February 22, 2024

Should you all of a sudden have an additional $20K in your checking account—from a piece bonus, inheritance, or a fortunate lottery ticket—you’ll be able to put that cash to work as a substitute of letting it burn a gap in your pocket. 

Whereas one of the best ways to take a position $20K is determined by your targets and danger tolerance, listed here are 10 choices to contemplate, from paying off debt to investing in fantastic artwork. 

10 Finest methods to take a position $20K

1. Repay debt

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

Utilizing your $20K to repay debt can prevent lots of of {dollars} a month in curiosity prices and aid you 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.  

However, moderately than allocating $20,000 solely in the 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 the direction of various funding alternatives.

RELATED: Finest Steadiness Switch Credit score Playing cards

Chase Freedom Limitless®

Credit score rating


Steadiness switch intro apr


Welcome supply particulars


It is 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 useful 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 higher worth. 

This card is advisable 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 probably 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 will be the good alternative to alter that. An emergency fund helps you keep afloat in case you lose your job or have surprising bills like residence repairs or medical payments. The fund ought to cowl three to 6 months’ price of residing bills, although you could want extra relying in your way of life, job stability, and household wants. A high-yield financial savings account could be a wonderful place to park an emergency fund. You possibly can entry your cash rapidly 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(ok)s supply a tax-advantaged approach to construct your nest egg. With $20K, you’ll be able to 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, similar to 50%, or $0.50 on the greenback as much as a certain quantity of your wage. Both manner, 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 below 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 necessary to notice that when you’ve got a number of IRAs, the boundaries apply to your mixed contributions. For instance, let’s say you are underneath age 50 and have a conventional IRA and a Roth IRA. Should you’ve already contributed $4,000 to a Roth IRA in 2023, you might contribute as much as $2,500 to your conventional IRA (primarily based on the $6,500 annual restrict). The identical rule applies to 401(ok)s. You possibly can cut up the $22,500 yearly worker contribution between plans you probably have a number of 401(ok)s via totally different employers. 

Robinhood Conventional & Roth IRA


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

Minimal quantity

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


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: Finest Roth IRA Accounts

4. Spend money on 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 most well-liked 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 could be a easy approach 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 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 will have entry to shares, bonds, choices, mutual funds, exchange-traded funds (ETFs), cryptocurrencies, commodities, futures, and extra. A full-service dealer is price a glance if you need assist managing your investments otherwise you already work with a personal 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 SDI

On-line buying and selling charges

$0 inventory & ETF trades.

$0.65/contract choices trades.

$0 mutual funds trades.


Stand up to $700 while you open & fund an account with qualifying new cash. Supply 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 desire a hands-off strategy—think about using a robo-advisor like M1 Finance. A robo-advisor makes use of an algorithm to construct a diversified funding portfolio primarily based in your time horizon, danger tolerance, and monetary targets. Many robo-advisors have options like computerized rebalancing and tax-loss harvesting, and a few supply entry to human advisors. 

M1 Finance


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

7. Spend money on fantastic artwork

Advantageous-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 helps you to spend money on fractional shares of fantastic artworks from artists like Banksy, Basquiat, Picasso, and extra. 

You may work one-on-one with a Masterworks monetary advisor to find out an appropriate funding, after which the corporate will choose, purchase, securitize, and retailer the art work. After three to 10 years, Masterworks seems for an excellent 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 too can 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 earnings

8. Spend money on actual property

Whereas $20K will not get you very far in right this moment’s actual property market,  it might purchase shares in an actual property ETF or REIT—an actual property funding belief. REITs are firms that personal and function income-generating properties similar to condominium buildings and retail facilities. Having $20K can also be sufficient to get began in actual property crowdfunding, which helps you to pool your cash with different traders (via on-line fintech platforms) to purchase properties as a bunch and share within the earnings. 

Realty Mogul is a platform that gives entry to REITs and different varieties of actual property investments.



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

9. Construct a CD ladder 

With one of the best CD charges topping 5% APY, CDs could be a low-risk approach to develop your cash. A CD ladder is an efficient choice in case 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 varied maturities—similar to one, two, three, 4, and 5 years. As every CD matures, you’ll be able to both money it out or renew it on the then-current fee. The ladder helps 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 accordance 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 yr, or $104,108 over 4 years. The sticker value jumps to $55,840—or $223,360 over 4 years—for college kids at personal, non-profit universities. Investing your $20K in a 529 school financial savings plan could be a sensible approach to save for training bills, and never simply on the school degree. You too can use a 529 plan to pay as much as $10,000 in yearly tuition bills at Okay-12 colleges. 

TIME Stamp: Your $20K might lose worth in case 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’ll be able to lead the life-style 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, spend money on fantastic artwork, or divide your money between a number of investments. 

Needless to say you’ll be able to 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 damaging—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 isn’t the place to stash money that might be working more durable elsewhere. 

Deciding one of the best ways to take a position $20K could be daunting, however do not let that cease you from making a call. When unsure, put your cash in a high-yield financial savings account whereas researching and evaluating your choices. That manner, you’ll be able to earn a aggressive yield, preserve quick access 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 shouldn’t be an funding consumer of Empower Advisory Group, LLC.