Do you have $10,000 but are not sure where you should invest this amount to grow? Plus, it needs to be a short-term plan because you need money as quickly as possible with lower risk. Well, you’re not the only one who wants passive income.
Many other people want to earn a good return on their income, whether it is $10,000 or any other amount, and that’s what we’re going to discuss.
There are both types of money-growing strategies. First, where you will earn a lower return, which involves lower risk, and the second one is a high return with high risk. And we’ll discuss both. You can choose whichever is suitable for you.
Besides this, I will also share my experience, how I invested my $1000, and what strategies I would follow if I had $10,000 to invest for the short term and get as much return as possible.
Best way to invest $10,000 short-term
Okay, so here are the eleven best ways that can help you grow your money and put it to work for you.
1. High-yield Savings Accounts
If you’re looking for a safe way to invest your $10,000, you can look for high-yield selling accounts. They are commonly safe and one of the best options for those who don’t want to take any risks. But they can’t make you rich overnight.
There are reasons why high-yield dividend accounts are safe for short-term investment, such as because they offer more interest than traditional banks. On the other hand, they maintain the same safety as traditional banks, so you can access your money whenever you need it. They are federally secured.
You can expect to earn at least 3-4% interest from a high-yield savings account. But it also depends on the provider or companies where you can open your account because all have different rates but mostly between 2-4%. Some of the best online banks that can help you invest your money are Ally and Marcus by Goldman Sachs, which usually pays high interest.
Because they don’t have a physical branch, they are completely accessible online. So after doing some homework, you may try to put your money there to earn a high interest rate.
Another thing that I like about investing in high-yield savings accounts is that they’re FDIC-insured, which means your money is saved up to $250,000. You can withdraw your money without getting any penalty whenever you need it.
Also Read: How to save your first 100k fast
2. Invest In Short Term Bonds
Many people don’t even notice short-term bonds or bond funds, especially those who are new to investing. However, in my opinion, short-term bonds can also offer steady returns while minimizing your risk chances.
There are both types of short-term and long-term. So, you can choose to invest $10,000 in the short term. Especially if you don’t want to take any risk, I suggest you invest your money in bonds and funds.
Besides this, there are two options: Government Bonds and Corporate Bonds. I would say that if you don’t want any risk, you should go with Government Bonds. Otherwise, you can choose Corporate Bonds because they also give a higher return. You can also buy Invest in both if you prefer diversification.
With the current market condition, you can expect a rate of return from bonds around 2% to 4% in the short term. In long-term bonds, it might be a little bit higher, depending on the provider, if you choose to invest $10k in corporate bonds.
3. Invest in Certificates of Deposit
Investing in certificates of deposit or CDs is quite like investing in FD, where you’ll have to lock your money for a specific period of time. It could be a good option if you want guaranteed returns, plus they typically offer a little higher interest than regular savings accounts. But one thing I don’t like about CDs is that you cannot take your money back if you need it. If you try to do so, you’ll have to face a penalty.
The minimum period for a certificate of deposit is around six months to 5 years. You can expect rates of return from CDS to be around 4% to 5%. Moreover, it depends on the bank. Some offer higher returns, and some lower with minimal fees.
- Pros: You know exactly how much you’re going to get back when you are investing in CDS.
- Cons: You’ll face a penalty if you try to do an early withdrawal. And in some cases, you can also lose all interest that you’d earn.
So before investing, make sure you won’t need this money again before the locked-in period. Plus, you can also create a small emergency fund. This way, if there is an emergency, you won’t have to withdraw your locked-in money.
4. Money Market Accounts
Have you ever heard of investing in money market accounts? (MMAs) Actually, it’s kind of a blend of the features of saving accounts and checking accounts that usually pay a higher interest rate of return.
Some of the best providers, such as Discover and Citibank, can give you interest rates between 2.5% and 3.5%. This is because money market accounts are also FDIC insured, plus they provide you easy access to your funds, just like savings accounts. However, you need to maintain a larger amount.
Because of some excellent features like check-writing and debit cards, investing money in MMAs might be a good choice as your money is liquid and still earning interest.
5. Peer-to-Peer lending
If you’re not really afraid of risks and want a high return, you can consider investing your $10,000 in peer-to-peer lending, in which you’ll give your money to individuals or small businesses. Because there are no traditional banks in the form of a middle bank, you’ll keep all the amount you earn, which might be high.
There are some dedicated platforms for peer-to-peer lending that can help you to give your money to an individual or business, such as LendingClub or Prosper. They mainly connect people like you with borrowers who are ready to pay interest.
As I’ve said earlier, investing in peer-to-peer lending might be a little risky, especially if you’re new and giving all your money to only one individual or a business. Therefore, I suggest you diversify across multiple loans.
You can expect to earn between 5% to 8% in peer-to-peer lending. And it also depends on the risk level you choose. But I’d highly recommend you diversify your money and reduce risk.
Also Read: How to Invest 100k for Passive Income
6. Treasury Bills
If you want to invest your $10,000 in a safe way, you can choose treasury bills. It might be a good option for you, specifically for short-term investment. Generally, they’re backed by the government, which means they have a lower risk chance. But they also offer lower returns.
Mostly, treasury bills are sold in short mutualities, like 4 weeks to 52 weeks. That’s why it might be an ideal choice to invest $10,000 for the short term. If you’re interested in investing in a Treasury Bill, then you can use the US Treasury website or any good brokerage account to invest and make around 2% to 3%.
And another good thing about the Treasury Bills is that your money is liquid. Which means you can sell them before the maturity period.
7. Robo Advisor for Short-Term Investing
Robo-Advisor is another good thing you can look for. They can manage your portfolio for you using the algorithms that balance risk and return.
They use a simple algorithm to create a diversified portfolio depending on your goal and risk tolerance. You just have to tell how much reasonable risk you can take, and they will handle the rest.
You can consider investing through some user-friendly platforms such as Betterment and Wealthfront.
Remember, as I have said before, they create the balance between risk and return. So don’t expect sky-high returns. They are just stable and consistent and can give anywhere between 3% to 6%.
8. Dividend Paying Stocks
If you’re risk-tolerant, then you can consider putting your money in a high-dividend-paying stock, which will give you potentially a higher return. It also might be a good option, especially when you’re looking for an investment in the short term. It’s because you’re not just receiving a dividend, but your $10,000, which is your capital, will also increase.
However, you need to pick up companies with a high dividend yield. You can check their history and consistency of dividend payments. You can look for industries like utilities, telecommunications, and consumer stables because they’re mostly reliable when it comes to dividends.
However, keep in mind that Stocks are generally more volatile than bonds and savings accounts. So, the chances of risk are high. Therefore, you should choose good stocks after doing some homework. And especially focus on companies that are paying good dividends. Here’s a bonus tip: You can re-invest that dividend. It’ll increase your $10,000 more quickly.
9. Short-term Real Estate Investment
Investment in real estate is one of the traditional methods that people have followed for centuries. They just buy a piece of land and sell it for a high price. Nowadays, people buy a house or any other property, renovate it, and sell it. But what do you do if you don’t have the money to buy a property yourself? Say thanks to Crowdfunding platforms.
There are many crowdfunding platforms, such as Fundrise and RealityMogul, which can help you invest your money in both commercial and residential real estate. Most of the time, it’s a short-term investment.
If you don’t want to own any property, you can choose REITs, which allows you to invest in real estate without managing any property. Basically, it’s a kind of trust that operates and gives you income that they earn from owning businesses, buildings, shopping malls, apartment complexes, etc.
If you’re investing through crowdfunding platforms, they can usually offer 6% to 12% return annually. However, it depends on the platform and the specific project. However, you can also see fluctuations in the real estate market.
10. Cash Management Account
Cash Management Accounts, CMAs, are nowadays popular because it’s a solution for managing your short-term cash with better average return.
Cash management accounts (CMAs) combine features of savings and checking accounts and typically offer higher than traditional bank accounts; plus, they also provide flexibility just like checking accounts, including bill pay, check writing, and debit card access.
To take advantage of it, you can invest through fintech companies like SoFi or brokerage firms like Fidelity and Schwab
The reason you may consider investing in a cash management account is that you get a higher return on your cash than a traditional bank. On the other hand, you can access your fund whenever you want, which makes it ideal for short-term investment. CMAs are offering interest between 3% and 4%, and you can use platforms like Wealthfront or Betterment.
11. Stock Market
Okay, so this one is one of the things. I have personally used it and made really good returns in just one year. Although I started seeing growth within a month, I took some of my money back after a year. But what is it?
It’s also known as swing trading. I used to buy stocks in good companies in multiple sectors, such as Healthcare, Information Technology, Utilities, Communication, etc. I chose over 25 companies and invested a certain amount in all companies. After one year, I got around 26% return, which means every month, I made around 2% plus return.
Conclusion
There are many options to invest $10,000 in the short term, including low-risk savings accounts and high-risk options like stocks or Cryptocurrency. And now, it’s totally up to you which strategy you follow and how much risk you can tolerate, depending on your financial goal.
So whether you’re looking for a passive income from $10,000 or you want to grow it, these 10 options are good for short-term investment. You can choose any of them.
I share my personal opinion: I don’t really care about risks, so I would buy stocks if I had $10,000 to invest in in the short term. If I see any growth within one month or three months and I need money, I would just sell my stocks. If I see my stocks aren’t performing well and giving me any return, plus there is no hope that they can grow in the future, then again, I’ll sell them and make the money and reinvest somewhere else.
If there is hope that they can grow in the future, I will keep my stocks on hold. But as I said before, when I invested my money, I chose over 25 stocks. And after a year, all of them were in profit. Some of them were giving 7 to 8 percent. Some of them were given more and less, but none were lost.
Which is the best way to invest 10k for 1 year?
The best way to invest $10,000 for 1 year is by putting it into low-risk options like high-yield savings accounts, certificates of deposit (CDs), or short-term bonds. If you’re risk-tolerant, then you can also choose to invest in the stock market for a higher return.
How to invest 10k for passive income?
If you want to invest $10,000 for passive income, you can consider options like high dividend-paying stocks, real estate investment trusts (REITs), or peer-to-peer lending. But keep doing some homework before investing money.
If I invest $10,000 in the stock market, how much money can I make?
If you invest $10,000 in the stock market, the amount you can make depends on a couple of factors, like the market conditions, the stocks you have chosen, and your investment timeline. According to NerdWallet, the average return from the stock market is around 10%, which means If you’re getting a 10% return on a $10,000 investment in stocks, you’ll have a total of $11,000. It includes your original $10,000 investment plus $1,000 in returns.
