June 17, 2024

For those who all of the sudden have an additional $20K in your checking account—from a piece bonus, inheritance, or a fortunate lottery ticket—you’ll be able to put that cash to work as an alternative of letting it burn a gap in your pocket.

Whereas the easiest way to speculate $20K depends upon your objectives and threat tolerance, listed here are 10 choices to think about, from paying off debt to investing in effective artwork.

10 Finest methods to speculate $20K

1. Repay debt

Paying off debt may not seem to be an funding, however it may present a greater return than you would possibly earn elsewhere. For instance, the typical bank card rate of interest is 22.77% APR, in response to the newest information from the Federal Reserve. Whilst you would possibly be capable to earn such excessive returns sometimes, it might be troublesome for many buyers to hit that mark persistently.

Utilizing your $20K to repay debt can prevent lots of of {dollars} a month in curiosity costs and aid you get on monetary observe. As a bonus, paying off debt additionally boosts your credit score rating, main to higher offers on bank cards, loans, insurance coverage premiums, and extra.

Then again, reasonably than allocating $20,000 solely in the direction of clearing bank card debt, take into account leveraging a stability switch bank card to consolidate your debt, permitting you to redirect that a few of you cash in the direction of different funding alternatives.

RELATED: Finest Stability Switch Credit score Playing cards

Chase Freedom Limitless®

Credit score rating


Stability switch intro apr


Welcome supply particulars


This can be a strong flat-rate earnings card with no annual charge. Though money again charge doesn’t appear spectacular at first look, it turns into extra worthwhile when mixed with [other rewards cards from Chase](https://time.com/personal-finance/article/best-chase-credit-cards/) that may be redeemed for a far better worth. 

This card is advisable for on a regular basis use, whether or not for physician copays or large field retailer purchases. It may be a big earner for cardmembers who wish to get probably the most out of their on a regular basis spending.

2. Construct an emergency fund

In case your emergency fund is slightly brief—or you have not began one but—now could be the excellent alternative to vary that. An emergency fund helps you keep afloat should you lose your job or have sudden bills like house repairs or medical payments. The fund ought to cowl three to 6 months’ price of dwelling bills, although it’s possible you’ll want extra relying in your life-style, job stability, and household wants. A high-yield financial savings account will be a wonderful place to park an emergency fund. You’ll be able to entry your cash shortly whereas incomes upwards of 5% APY in the very best high-yield financial savings accounts.

3. Max out your retirement accounts

Retirement accounts like IRAs (conventional or Roth) and 401(okay)s supply a tax-advantaged approach to construct your nest egg. With $20K, you’ll be able to enhance or max out your annual contributions. Begin by contributing sufficient to your 401(okay) to get the total match in case your employer provides this profit. Some employers match contributions on a dollar-for-dollar foundation, whereas others present a partial match, reminiscent of 50%, or $0.50 on the greenback as much as a certain quantity of your wage. Both means, a match is like getting free cash, so it pays to make the most of it.

Subsequent, max out your IRA to spherical out your retirement account contributions. Listed here are the IRA and 401(okay) contribution limits for 2023 and 2024:

IRA contribution if 50 or older

401(okay) worker contribution

401(okay) worker contribution if 50 or older

401(okay) worker + employer contribution

401(okay) worker + employer contribution if 50 or older

It is necessary to notice that when you might have a number of IRAs, the boundaries apply to your mixed contributions. For instance, let’s say you are underneath age 50 and have a standard IRA and a Roth IRA. For those who’ve already contributed $4,000 to a Roth IRA in 2023, you can contribute as much as $2,500 to your conventional IRA (primarily based on the $6,500 annual restrict). The identical rule applies to 401(okay)s. You’ll be able to cut up the $22,500 yearly worker contribution between plans if in case you have a number of 401(okay)s by means of completely different employers.

Robinhood Conventional & Roth IRA


  • $0 administration charges
  • $0 fee charges
  • IRA Match Early Withdrawal Charge might apply


Get a 3% match on IRA contributions annually with Robinhood Gold (subscription charge applies), or 1% with out.

IRA transfers and 401(okay) rollovers additionally get a 3% match by means of April 30 with Robinhood Gold, or 1% with out.

RELATED: Finest Roth IRA Accounts

4. Put money into an index fund

Index funds bundle baskets of particular person securities right into a single funding that tracks the efficiency of a selected market index. The most well-liked index funds observe the S&P 500, however different indexes are additionally used, together with the Russell 2000, Dow Jones Industrial Common (DJIA), and Nasdaq 100. As an alternative of hand-selecting the investments the fund holds, the fund’s supervisor buys all (or a consultant pattern) of the securities within the underlying index.

Index funds is usually a easy approach to develop your retirement or brokerage account, providing low prices, broad diversification, and the potential for engaging returns. Traditionally, index funds persistently outperform actively managed mutual funds within the brief time period and future.

5. Make investments with a brokerage account

A sum of $20K is greater than sufficient to get began with most on-line brokers. Relying on the dealer, you may have entry to shares, bonds, choices, mutual funds, exchange-traded funds (ETFs), cryptocurrencies, commodities, futures, and extra. A full-service dealer is price a glance if you need assist managing your investments otherwise you already work with a non-public banker or wealth supervisor. In any other case, take into account a reduction dealer like J.P. Morgan Self-Directed Investing to make the most of low prices, a broad vary of analysis instruments, and an easy-to-use platform for putting trades.



J.P. Morgan Self Directed Investing

On-line buying and selling charges

$0 inventory & ETF trades.

$0.65/contract choices trades.

$0 mutual funds trades.


Stand up to $700 whenever you open & fund an account with qualifying new cash. Provide expires 4/12/24


6. Make investments with a robo-advisor

If you do not have the time, curiosity, or experience to decide on and handle your individual investments—otherwise you desire a hands-off method—think about using a robo-advisor like M1 Finance. A robo-advisor makes use of an algorithm to construct a diversified funding portfolio primarily based in your time horizon, threat tolerance, and monetary objectives. Many robo-advisors have options like computerized rebalancing and tax-loss harvesting, and a few supply entry to human advisors.

M1 Finance


$4 month-to-month charge or 0.25% annual charge

7. Put money into effective artwork

Tremendous-art investing was reserved for the rich, however on-line platforms like Masterworks have democratized artwork as an asset class to make it accessible to a broader viewers. As an alternative of shopping for and managing a complete piece (or assortment) by yourself, Masterworks permits you to put money into fractional shares of effective artworks from artists like Banksy, Basquiat, Picasso, and extra.

You may work one-on-one with a Masterworks monetary advisor to find out an appropriate funding, after which the corporate will choose, purchase, securitize, and retailer the art work. After three to 10 years, Masterworks appears for a very good alternative to exit the funding and sells the work on to prime collectors within the artwork world—and also you obtain your professional rata proceeds after charges. You can too money out early by promoting your shares on Masterworks’ buying and selling market, although the corporate does not assure the market will present sufficient liquidity to monetize your funding.


Minimal funding

No minimal


1.5% annual administration charge, plus 20% of any income

8. Put money into actual property

Whereas $20K will not get you very far in right now’s actual property market, it may purchase shares in an actual property ETF or REIT—an actual property funding belief. REITs are corporations that personal and function income-generating properties reminiscent of residence buildings and retail facilities. Having $20K can be sufficient to get began in actual property crowdfunding, which helps you to pool your cash with different buyers (by means of on-line fintech platforms) to purchase properties as a gaggle and share within the income.

Realty Mogul is a platform that provides entry to REITs and different kinds of actual property investments.



1% to 1.25% administration charges (further charges might apply)

9. Construct a CD ladder

With the very best CD charges topping 5% APY, CDs is usually a low-risk approach to develop your cash. A CD ladder is an efficient choice should you do not wish to put all of your money in a single CD. With a CD ladder, you divide your deposit between a number of CDs with numerous maturities—reminiscent of one, two, three, 4, and 5 years. As every CD matures, you’ll be able to both money it out or renew it on the then-current charge. The ladder permits you to handle altering rates of interest and provides extra liquidity than placing your money into one long-term CD.

10. Fund a school financial savings account

In keeping with a brand new report from the Schooling Knowledge Initiative, the typical price of attendance at a public 4 -year in-state establishment is $26,027 per yr, or $104,108 over 4 years. The sticker worth jumps to $55,840—or $223,360 over 4 years—for college students at non-public, non-profit universities. Investing your $20K in a 529 faculty financial savings plan is usually a good approach to save for training bills, and never simply on the faculty degree. You can too use a 529 plan to pay as much as $10,000 in yearly tuition bills at Ok-12 faculties.

TIME Stamp: Your $20K may lose worth should you do not make investments it

Investing can give you an revenue supply and fund your nest egg. Most significantly, investing grows your wealth so you’ll be able to lead the life-style you need and go away a legacy to your family members.

Whereas $20K might not allow you to stop your job, it is sufficient to begin constructing monetary safety, whether or not you max out your retirement accounts, put money into effective artwork, or divide your money between a number of investments.

Remember that you’ll be able to lose cash by not investing it, because of inflation. For instance, say you park $20K in a checking account that earns zero curiosity. If the general inflation charge is 3%, your actual return can be adverse—that means you’d be dropping cash. Whereas maintaining sufficient cash in your checking account to cowl your payments and on a regular basis spending is OK, it isn’t the place to stash money that could possibly be working more durable elsewhere.

Deciding the easiest way to speculate $20K will be daunting, however do not let that cease you from making a call. When doubtful, put your cash in a high-yield financial savings account whereas researching and evaluating your choices. That means, you’ll be able to earn a aggressive yield, keep quick access to your money, and be prepared to speculate when the fitting alternative comes.

** Empower Private Wealth, LLC (“EPW”) compensates Time Stamped for brand spanking new leads. Time Stamped shouldn’t be an funding shopper of Empower Advisory Group, LLC.