A How-to Guide Into The Best Way to Invest Your Money

Saving any money in today’s economy is not ease so when your hard work of setting aside a bit each paycheck or you get that inheritance check in the mail that means it is the time to think about investing. Investing is one of the best things you can do for your future, but how do you invest $50,000 and do it so you can maximize your financial returns?           

What is the Best way to Invest 50K?

Before you even think of investing 50K in anything make sure you are prepared for anything that can happen in life. You need to have an emergency account set up for just such problems as job loss, medical problems, car problems or other unexpected financial burdens that can occur as life events. What you should do from here is to start looking at Tax-advantage Accounts. Tax Advantage Accounts are ones that are set up to have specific tax structures worked into their foundations. These are 401(k)s, Roth or traditional IRAs, health savings accounts and 529 savings plans and custodial IRAs for children.

Depending on the type of account you have or want each will be designed for a different reason you set them up for. 401(k)s and IRAs are retirement accounts that have penalties attached to them if you touch them too early  (before the age of 59 ½). Health savings accounts are deductible on your taxes because they are set aside for medical expenses. Savings accounts that are designed for your children such as custodial IRAs and 529 savings plans are also deductible.

If the above accounts have not yet met the maximum contribution for the year, you should consider setting some of that 50K aside for just that purpose. Both IRAs, Traditional and Roth, allow for the yearly contribution of up to $5,500 if you are under the age of 50 or $6,500 if you are over the age of 50. 401(k)s can have upwards of $18,000 contributed per year, You are not taxed on these types of accounts until you start withdrawing at or after the age of 59 ½ especially if the money is growing and the accounts are distributed and taxed as income.

Easy Investing Using Accessible Accounts

Once you have maxed out any of the above-listed accounts you have you can start thinking about investing your remaining funds. You need to figure out the amount of money you are willing to part with for a time and how much you want to make on it. You can put some of the money into high-interest savings accounts. This option will earn you money on your initial investment, but it will also be only a projected amount depending on the length of time you have set the accounts up to be in and the amount of interest it is projected to make.

Such an account as described above is a Certificate of Deposit. This type of account will not earn you a lot of money, but your investments will definitely not lose any money. Ifs a safe investment especially if the CD is FDIC-insured. You also lose the ability to withdraw the money on your own terms depending on the length of time it is designed to be inaccessible and whether you face a penalty fee for early withdrawal.

            A riskier account is a brokerage account. This type of account offers you higher returns than the traditional savings account, but you also stand a chance of losing money if the investment does not make gains as you would hope. This type of account invests directly into the stock market which will ebb and flow as the economy and politics do. You can withdraw money easily in this type of an account if you sell the types of stocks and funds your money is invested in. However, this type of account comes with fees for any transactions that are made whether buying or selling. The fees add up with each purchase and sale.

The way to get around the fees is to use an algorithm-management investment, also known as Robo-advisors. There are dozens to choose from including Wealthfront and Betterment. You should check with your bank if you are considering this option as they may have their own options as well. This type of account usually has lower fees of around 0.25% for their services.

Financial Assistance

The idea of getting someone to help manage your finances is strange in the age of the internet where a wealth of financial information and platforms are available after just a few keystrokes, but getting professional help can be an option for guaranteeing at least a marginal growth i your investments and a financial advisor is trained to know what your options are and how your money can be best invested for the most return.

Finding an advisor is a smart move if you are working with larger sums than 50k or you lack the time to fully research your options. Having an expert available to consult is the prudent move if you want these accounts to grow fast than if you do them yourself.

Final Thoughts

            When it comes to investing any of your money think about what you want long term for yourself and whether the platform you are working with will work well enough for what you want and need for your future. Do not just jump on to a financial path without getting all the facts. You may be young and retirement is far off, but maxing out your tax-advantaged accounts every year will mean you will have that much more to work with when you hit retirement age. Operating a brokerage account can be a smart move, but at a young age you don’t have that much money to lose or if have already received a certain degree of age, how much do you have or can you have to lose?

Tips

• Make a timeline for your financial goals and consider the risks you will want to take along the way to achieve the levels of risk you are willing to assume. Include projected income changes and growth for the coming years and plan for emergencies while hoping they don’t happen.