40 Smart Money Moves To Make With Just $50K
Having $50,000 in your bank account is a huge milestone—congratulations! But what are you going to do with it? Sure, you could let it sit there and use it as an expense account, but that's going to get sucked up pretty quickly by life's various expenses. Here are 40 you should make with $50,000.
Create An Emergency Fund
While we don't recommend dumping all $50,000 into an emergency fund, creating a buffer zone of three to six months of expenses is generally the rule of thumb. You don't need to go crazy here—setting aside $5,000 to $10,000 should cover your expenses should the worst happen.
Vitalii Vodolazskyi, Shutterstock
Pay Off Your Debts
While $50,000 might not allow you to pay off all your debts, it might be enough to either pay off completely or knock a big hole in some of your high-interest debts. Always pay off high-interest debt first, like credit cards!
Open A High-Yield Savings Account
If you don't need all $50,000 or want to put away a certain amount for retirement, it's best to open a high-yield savings account. The higher your account balance, the higher interest you'll earn. Online banking options offer higher and promotional interest rates for newcomers.
Invest In A Certificate Of Deposit Account
Otherwise known as a CD account, a Certificate of Deposit account locks away your money for a fixed term and pays out a guaranteed amount of interest after the term ends. Ensure you only deposit what you're comfortable with and do not touch it for the duration, as there are penalties for withdrawing early!
Hire A Financial Planner
Sure, your financial planner will cost you some money, but hiring one is better when you have the money to spend. Certified financial planners are experts in their field with the knowledge and expertise to help you make your newfound $50K work for you.
Invest In The Stock Market
While a high-interest savings account is a great way to grow your initial investment, investing in the stock market is even better. Again, you should only invest what you're comfortable with losing.
Give To Charity
If you're inclined, you could give some of your $50,000 to a charity near and dear to your heart. Or, if you can't think of one, start researching reputable charities where the money you give will go to help people in need.
Take That Family Vacation
Sure, you've likely been taking family vacations for a while, but not ones where spending isn't as much of a concern. While you do not want to spend $50,000—or even above $10,000—on a family vacation, you'll make memories that will last a lifetime for yourself and everyone else.
Start A Business
If you've always been entrepreneurial and have dreamed of running your own business, now's the time! While you have a cushion of $50,000, think about that business you've always wanted to start and create a business plan. You'll likely be able to cover some of the initial expenses involved in starting up, so you'll be making a profit faster.
Buy A Rental Property
If you don't want to invest in the stock market, you can invest in another property you rent. Rentals are in such high demand right now that you won't have problems finding tenants. But you'll want to do your due diligence and purchase a property that's either move-in ready or requires a little TLC—but not too much that you'll blow through your initial investment quickly.
Pursue Higher Education
Maybe you've always wanted to go back to school, but the cost has always been prohibitive. That is, until now! Use some of your $50,000 to invest in yourself by pursuing higher education, either with an associate degree that'll allow you to move up in your job or get your Master's and apply for your dream job that's always been out of reach until now.
Invest In A Start-Up Business
Even if you don't want to start a business, you can use some of your $50,000 to invest in a start-up. Maybe a good friend is starting their own business and you believe they could be successful—perhaps you could invest some of your money to help them get off the ground.
Save For The Kids' Education
With $50,000 in your bank, you could put aside a decent amount for your children's education. Ask your newly hired financial planner about a 529 plan—a tax-advantaged account used to pay for educational expenses associated with raising children, from K-12 to college and apprenticeship programs.
Open Or Contribute To Your Retirement Account
If you don't have a retirement account, open one and contribute. Making that contribution while you have the money is a great way to jump-start your retirement.
Buy A New Car
While we certainly don't advise spending $50,000 on a new car, a fraction of that amount on a used vehicle from a reputable dealership might be worthwhile if your old car is about to die.
Make Those House Renovations
If your house needs renovations but you've never had the money, now would be a great time to invest in it. Put on a new roof, paint the whole thing, or add your desired sunroom. This will increase your home's market value when it comes to selling.
Travel To Europe
Even if you don't have any young children to do this with, if you or your significant other has always wanted to go to Europe, now is the perfect time to do it! Depending on how you travel, flights may be the most expensive part of your journey. See Paris, Rome, and London for the trip of a lifetime.
Buy A Van, Drive Across America
If your newfound $50,000 came from a severance package paid out by your work, this might be your calling to take some time and travel. Sure, you could choose the European trip we mentioned above, but buying a van, like an old 1970s VW camper, and driving across America is also wonderful. Budget out your trip so as not to spend every last dime!
Look For New Employment
If you haven't been let go with that generous severance and instead received your $50K from hard work and/or an inheritance, but you're not happy at your current job, maybe now is a good time to call it quits. You'll have the $50,000 in the bank to cover certain expenses. Go out and look for your dream job while you have the funds.
Spend A Little On Things That Make You Happy
We're not saying you should spend your $50,000 on material possessions, but it's important that you at least spend some of it on things that will make you happy. For example, you could buy a new camera lens, a set of golf clubs, or a new laptop.
Replace Old Home Appliances
Now that you've got the money, maybe it's time to invest in new appliances. Even if there's nothing wrong with your existing ones, they're likely older and don't have the energy-efficiency ratings of newer appliances. You may save money in the long run with efficiency savings on your electric bill.
Flip A House
Similar to rental property investments, house-flipping can sometimes be a lucrative venture. Buy a house cheaply and put the work in to make significant improvements, then sell it for a profit. Win-win.
Buy Appreciative Artwork
If you love the arts or are creative, you might want to invest some of your money in artwork that will increase in value over time. You can either patronize a specific artist or invest your money in an art fund to support several artists simultaneously.
Buy Farmland
If you know a good land realtor, you might consider investing in farmland or other agricultural land you can rent out to farmers in need. This might only work if you have some understanding of the quality of arable land you're buying, so ensure you consult with experts.
Buy A Commercial Property
If you notice a vacant commercial property in your town and think you could make it appealing to businesses to set up shop, it might be worth investing in. Commercial leases are between three and five years; you're guaranteed income longer than residential leases.
Open A Money Market Account
A money market account is like a traditional high-yield savings account but with the ability to write a check. It also offers a higher interest rate than a traditional savings account, making it great for those who want high interest but accessible earnings.
Contribute To A Health Savings Account
Health Savings Accounts are a type of savings account specifically for medical expenses. They grow at an interest rate yearly and are only taxed once the money is withdrawn.
What About Investing It?
Let's say you don't need the $50K—you make good money at your job, and the $50,000 is from an inheritance. It becomes a $50,000 bonus for the year. So, if you don't need the money to make significant life upgrades or pay for any of the above experiences, why not invest it?
You Don't Have To Invest All Of It
It's important to note that you don't have to invest all of your $50,000. You can invest as much or as little as you want, but investments are a great way to prepare for the future. A good rule of thumb is to invest as much money as you're prepared to forget exists.
Index Fund Investments
Index funds follow the stock market, such as the S&P 500. These low-cost investments are simple to understand and track but offer various investment options.
Invest Across The Stock Market
Another type of index fund investment is a total market index fund. This allows you to invest your money across the entire stock market rather than in a stock group. This offers you even greater distribution while maintaining the low-cost advantages of index funds.
What About Investing In Savings Bonds?
Savings bonds are a more traditional way of growing your money. You purchase a bond at face value, wait for it to reach maturity (typically 30 years), then get that money plus guaranteed interest. They're a great way to "fire and forget" about an investment.
Consider Investing In Cryptocurrency
Cryptocurrency is a new form of currency that can be a profitable investment. It's worth noting that cryptocurrency is not without risk and should be considered carefully. You have options like Bitcoin, Ethereum, and other types of crypto.
Buy Exchange-Traded Funds
Another great option for buying stocks is exchange-traded funds or ETFs. These funds comprise bonds, stocks, and aggregated investments combined to form a single investment. They are great for those looking for immediate diversification rather than investing in index funds.
Invest in REITs
A REIT is a real estate investment trust. These are firms whose shares you can buy that own or manage different properties. They are publicly traded funds on the stock exchange and can be a great option for those who don't want to own their own homes but still want to get onto the real estate ladder.
Sirikarn Rinruesee, Shutterstock
Invest In A Dividend Stock
Dividend stocks are a great way to make passive income. These stocks pay out dividends to their investors. These types of stocks can also help build your net worth over time if the value of the stock increases.
Invest In A Treasury Bond
Treasury Bonds are investments that the US Treasury guarantees. They're paid out in six-month increments until their maturity of between 20 and 30 years. They're fantastic as a long-term investment option that will see you into retirement.
Invest In A Treasury Note
Identical to a Treasury Bond, the US Treasury offers Treasury Notes intended for short-term investments between two and 10 years, which can mature at two, three, five, seven, or the full term of 10 years.
How Would You Invest/Spend/Save $50,000?
Whether you're investing $50,000 in yourself, the stock market, your house, or a few new items you want, it's great to have made that much or saved that much—congrats! We hope our money management tips will help your $50K go as far as possible. Let us know how you'd invest/spend/save $50K if you had it.
