June 17, 2024

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

Whereas one of the simplest ways to take a position $20K will depend on your objectives and threat tolerance, listed here are 10 choices to contemplate, from paying off debt to investing in wonderful artwork. 

10 Greatest methods to take a position $20K

1. Repay debt

Paying off debt may not look like an funding, however it may possibly present a greater return than you would possibly earn elsewhere. For instance, the common bank card rate of interest is 22.77% APR, in line with the latest information from the Federal Reserve. When you would possibly be capable to earn such excessive returns often, it might be troublesome for many buyers to hit that mark persistently. 

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

However, somewhat than allocating $20,000 solely in direction of clearing bank card debt, contemplate leveraging a steadiness switch bank card to consolidate your debt, permitting you to redirect that a few of you cash in direction of different funding alternatives.

RELATED: Greatest Stability Switch Credit score Playing cards

Chase Freedom Limitless®

Credit score rating


Stability switch intro apr


Welcome supply particulars


This can be a stable flat-rate earnings card with no annual price. Though money again fee doesn’t appear spectacular at first look, it turns into extra precious 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 really helpful 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 need to get essentially 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 stands out as the excellent alternative to vary that. An emergency fund helps you keep afloat in the event you lose your job or have sudden bills like dwelling repairs or medical payments. The fund ought to cowl three to 6 months’ value 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 may be a superb place to park an emergency fund. You’ll be able to entry your cash shortly whereas incomes upwards of 5% APY in one of the 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 strategy to construct your nest egg. With $20K, you may improve or max out your annual contributions. Begin by contributing sufficient to your 401(okay) to get the total match in case your employer affords this profit. Some employers match contributions on a dollar-for-dollar foundation, whereas others present a partial match, corresponding to 50%, or $0.50 on the greenback as much as a certain quantity of your wage. Both approach, a match is like getting free cash, so it pays to benefit from 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 essential to notice that when you may have a number of IRAs, the bounds apply to your mixed contributions. For instance, let’s say you are beneath age 50 and have a conventional IRA and a Roth IRA. For those who’ve already contributed $4,000 to a Roth IRA in 2023, you would contribute as much as $2,500 to your conventional IRA (based mostly 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 via totally different employers. 

Robinhood Conventional & Roth IRA


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

Minimal quantity

$20 minimal to take a position within the Robinhood portfolio really helpful.


Get an additional 1% on each greenback you deposit from any account. Yearly. An additional 1% on contributions yearly might develop to an additional $25,000+ in 45 years.

RELATED: Greatest 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 particular 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 could be a easy strategy 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 value a glance in order for you assist managing your investments otherwise you already work with a non-public banker or wealth supervisor. In any other case, contemplate a reduction dealer like J.P. Morgan Self-Directed Investing to benefit from 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 if you open & fund an account with qualifying new cash. Provide expires 1/22/24


6. Make investments with a robo-advisor

If you do not have the time, curiosity, or experience to decide on and handle your personal investments—otherwise you want 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 based mostly 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 Robo Advisor


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

For a extra customized method, contemplate working with a monetary advisor, like Empower.    

Empower Monetary Advisor


Managed accounts accrue an annual price that’s charged quarterly and based mostly in your belongings beneath administration (AUM). The charges are 0.50% for as much as $100,000 in AUM, 0.40% for the following $150,000, 0.30% for the following $150,000, after which 0.20% for AUM better than $400,000.

7. Put money into wonderful artwork

Superb-art investing was once 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 wonderful artworks from artists like Banksy, Basquiat, Picasso, and extra. 

You will work one-on-one with a Masterworks monetary advisor to find out an acceptable funding, after which the corporate will choose, purchase, securitize, and retailer the art work. After three to 10 years, Masterworks seems for a superb alternative to exit the funding and sells the work on to high collectors within the artwork world—and also you obtain your professional rata proceeds after charges. You may also 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 price, plus 20% of any income

8. Put money into actual property

Whereas $20K will not get you very far in as we speak’s actual property market,  it may possibly purchase shares in an actual property ETF or REIT—an actual property funding belief. REITs are firms that personal and function income-generating properties corresponding to house 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 (via 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 varieties of actual property investments.

RealtyMogul Make investments


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

9. Construct a CD ladder 

With one of the best CD charges topping 5% APY, CDs could be a low-risk strategy to develop your cash. A CD ladder is an efficient possibility in the event you do not need 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—corresponding to one, two, three, 4, and 5 years. As every CD matures, you may both money it out or renew it on the then-current fee. The ladder permits you to handle altering rates of interest and affords extra liquidity than placing your money into one long-term CD. 

10. Fund a school financial savings account

In accordance with a brand new report from the Training Information Initiative, the common price of attendance at a public 4 -year in-state establishment is $26,027 per yr, or $104,108 over 4 years. The sticker value jumps to $55,840—or $223,360 over 4 years—for college kids at non-public, non-profit universities. Investing your $20K in a 529 school financial savings plan could be a good strategy to save for training bills, and never simply on the school stage. You may also use a 529 plan to pay as much as $10,000 in yearly tuition bills at Ok-12 colleges. 

TIME Stamp: Your $20K might lose worth in the event you do not make investments it

Investing can give you an earnings supply and fund your nest egg. Most significantly, investing grows your wealth so you may lead the approach to life you need and go away a legacy to your family members. 

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

Needless to say you may 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 fee is 3%, your actual return could be detrimental—which means you’ll be dropping cash. Whereas preserving sufficient cash in your checking account to cowl your payments and on a regular basis spending is OK, it is not the place to stash money that may very well be working tougher elsewhere. 

Deciding one of the simplest ways to take a position $20K may be daunting, however do not let that cease you from making a choice. When unsure, put your cash in a high-yield financial savings account whereas researching and evaluating your choices. That approach, you may earn a aggressive yield, keep easy accessibility to your money, and be prepared to take a position when the fitting alternative comes.

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