Got $10,000 and wondering how to make it grow? Investing can be a great way to build wealth and secure your financial future. Whether you’re new to investing or looking for fresh ideas, these 10 brilliant investment strategies will help you make the most of your money. Find out how to wisely invest $10k and watch your wealth grow.
1. Invest in Index Funds
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Index funds offer an easy way to invest $10K by providing low fees and diversification. They track benchmarks like the S&P 500, making them a simple way to grow wealth over time. You need a brokerage account to start.
2. Put Money in High-Yield Savings Account
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A high-yield savings account is great for storing your $10K safely. It’s FDIC insured up to $250,000, and with interest rates of 2% or more, your money grows without losing value.
To learn more: How Many Bank Accounts Should I Have
3. Invest in Individual Stocks
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Investing in individual stocks can grow your wealth if you’re patient and informed. With $10K, you can buy stocks in 10 to 20 companies, diversifying your investments and potential returns.
To learn more: How To Invest In Stocks For Beginners: Investing Made Easy
4. Fund A Health Savings Account (HSA)
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An HSA is a smart way to invest $10K, offering a triple tax advantage and saving for future healthcare costs. Contributions, earnings, and withdrawals for medical expenses are all tax-free.
5. Invest in Entrepreneurship
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Investing in small businesses can yield high returns and personal satisfaction. Diversifying your $10K across multiple ventures reduces risk and can amplify potential profits.
6. Invest in Rental Properties
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Rental properties can build long-term wealth. Use $10K as a down payment on a low-cost rental, fix it up, and let tenant payments cover the mortgage and taxes, creating a steady income stream.
7. Max Out Your Roth IRA
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Max out your Roth IRA to invest part of your $10K. It offers tax-deferred growth and potential tax-free withdrawals in retirement. Remember, there’s a yearly contribution limit.
To learn more: Can You Have Multiple Roth IRAs?
8. Loan to Others Through P2P Lending
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P2P lending can provide high returns on your $10K investment. By lending directly to borrowers via P2P platforms, you cut out banks, enjoy better rates, and diversify your investments.
9. Invest In Crypto or Bitcoin ETF
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Investing in cryptocurrencies or Bitcoin ETFs can offer quick gains with market volatility. High rewards come with high risks, so be prepared for potential losses but also big profits.
10. Pay off high-interest debt
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Paying off high-interest debt with $10K can be a smart investment. It frees up cash flow for future investments in stocks, funds, or real estate, helping you grow your wealth long-term.
To learn more: How to Get Out of Debt in 5 Easy Steps
More Idea to Invest $10k
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Looking to invest $10K? This guide shows options for all risk levels and goals, from stocks to real estate. Start making money and take your first step to becoming a millionaire.
To learn more: How to Invest 10K: The Best Ways to Invest Money for Future
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More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
In the past, investing was thought of as something only wealthy people did. And unfortunately, many people used this as an excuse to put off saving for retirement, saying they would do it when they earned more money.
But if you wait to start investing, you lose out on the benefits of compound interest and shortchange your retirement savings. So, it’s best to get started as soon as possible, even if you only have a bit of money to tuck away every month.
One of the easiest ways to invest money is by using micro-investment apps. This article will explain what micro-investing is, how it works, and six micro-investing apps we recommend trying out.
10 Best Micro Investing Apps
Micro-investing apps make it easy to get started with small amounts of money and learn the basics of investing. We’ve compiled a list of the best micro-investing apps on the market today. Whether you’re a beginner or a seasoned investor, you’re sure to find an app that fits your needs and investment goals.
1. Robinhood
Account minimum
Margin accounts, ETF’s, crypto
Great for beginners!
Robinhood aims to make investing accessible to everyone, which is evident in the fact that the company doesn’t charge any commission or management fees.
In addition, there’s no charge to open a brokerage account, and bank transfers are free as well.
The app is designed for beginners, so there is no confusing terminology, and the interface is easy to use.
Unlike other micro-investing apps, Robinhood lets you trade full stocks and cryptocurrencies like Bitcoin. However, it doesn’t offer mutual funds and bonds.
Check out our in-depth review of Robinhood.
2. Axos Invest (Formerly WiseBanyan)
Account minimum
New investors
or goal-based investing
You can get started with Axos Invest (formerly known as WiseBanyan) for just $1. The company doesn’t charge any trading fees for the most basic version. But if you upgrade to one of the premium versions, the company does charge fees.
Axos Invest focuses on goal-based investing, so once you sign up, you’ll be prompted to create your first “Milestone.”
Then, you’ll enter how much you want to save and by what date. From there, Axos Invest recommends how much you should save to reach your goal.
3. SoFi Invest
Account minimum
$0 for Automated Investing
$1 for Active Investing
Active and Hands-Off Investors
SoFi is a well known brand in the personal finance space, and their investing app is another high quality product.
This investment service provides users with the ability to either trade actively or opt for automated trading tools to take care of your account.
SoFi is geared towards trading in fractional shares, which they refer to as “stock bits”. This means the app is a solid choice for those wanting to invest their spare change.
You can also tap into savings accounts or make larger deposits to add more to your investment accounts.
4. Plynk
Account minimum
$2 per month
New investors
Plynk is designed to guide your learning while you begin to invest. The Plynk app offers investors access to a selection of stocks, ETFs, mutual funds and four cryptocurrencies. And you can start investing with just $1.
One of the best things about Plynk’s platform is the straightforward, easy-to-understand language. You won’t find technical jargon or complex charts and tables.
The Plynk app also allows investors to easily set up dollar-cost averaging, which is an ideal investing technique for many new and experienced investors.
5. Webull
Account minimum
Active traders and investors
Webull is a stock trading app offering free stock trading as well as free trades on ETFs, options and cryptocurrencies.
Webull also allows users to trade fractional shares, making it a great choice for micro investing.
Webull provides users with plenty of powerful tools to assist with in-depth trading analysis, making it a solid option for active and experienced traders. Plus, setting up a Webull account is free and there are no account minimums to worry about.
6. Stash
Account minimum
$1 per month
New investors
or tax-advantaged retirement accounts
Stash is another hands-off micro-investing app designed for beginner investors. After you sign up, Stash will ask you a series of questions to determine your tolerance for investment risks. You will be labeled as a conservative, moderate, or aggressive investor.
One of the unique things about Stash is that you can choose the types of companies you want to invest in. So if there is a particular cause or type of company that you’re interested in, you can set that in your investing preferences.
After you’ve chosen the types of companies you’d like to invest in, you’ll set up your “Auto-Stash.” You choose how much you want to invest and how often.
7. Public
Account minimum
(1-2% markup on crypto)
Young investors
Public.com is a blend of both investment and social media platforms. It’s designed for younger and socially oriented investors who would like to own fractional shares of stocks and ETFs.
You can share ideas within a community of like-minded investors. You might think of it as a kind of investing social network.
The aim of Public.com is to create an inclusive and educational community focused on stock market trading and investment.
For young investors who wish to align their social and investing preferences, as well as learn from other investors, Public.com is a great option.
8. Betterment
Account minimum
Low balance investors
Goal-based investing
If you’re looking for something a little more hands-on, then Betterment might be a suitable option for you. Betterment gives you the option to work with a financial advisor who can make investing recommendations.
There are two different plans to choose from, and the most basic plan doesn’t require any upfront balance to get started.
Betterment is a great option for anyone who wants an easy investing option while still maintaining a bit of control over their investment portfolio.
9. M1 Finance
Account minimum
Experienced Investors
M1 Finance might be the best micro investing app for more experienced investors. It is ideal for those looking for customized investment portfolios with some automated options, as well as those looking to set up commission free retirement accounts.
Purchasing fractional shares, setting up recurring deposits and extensive portfolio management options is easy with M1 Finance’s quality app. M1 Finance aims to be a singular personal finance app for building wealth and establishing a diversified portfolio.
Above all, M1 Finance makes investing easy. Simply deposit your funds, set your stock and index selections and use their automated service for commission free trading.
M1 Finance will also automatically rebalance your portfolio in accordance with your stated asset targets, to improve the overall performance of individual stocks.
10. Acorns
Account minimum
$1 per month
Hands-off investors
(e.g., College Students)
If you want a hands-off approach to investing, Acorns will be your best bet. After you sign up, you’ll connect your credit card or debit card to Acorns.
Then, whenever you make a purchase, Acorn rounds it up to the nearest dollar and deposits that “spare change” into your investment account.
For instance, if you make a purchase of $9.67, Acorns will save the additional 33 cents for you. Once your Acorns account reaches $5, the company will invest the money for you.
Acorns also gives you access to a robo-advisor, IRAs, and even a checking account.
What is micro-investing?
According to one survey, more than 47% of Americans are not saving for retirement. When pressed about their decision not to invest, over 34% said they don’t have enough money to invest.
The basic premise behind micro-investing is that you only need a few dollars to start investing. When you use a micro-investing app, you invest in very small increments by buying fractional shares.
With a micro-investing app, you can invest as little as $5. And with micro-investing, you don’t have to know anything about the stock market. The money you save is put in a portfolio of stocks that the company creates for you.
Is micro-investing even worth it?
Micro-investing will not get you rich, and it’s not going to help you fund your retirement goals. For that reason, it’s easy to write micro-investment apps off as not being worth your time.
But every day you put off investing is one less day that your money can grow in the market. So, you can wait until you feel like you have “enough money,” or you can work with what you have today.
Here are just a few benefits of using a micro-investing app:
Invest with very little money: Micro-investing platforms allow you to invest, even if you only have $5 to spare. So if you can skip your morning latte, then you have enough money to give micro-investing a try.
Save it and forget about it: It’s hard to set aside money in a savings account. You know it’s there, and it’s easy to access and spend. With a micro-investing app, it’s easy to save your money and forget about it.
Build positive habits over time: Anytime you’re trying to build a new habit, it’s best to start small. Micro investing allows you to ease into investing, and you can start saving more money when you’re ready.
See also: How to Invest: A Basic Guide to Making Your Money Grow
Pros and Cons of Micro-Investing Apps
While it’s true that micro-investing provides many benefits, they’re not necessarily the right choice for everyone. It’s worthwhile taking the time to understand the all nuances before committing financially.
Pros
24/7 Access
Using a micro investing app allows you full access to your investment account around-the-clock. You won’t ever have to worry about opening hours or holidays getting in the way of your ability to monitor and manage your funds.
Easy Fractional Investment
Traditional investment in stocks and ETFs requires large amounts of funding, but micro investment means you purchase fractional shares quickly and easily. This means you can begin your investment portfolio with your spare change, rather than hundreds or thousands of dollars.
Low Account Minimums
Another factor which makes micro investment apps attractive are the low account minimums. Most micro-investing apps have $0 minimum balance requirements, so you can begin investing with as little as you wish.
Safety
As with traditional investment accounts, legitimate micro-investing platforms will be registered with the U.S. Securities and Exchange Commission. On top of that, all savings and checking accounts with micro investing companies are FDIC insured.
Cons
Fees Can Be High
Account fees can vary, so it’s important to watch out for this. Don’t assume that an account with low minimums will also have low fees. If you’re only investing small amounts, paying high fees might not seem like a good deal in the long term.
Limited Investment Choice
Most micro investment apps won’t allow you to handpick the stocks inside your portfolio. While you will have choice regarding which set portfolios you invest in, you’re less likely to be able to pick and choose specific stocks.
Won’t Change Your Retirement Plans
One thing to keep in mind is that using a micro investment app won’t do much to affect your retirement on its own. It’s more about learning good investment habits, and getting familiar with maintaining and growing a portfolio.
Features of the Best Micro-Investing Apps
So, how do you decide which micro investing app is the right one for you? We’ve compiled a list of the most important features below to help you know what to look for. The best micro investment apps will have the following qualities:
Ease of Use
Fundamentally, the best micro investment apps will be easy and intuitive to use. They are often free of the usual clutter and jargon of some traditional brokerage accounts. With simple, easy to navigate interfaces these apps should provide an enjoyable user experience for all.
Low Minimum Investments
Good investing apps should allow you to access the market with just a few dollars. This is possible because they’re designed to allow you to purchase fractional shares of ETFs and other assets. Not all investing apps will come with a low minimum investment, however, so be sure to check if you’re a low budget investor.
Diversified Investment
The best investing apps will provide users with the chance to invest in diverse portfolios which are automatically generated. Asset allocation and diversification can be challenging even for experienced investors, so this is a great feature of these apps.
When you’re starting out as an investor, the sooner you can learn about diversification the better. And these apps should make it relatively easy for you to both practice and learn about asset diversity.
Educational Tools
As most micro investing apps will be marketed to newcomers, education is an important factor. If you’re just starting out with investing, then the best micro investment app for you will likely provide a wealth of educational resources and advice.
Keep in mind, however, that most micro-investing apps won’t offer access to a professional financial advisor.
Recurring Transfers
The best investing apps allow you to easily set up automatic transfers from your bank account to fund your investment account. A recurring transfer can remove some of the human error involved in managing your account and allow you to quickly build up a habit of funding your account.
Additional Services
While some apps are minimalist and simple, others come with the option of additional financial services. In addition to brokerage accounts, some offer access to a savings or checking account, as well as IRA and custodian accounts. Depending on your own financial goals, an app with additional services might be worth the extra fees.
Final Thoughts
Micro-investing apps make it simple for anyone, even those with just $5 to spare, to begin investing in the stock market. The apps we’ve covered in this article provide a great starting point.
While micro-investing might not cover all your retirement needs, it’s a smart way to begin saving, especially if your budget is tight. The crucial thing is to start investing and gradually increase your contributions over time. This way, you’re setting yourself up for a better financial future.
Frequently Asked Questions
Which micro investing app has the lowest fees?
Among the micro-investing apps listed, Robinhood, Axos Invest, SoFi Invest, Webull, Public, and M1 Finance all offer commission-free trading, which means they do not charge fees for buying or selling stocks and ETFs. So, you can consider any of these apps if you’re looking for a platform with low fees for micro-investing.
Which app is best for small investments?
Choosing the best app depends on your own budget, needs and goals. The market for micro investment apps has grown rapidly, and there are a lot of different options out there.
The list we’ve compiled in this article are our top picks, and are among the best micro investing apps available. These apps make it easy and convenient to begin investing. They also provide various unique features, low fees, good customer support and educational resources.
Who should use micro investing apps?
Micro investing apps are a fantastic way to begin investing small amounts while you learn the ins and outs. But who will benefit the most from using these apps?
Beginner investors: These apps are perfect for young investors and newcomers because you only need a small amount of money to start.
Passive investors: Most of them are actually robo-advisors which invest on your behalf based on your needs and budget. This automated investing allows you to establish a diversified portfolio based on your goals that you can simply set up and forget about, letting it work away in the background.
Emotional investors: Automated investing means you can’t make rash emotional decisions based on market swings. Instead of constantly worrying about market performance, you just invest small amounts and build your portfolio slowly over time.
Can you get rich from micro investing?
Micro investing is primarily a strategy for saving and building wealth gradually over time. While it’s a valuable tool for starting your investment journey with small amounts of money, it’s important to have realistic expectations. It’s unlikely to lead to rapid wealth accumulation or “getting rich” in a short period.
How do I start micro investing?
Investing today is more accessible than ever before. Nevertheless, it still seems an intimidating world for those who have no experience or education. If you don’t know where to start, you can follow these steps to begin investing with confidence:
1. Decide Between DIY or Automated Investing
If you’re not yet comfortable choosing your own investments, and managing your own portfolio, you’ll want to start with robo-advisor investing. It’s totally normal for beginners to feel uncomfortable choosing stock to invest in, and automated investing is the safer option in any case.
2. Identify Your Investment Goals
This is often the hardest step for new investors, but it’s one of the most important. Figuring out your short and long term financial goals will help bring purpose and structure to your investment decisions.
Generally speaking, investing is successful when considered a long term project. You’re much more likely to find success with investments by holding stock long term, rather than trying to figure out when the best time to buy or sell is.
3. Determine Your Monthly Investment
The traditional advice is to save and invest 20% of your monthly income. With the rise of micro investing, however, you don’t even need to invest much to begin with.
It’s important to pick an amount you can reasonably commit to. Of course, you can always change your automatic investment amount, or just add on extra when necessary, but it’s always better to set it and forget it. Even if it’s a small amount, consistency and time and the key ingredients to good investing.
4. Choose an Account That Fits Your Goals
Once you’ve got your budget and goals determined, it’s time to choose a platform to begin investing with.
Keep in mind that you can always switch the platform you use for micro investing, use more than one, or even open a brokerage account. Just make sure to take all fees into account before you sign up and get committed.
Are there any limitations on the types of investments I can make with these apps?
Micro-investing apps typically focus on stocks, ETFs, and sometimes cryptocurrencies. While they offer a wide range of investment options within these categories, they may not provide access to more complex financial instruments like options, futures, or mutual funds.
It takes a lot of hard work to save $100,000 or you have to be very lucky for $100,000 to fall into your lap. Once you have $100,000 it can be even harder to commit to investing it and not blowing it on material goods. If I had an extra $100,000 to invest I know exactly what I would do with it; invest it in real estate. In fact I invest all of my money into real estate. Whether I invested in fix and flips or rental properties would depend on my current situation.
For others there are a number of factors that determine how and when you should invest $100,000. My specialty is investing in real estate because of the awesome returns rentals and flipping can produce. I am a real estate agent and I have a big advantage over many new real estate investors. This article will describe why I think real estate is such a great investment for me and if it would be for you as well.
Why is real estate my top choice for investing $100,000?
There are many ways to invest money into real estate and that is one reason why I love to buy houses. The main reason I love real estate is the great returns you can get if you are willing to do some work. I own 13 rental properties and fix and flip about 10 houses a year. On my rentals I tend to get 20 percent cash on cash returns or more. On my flips I average over a $30,000 profit on each one.
It is not easy to get those returns on rentals and make that much money on each flip. It helps that I am a real estate agent and I have been investing for many years. That doesn’t mean a novice or beginning investor cannot make great money with real estate if they do their homework, work hard and are patient. When investing money in the stock market it is very hard to get the returns I get and there are even more advantages to investing in real estate that blow the stock market away.
What is the best way to invest $100,000 in real estate?
There are many ways to invest in real estate. Besides flipping and rental properties, there is private money investing, REITs, notes and more. Choosing the best option is not easy, because everyone has different goals and everyone is willing to spend varying amounts of time to learn to invest and complete the investments. Here is a quick break down of the most popular ways to invest in real estate.
Flipping: flipping houses takes a lot of work and a lot of experience to make money. A flip is buying a house very cheap, fixing it up and selling it for a profit. Flipping is more of a job than investing and it usually takes a lot of capital to get started.
Rental properties: rental property investing can be very involved or very hands off. I like to buy properties below market value and then make repairs, which takes time and money. The cheaper I buy properties the more cash flow I am able to create. If you are looking for an easier way to buy rental properties; turn key rentals take very little time and are mostly hands off.
Private money: private money is when one investor lends money to another investor for the purpose of investing in real estate. Private money can be very hands off once you find a great investor. Finding the great investor can take time and if the investor does not follow trough on their promises, private money investing can turn into a nightmare.
Notes: buying notes is also mostly hands off, because you are not buying a property. Buying notes involves buying a mortgage and becoming the bank. However if the borrower stops making their payments you may have to foreclose on the home which becomes very hands on.
REITs: REITs are more like investing in the stock market than investing in real estate. You buy shares of a REIT, which give you a piece of a real estate trust. With a REIT the management is taken care of by a large company and don’t have to worry about taking responsibly for a property. However, you give up all control of the investment and have to hope you picked a good manager.
Even though there are many ways to invest in real estate, this article is going to focus on investing $100,000 into rental properties and fix and flips, because I think they provide the best returns. They also take the most work which I think is a good thing. If you are investing for your future retirement and livelihood I think it should take some work!
Why are rental properties how I would invest $100,000?
Figuring out the best investment for you depends on how much time you have to learn and implement. The more time you have, usually the more money you can make and the better returns you will get. I think rental properties are the best investment if you have the money and time to learn the correct way to invest in them. Once you buy your rentals and get them set up with great renters or property managers, they take very little work.
I spend about $30,000 to $35,000 in cash on each rental I buy. I finance my rentals with 20 percent down and make repairs to add value. Rentals in my area produce about $500 a month in cash flow which equals $6,000 a year. I buy my properties from $80,000 to $135,000 and rent them from $1,200 to $1,500 a month. A 20 percent cash on cash return is pretty awesome, but it is getting harder and harder to find these types of deals in my area. However, even with much lower returns rentals properties have many advantages besides the cash on cash return.
Rentals have great tax advantages.
Properties will most likely appreciate over time.
I am paying off loans and gaining equity every month.
Rents will most likely go up over time.
Rentals can be bought below market value giving you instant equity.
To see all the advantages of rental properties I will show you the numbers on rental property 7, which I bought two years ago. I bought this house as a short sale and it was a smoking deal.
Purchase price $113,000
Repairs $8,000
Closing costs out of pocket $500 (seller paid $2,000)
Down payment $22,600
Commission I made -$3,000
Total cash spent $28,100
I rented this house for $1,400 a month shortly after the repairs were made and it has been rented to the same tenants for almost two years.
Not only am I making over 20 percent on the cash I invested from rent, but I bought the home below market and added value with repairs. The home recently appraised for $195,000 and I was able to take out $52,000 in a cash out refinance. Even after the refinance the house cash flows every month (it does make less than $500 a month now).
Many circumstances came together to make this a great rental. These deals are not easy to find and not readily available in every market. However, getting half the return I did would still be a great deal for most people. Here is a look at the total return I have seen in two years on this property.
Returns from buying the home below market
Value of home when purchased and after repairs: $155,000.
Repairs and purchase price plus closing costs: $121,500
Value gained $33,500 which equals 59.6 percent return per year.
Returns from appreciation
Current value of home based on appraisal: $195,000
Appreciation of house over two years: $40,000.
That is a 71 percent return per year over two years.
Returns from rental income received
Rent income per year: $16,800.
Expenses per year: $8,440 (mortgage, taxes, insurance, property management and maintenance)
Profit from the renal property income: $8,360, which equates to a 29.7 percent return.
This number is misleading, because I have been very lucky with these tenants and had no out-of-pocket maintenance, except for the deductible on an insurance claim. We had a major hail storm that damaged the roof, some siding and windows, but my expense was only $500. When I figure cash flow for the future I include much higher expenses for vacancies and maintenance.
What are the total returns of this rental property?
Those returns equal a 160.3 percent return on the initial money I invested each of the first two years. But to be honest, the returns are not that high because you would have selling costs if you sold the house. There are costs to refinance as well when you take cash out. If I sold the house I would have to pay about 6 percent of the selling price in real estate commissions and closing costs (10 percent if I was not a real estate agent). The returns would also go down over time, because the initial benefit of buying below market value would be spread out over more years and we can’t count on 20 percent appreciation each year. A word of warning, I never invest strictly for appreciation.
If you never sell or refinance the property, you will not see those returns from appreciation or buying below market. They would be paper returns which would make your net worth look awesome, but the actual gains would be just the cash on cash returns. Even if you don’t sell or refinance having a lot of equity in homes looks great to banks if you want to get more loans.
When I refinanced the property I had to pay closing costs, which were about $5,000. I will get some of that money back, because the bank collected escrow amounts for taxes and insurance. I already had money in my escrow accounts for my previous loan which I will get back. I also skip one payment with the new loan, which will save me $800. I spent $28,100 buying this property and took out over $52,000 when I refinanced. I still have 25 percent equity since the maximum I can refinance with my lender is 75% of the appraisal. As you can see buying below market coupled with appreciation can make for some great returns when you refinance.
Having said all of that, let’s get back to the entire point of this article. How would I invest $100,000 into real estate? I would buy rental properties, but I would not spend all the money on rentals.
Why do you need to have money in reserves for rental properties?
I may not have had any vacancies or maintenance needed on rental property number 7, but that doesn’t mean I never will or I haven’t had those costs on other rentals. If you are going to buy rentals, you will have to fix things, you will have vacant properties and you will have tenants who don’t pay rent. If you have no money to handle these situations, you will run into some very tough times.
A good rule of thumb is to have at least six months of mortgage payments, taxes and insurance per property in savings. Banks will require this amount as well when you try to get a new loan on a property.
If you bought two rentals using $35,000 cash for each property, you would have $30,000 in cash left. You might be tempted to buy another property with that cash, but you would have no money left for reserves. If you had two rentals and a personal residence, you would need at least $16,000 in reserves assuming you had two $600 payments and a personal house payment of $1,500.
With $100,000 to invest, you could buy two rental properties which would give you great returns on $70,000 of your money. Some may argue the stock market is a better investment because you could invest all $100,000, but no matter what you invest in you should have an emergency fund or safety net. It is more important to have a safety net with rentals because you may have to put more money into then for repairs or to make mortgage payments. Where the stock market you would not need more money, unless you are buying on margin (one of the few advantages of the stock market).
How your goals and personal situation will affect investing the $100,000
There is more to consider then just the $100,000 investment you have. How did you get the money? How much do you save? How old are you? Are you investing from an IRA?
If you make $500,000 a year and it is not difficult to save $100,000, then maybe you are okay taking more risk and buying three rentals. If you make $50,000 a year and it took ten years to save $100,000 maybe you only want two or even one rental. If you are retiring in five years maybe one rental paid with all cash would make you more comfortable. Personally I think leverage is the way to with rental properties as long as they cash flow and I explain why here. If you are in a market with more expensive houses it will also affect how you invest and how much money you need.
If you happened to inherit $100,000 and have no prospect for saving more money, be very careful when investing in anything! It is vitally important you have reserves in savings if you buy rentals.
How much time you have to invest will also play a big role in how you spend the money. If you have no extra time to learn about rentals and buy properties, my strategy will not work well. You have to know your market well, be patient to find great deals, and take time to hire great managers and contractors. Turn-key rentals are a better option for those with no time, but will not provide nearly the same results.
If you have a lot of time to invest, you might even consider flipping to boost your rental property purchasing! If you want help with learning how to invest in rentals, I offer a great program to get you jump started.
How can fix and flipping increase the returns on $100,000?
Fix and flipping can provide a great income, but will take a lot of direct involvement. It is more of a job, because once you sell the property it will no longer make you any money. It takes a lot of money to get started flipping unless you use hard money or have a partner. Having $100,000 to start a flipping business would be a great start,but you are taking on a lot of risk. I love to use flipping to make more money to invest in my rentals.
This article is already way too long to start going into the details of flipping, but here is a great article that describes the process and how much money you can make.
Conclusion
I have invested much more than $100,000 into rental properties and fix and flips. My investments have built up over time and I was not able to put a large chunk of money into the investments in the beginning. If you have $100,000 or $50,000 or one million to invest, don’t dump it all into the business at once. Make sure you know what you are doing, have done the proper research and have a safety net. The returns I show in this article are not typical, but show the incredible power rentals can have. If you have questions or comments for me, be sure to check out the discussion forums!
If youâve just graduated collegeâfirst off, congrats! And as youâre creating a massive ânext stepsâ to-do list, that might include landing your first grown-up job, moving to new stomping grounds, or creating a budget, youâll want to add one thing: investing. We get it. While retirement might seem like aeons away, hereâs the thing: The
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