What Can You Invest In With $10K?
Money is a commodity that we all trade-in. We start with chores and paper routes and progress to full-time jobs and careers that finance our lives, and if we a disciplined, we save some of that hard-earned cash.
Putting 10k into an investment is exciting and can start your investment journey. Still, if you have outstanding debt or are not prepared for any financial emergency, you could be in trouble fast. Start by setting yourself up first, and then you will not worry about your future investments.
Do you have a nest egg put aside and are not sure what to do with it? Here is what you can invest in with 10k.
1. Lower Your Tax Bill
A great way to invest and pay less taxes is to use a tax-advantaged account like an RRSP or TFSA. These are designed to put money into a vehicle for long-term growth and give you an immediate tax write-off to benefit you now.
RRSPs are good when you have a high income because they lower your rate, especially when you are a big earner. 10k can even lower your tax bracket, depending on where your income sits. Then when you retire and are making less money, you can withdraw it and a much lower rate and get the principal plus interest from the investment.
TFSAs allow you to set money aside tax-free over your lifetime, so as you invest within a TFSA, the capital gains and any dividends generate are tax-free. You can withdraw at any time to use your principal and gain but are not required to pay taxes like an RRSP.
The government limits the amount you can contribute each year, and any unused amount is carried over to the next year to increase your contribution room.
2. Mortgages
A great way to take advantage of real estate investing is to be on the other end as a lender. 10k is perfect for getting started for investing in mortgages, as many people and businesses require funding for property and refinancing.
You can fund an entire mortgage loan yourself with 10k, but there are mortgage funds that you can join to combine resources and be part of a pool of investors. This gives you fractional interest in mortgages and helps in your diversification. It is a safe investment as the mortgage is usually secured by the property being purchased by the mortgager.
3. Mutual Funds & EFTs
You can get quite diversified with 10k if you invest in a mutual fund or EFT. These are easy to put money into and monitor, so you participate in stocks and bonds in a pooled investment vehicle that your financial advisor takes care of.
An EFT also has the added benefit of being traded throughout the day, so you can be more hands-on and buy and sell when you want to. You can only buy and sell mutual funds at the end of the trading day, but most people invest in them for the long term. There are transaction fees, but it is a safer, more diversified way to invest and trade stocks with your 10k.
4. Stocks & Real Estate
Some of the best ways to make serious money is by investing in stocks and real estate. Stocks can be risky, so you need to understand your level of risk and proceed with caution as you invest your money. 10k is enough to get diversified, so your risk is spread out.
Real estate is great but requires a lot of money to buy a piece of property. For your home, 10k can go towards a down payment, and then you must pay the monthly mortgage. You may need more than 10k for an investment property, but once you have it, your rental price should be set to cover the mortgage, additional carrying costs, and a maintenance fund.
5. Pay Off High-Interest Debt
If you have credit card debt or personal loans that are high interest, pay them off before investing. They often have higher interest rates, so it makes more sense to get them handled first.
6. Emergency Fund Life
Emergency fund life has a way up sneaking up with a financial emergency, which could be a job loss or a major car repair. Put together 2-3 months’ salary in a savings account first so you can weather these storms.
7. Holiday Fund
Too much work and no play makes life hard to handle, so you need to take a trip to get away once every year at least. You need 5k in a short-term GIC to pay for a family holiday.
There are other things you may want to save for, so once you get them all funded, it is time to invest.
This is what you can invest in with 10k. Some of these vehicles require less, so you can participate in more than one, and this is a smart strategy for any investor. Once you invest your entire amount, you will be excited to set aside another 10k and increase your portfolio.