How to Invest $50,000 (Like a Pro)

Written by Kim PinnelliUpdated: 4th Jan 2022
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You have an extra $50,000 and want more. What better way to make it grow than to invest in the stock market?

You have many options when you invest 50K – it opens many more doors than someone just starting out.

Ready to learn how to invest $50,000 and make the most of your opportunity? Let’s dive in.

Here is how to invest $50,000.

Pay Off Your Debt

First, don’t invest until you pay off your debt. Use some (hopefully not all) of your $50,000 to pay off any high-interest debt.

I’m talking about credit cards, personal loans, collections, and any other debt you owe. Chances are you won’t find any investment that beats the high-interest rates you’re paying on credit cards.

Let’s say you have a 19.99% APR – you are NOT going to beat that even if you’re the most experienced investor.

Pay it off, put it behind you and then move forward investing what’s left, even if you set out to invest 50K.

Set Goals

All money needs goals; otherwise, it doesn’t serve a purpose. Trust me, you’ll be much more invested if you set goals for your money. You’ll be more interested in what your account does, and where you invest.

Look at short-term, long-term, and retirement goals.

  • Short Term Goals: Short-term goals are anything you want to achieve in the next 3 to 5 years. It could be even sooner. Saving for a down payment on a house, buying new appliances, or buying a car are all great short-term goals.
  • Long Term Financial Goals: Long-term goals are those you set that won’t take effect for more than 5 years. Maybe you have a 10-year goal to buy a vacation home or take a bucket list trip. You can take higher risks with money allocated toward long-term goals because you have more time to make up for losses.
  • Retirement Goals: Retirement may be 30+ years away for you but plan today. You’ll set up a tax-advantaged account for retirement, but you can’t (or shouldn’t) touch the funds until you’re at least 59 ½ otherwise you’ll pay hefty penalties and increase your taxable income considerably.

What Type of Investor Are You?

Whether you are a hands-on or passive investor, you have options. The first thing you need to do is decide what type of investor you are.

Do It Yourself (DIY)

Does the thrill of learning how to invest $50,000 light you up? You’re a DIY investor. Don’t worry, it’s still affordable.

You don’t need to pay an expensive stockbroker. Online and mobile robo-advisors offer plenty of great opportunities to invest with guidance, but you do the work.

Need Assistance? We Got You Covered.

Does investing $50K scare you more than your biggest fear? Don’t worry. There are plenty of robo-advisors that offer hands-off investment opportunities.

The most you must do is answer questions about your risk tolerance and goals, and they handle the rest.

11 Best Ways to Invest $50,000

Without further ado, here are the best ways to invest $50,000.

#1. Invest in the Stock Market

Most people (investors or not) know about the stock market. It’s where you invest in companies and become ‘part-owner’ in the company.

Your earnings depend on the company’s performance and profits (if it’s a dividend-paying stock). Stock prices go up and down sometimes multiple times a day.

If choosing individual stocks scare you, consider index funds (ETFs). These baskets of securities diversify your money across a variety of investments, including stocks and bonds.

They try to mimic the returns of a specific index without buying individual securities.

To invest in the stock market (and not for retirement), you’ll need to open a taxable brokerage account. Check out the fees and services offered by each discount broker to choose the right broker.

>> More: BestOnline Stock Broker

#2. Invest with a Robo-Advisor

If you don’t want to learn how to invest $50,000 and would rather someone did the work for you, use a robo-advisor.

There are more robo-advisors available today than most people realize, each of which offers a different service. Some are completely hands-off, meaning you answer some questions, and the robo-advisor does the rest.

Others offer a hybrid version of a robo-advisor, providing you with guidance, letting you make investment choices, but overseeing the portfolio and rebalancing it when you get too off course.

#3. Max Out Your Retirement Accounts

If you haven’t saved for retirement yet, use your 50K to invest in retirement now. Start with your employer-sponsored 401K. Does your employer match contributions? At least contribute the amount they’ll match.

For example, if your employer matches 3% of your salary and you make $75,000 a year, contribute at least $2,250 and get a ‘free’ $2,250 invested from your employer.

If you don’t have an employer-sponsored 401K, contribute to a Roth IRA or Traditional IRA. Here’s why.

You’ll contribute the funds after-tax, but your funds grow tax-free, NOT tax-deferred. In other words, when you withdraw the invested 50K, which will now be worth a lot more, you keep every penny – no tax liabilities incurred.

>> More: Blooom Review (Optimize Your 401K)

#4. Invest in Real Estate

Have you always dreamt of investing in real estate, but wonder how? $50,000 is a great start to investing in real estate in a couple of ways.

Try the traditional way to invest in real estate – fix and flip or buy and hold. If you’re not the traditional real estate investor type, look at REITs (real estate investment trusts).

You can invest the $50K in multiple real estate investments, diversifying your risk, and increasing your chances of a decent return. Fundrise is a great platform for REITs.

#5. Invest in ETFs

Exchange traded funds (ETFs) are like mutual funds, but they trade throughout the trading day, mutual funds don’t. We like ETFs because of the diversification they provide.

You don’t have to scratch your head wondering which company to invest in to diversify – ETFs do it for you. Just choose an ETF that mimics the returns you want or aligns with your beliefs.

Dollar cost averaging across ETFs is a fan favorite amongst investors. It is easy, safe, and generally yields steady returns.

>> Want to Learn More? Read Our Guide on How to Invest in the S&P 500

#6. Invest in Mutual Funds

Mutual funds are like ETFs, with a few differences. First, they only trade at the close of each trading day.

Mutual funds are also actively traded by the mutual fund manager, which means higher expense ratios, so make sure your account for them.

#7. Invest $50,000 in a 529 College Plan

If you have a child or children going to college someday, invest $50K, or at least some of it in a 529 plan.

There are many 529 College Savings Plans to choose from but check your state’s plans first. You may get more tax benefits if you keep the money in your state.

The money grows tax-free, and IF you use the funds for qualified education expenses (K-12 education expenses count too), you don’t pay taxes on the earnings.

>> Related: Best Financial Magazines to Read

#8. Buy Bonds

Invest in individual bonds or debt securities to the government or corporations. This is one of the lower-risk investments you can choose and is a great way to diversify your portfolio, especially if you invest in stocks.

Government bonds are the least risky, but also pay the least interest. Corporate bonds are a bit riskier, but you’ll have a higher rate of return, assuming they make good on their debt.

#9. Buy CDs

If you aren’t up for learning how to invest $50,000 and want something secure but with a decent interest rate, buy CDs.

Here’s the trick. You have to tie up your money for a while (at least a few years) if you want a decent return. Don’t bother with a 3 or 6-month CD.

That will earn you next to nothing. Instead, choose a long-term CD or do CD laddering, where you invest in multiple terms, earning interest on all terms, but more on the longer CDs. This gives you more liquidity without sacrificing your potential returns.

>> More: Best CD Rates

#10. Set Up An Emergency Fund

Before you do any of the above, set up an emergency fund. If you don’t have one, use some of the $50,000 to get yourself situated.

Before you invest $50K, know that you have AT LEAST 3 to 6 months of expenses set aside. After 2020, though, you may even want more because no one knows what really can happen.

>> Need Help Picking Stocks? Check out our Motley Fool Review

#11. Consider a Financial Advisor

If you’re still lost and wonder where in the world, you’ll invest your money, hire a financial advisor.

You may not want to use him/her long-term though or you’ll kiss your $50,000 goodbye quickly. Have a quick consultation, set up a plan, and then do the rest yourself to maximize the return on your $50K.

Best ways to invest $50,000 right now

What to Consider When Investing $50,000:

Time

The more time you have, the more risk you can take and vice versa. Long-term goals provide you with time to take some risk, realize great returns, and make up for great losses because we all know they’ll happen.

The less time you have, the more conservative investment options you should choose.

Fees

Fees can eat your $50,000 faster than you can say invest $50K. Look closely at the total cost, not just the maintenance costs.

Read the fine print, know what you’ll owe, and make sure it aligns with your investment strategy.

Priorities: Family, Retirement, Yourself

Look at your priorities. Take care of your family first. Make sure you’re all situated with an emergency fund, life insurance, and money to cover the unexpected.

Next, focus on retirement, and of course, always include yourself in the equation. After all, it’s your money.

Flexibility

Know how you can (or can’t) access your funds when you learn how to invest $50,000. Retirement funds, for example, aren’t flexible.

You tie up the funds until you are 59 ½ years old. But taxable investments, like stocks or ETFs, are easily cashed in (minus taxes), and you can use the funds as needed.

Diversify Investments

Always diversify. Don’t put all your eggs in one basket. The risk is much too high to put all your money in stocks or bonds, or any other single investment.

Figure out your risk tolerance and diversify accordingly. If you can’t, focus on ETFs and let the diversification happen for you.

Bottom Line: How to Invest $50,000

Knowing how to invest $50,000 is one of the most powerful steps you can take toward financial freedom.

From there, you’ll take bigger and better steps, maximizing your returns, growing your money, and reaching your financial goals faster and easier than you ever thought possible.

Need Help Choosing a Broker? We did the research for you.

Kim Pinnelli
Kim Pinnelli

Kim Pinnelli is a Senior Writer, Editor, & Product Analyst with a Bachelor’s Degree in Finance from the University of Illinois at Chicago. She has been a professional financial writer for over 15 years, and has appeared in a myriad of industry leading financial media outlets. Leveraging her personal experience, Kim is committed to helping people take charge of their personal finances and make simple financial decisions.