a business from scratch, that doesn’t mean you should give up on the idea of managing a business altogether. 

With online marketplaces like BizBuySell and BizQuest, you can own an established business already making a profit. 

You can take over a business with a good track record and scale it using your marketing and sales strategies. 

Of course, it’s crucial to remember that buying an established business can be a bit pricey.

After all, the previous owners have put in a lot of grueling work to get the business to where it is today. 

But if you’re willing to invest, it could pay off big time.

If you chance upon a more affordable one, chances are that it’s a bit of a fixer-upper. 

One of the most significant advantages of buying an established business is that you’ll likely be able to profit immediately. 

That means you can recoup your initial investment quickly and start seeing cash flow into your bank account. 

From there, you can strengthen the business and make it even more profitable.

Maybe you’ll earn enough to acquire and add another business to your roster! 

But remember, buying a business isn’t without its risks.

It’s essential to ensure you’re investing in one with a solid foundation and plenty of growth potential.

And, of course, you’ll need to put in the work to make the business thrive.

This is your chance to apply your ideas and personal flair. 

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High-Yield Savings Account

A high-yield savings account might not be the sexiest way to grow your money, but it’s undoubtedly one of the surest options available. 

With interest rates up to 10 times higher than a traditional savings account, you’re better off “forgetting” your savings this way. 

The best part about a high-yield savings account is that it’s FDIC-insured, which means that your money is protected up to $250k per depositor, per insured bank. 

That’s a pretty sweet deal, especially considering that there’s a slight risk involved with this type of investment. 

Plus, with this type of account, you can access your money if needed.

I couldn’t say the same about other investment options requiring you to lock up your funds for a certain period. 

But let’s be realistic.

Growing $20k into $100k with a high-yield savings account won’t happen in a few years. 

It will take time and patience to see your money grow, but it’s a low-stress way to reach your financial goals, especially if you’re starting young! 

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FAQ’s

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Final Thoughts 

Who wouldn’t want to grow $20k into $100k?

While it’s undoubtedly an exciting prospect, it’s essential to approach it with caution. 

Investing $20k comes with some degree of risk, no matter how minor.

So, please ensure you’re ready to handle the possibility of losses before jumping into most of the methods I listed above. 

Fortunately, the internet and modern innovation have opened up a world of possibilities for those looking to increase their wealth. 

With the right strategy and mindset, turning $20k into $100k is more achievable.

Just do your research, consult experts, and ensure you’re as financially stable as possible before investing. 

While the potential rewards are undoubtedly tempting, try not to get too carried away by the excitement.

Remember to stay grounded, be realistic, and take steps to protect your investments. 

With hard work, determination, and a little luck, you can make your dream of financial independence a reality!