June 20, 2024

If you happen to immediately 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 the easiest way to take a position $20K is determined by your targets and danger tolerance, listed below are 10 choices to contemplate, from paying off debt to investing in effective artwork.

10 Greatest methods to take a position $20K

1. Repay debt

Paying off debt won’t appear to be an funding, however it may well present a greater return than you may earn elsewhere. For instance, the typical bank card rate of interest is 22.77% APR, based on the latest knowledge from the Federal Reserve. Whilst you may be capable of earn such excessive returns often, it could be tough for many buyers to hit that mark persistently.

Utilizing your $20K to repay debt can prevent tons of of {dollars} a month in curiosity prices and enable you to get on monetary monitor. 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.

Then again, quite than allocating $20,000 solely in 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 direction of various funding alternatives.

RELATED: Greatest Stability Switch Credit score Playing cards

Chase Freedom Limitless®

Credit score rating


Stability switch intro apr


Welcome provide particulars


This can be a strong flat-rate earnings card with no annual price. Though money again fee doesn’t appear spectacular at first look, it turns into extra beneficial 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 larger 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 wish to get essentially the most out of their on a regular basis spending.

2. Construct an emergency fund

In case your emergency fund is a bit of quick—or you have not began one but—now would be the good alternative to vary that. An emergency fund helps you keep afloat when you lose your job or have surprising bills like residence repairs or medical payments. The fund ought to cowl three to 6 months’ value of residing bills, although you might want extra relying in your life-style, job stability, and household wants. A high-yield financial savings account might be a superb place to park an emergency fund. You possibly can entry your cash rapidly whereas incomes upwards of 5% APY in the perfect high-yield financial savings accounts.

3. Max out your retirement accounts

Retirement accounts like IRAs (conventional or Roth) and 401(ok)s provide a tax-advantaged technique to construct your nest egg. With $20K, you may enhance or max out your annual contributions. Begin by contributing sufficient to your 401(ok) to get the complete match in case your employer provides 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 specific amount 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(ok) contribution limits for 2023 and 2024:

IRA contribution if 50 or older

401(ok) worker contribution

401(ok) worker contribution if 50 or older

401(ok) worker + employer contribution

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

It is vital to notice that when you have got a number of IRAs, the bounds apply to your mixed contributions. For instance, let’s say you are below age 50 and have a standard IRA and a Roth IRA. If you happen to’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(ok)s. You possibly can break up the $22,500 yearly worker contribution between plans if in case you have a number of 401(ok)s via completely different employers.

Robinhood Conventional & Roth IRA


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


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

IRA transfers and 401(ok) rollovers additionally get a 3% match via April 30 with Robinhood Gold, or 1% with out.

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 selected market index. The preferred index funds monitor 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 technique 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 quick time period and long term.

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 if you’d like assist managing your investments otherwise you already work with a personal banker or wealth supervisor. In any other case, take into account 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.


Rise up to $700 while 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 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, danger tolerance, and monetary targets. Many robo-advisors have options like computerized rebalancing and tax-loss harvesting, and a few provide entry to human advisors.

M1 Finance


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

7. Put money into effective artwork

High-quality-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 whole piece (or assortment) by yourself, Masterworks enables you to spend money on fractional shares of effective 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 to be for a superb 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 may as well money out early by promoting your shares on Masterworks’ buying and selling market, although the corporate would 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 at present’s actual property market, it may well purchase shares in an actual property ETF or REIT—an actual property funding belief. REITs are corporations that personal and function income-generating properties corresponding to condominium 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 forms of actual property investments.



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

9. Construct a CD ladder

With the perfect CD charges topping 5% APY, CDs is usually a low-risk technique to develop your cash. A CD ladder is an effective choice when 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—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 enables you to handle altering rates of interest and provides extra liquidity than placing your money into one long-term CD.

10. Fund a university financial savings account

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

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

Investing can offer 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 depart a legacy to your family members.

Whereas $20K could not allow you to give up your job, it is sufficient to start out constructing monetary safety, whether or not you max out your retirement accounts, spend money on effective artwork, or divide your money between a number of investments.

Remember the fact that you may lose cash by not investing it, due to 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 can be unfavorable—that means you’d be dropping cash. Whereas preserving 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 might be working more durable elsewhere.

Deciding the easiest way to take a position $20K might be daunting, however do not let that cease you from making a choice. When doubtful, 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 proper alternative comes.

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