Whenever a new installment of our Where to Invest series comes out, sign up to receive an email about it. This should happen once a month.
Stated differently, do you commemorate the S
Only one money manager out of the four that Bloomberg News questioned for the most recent Where to Invest $10,000 installment was particularly interested in growth stocks—consistent growth, not giddy growth, which should help tame market fluctuations. The remaining three, however, tended to focus more on value-oriented opportunities, such as utilities, emerging markets, and premium corporate bonds.
Andre Yapp, an ETF research associate at Bloomberg Intelligence, suggests exchange-traded funds as a good place to start for readers who want to track the themes among investors.
In the meantime, the money managers gave a wide range of responses when asked how they would use $10,000 for a personal interest. For example, one advocated taking to the skies in a World War II fighter plane, while another recommended scheduling extensive personal diagnostic tests to fine-tune one’s health.
It’s a good use of time to make sure you’re well-positioned to weather potential volatility, as some people believe the equity market’s rally is overbought. See whether you can enhance your knowledge of basic finance by reading The 7 Habits of Highly Effective Investors.
The concept: Because of their historically cheap valuations, superior relative growth rates in comparison to the US, and the possibility of falling interest rates, emerging market equities have the most attractive performance potential my colleagues and I have seen in years.
The strategy is as follows: with China accounting for E2%80%99 of the weight in the MSCI Emerging Markets Index, down from 2039% at year-end 2020 to 2027% by year-end 202023, EM is no longer dominated by China and its large internet stocks. Regulatory concerns and headwinds to growth have hampered their performance. And as a result, other Chinese industries that tend to offer above-market dividend yields, such as “traditional economy” stocks like energy, banks, materials, and infrastructure, have had an opportunity to outperform in comparison. Investor interest has increased as EM’s country mix has become more balanced. Other markets like Taiwan, India, and the Gulf Cooperation Council—which consists of Saudi Arabia, the United Arab Emirates, Qatar, and Kuwait—have seen an increase in trading volumes. And that makes even small-cap stocks more accessible and helps to reduce transaction costs.
The big picture: in the first quarter of 2020, EM stocks traded at a rate of 20%E2%80%94%20in relation to those in the US and at a rate of 20%2060%%20in terms of price-to-book and forward earnings discounts. However, according to consensus projections, EM should see stronger sales growth and earnings per share over the coming years. The yield curve should start to normalize, global liquidity should increase, and the US dollar should depreciate if the Federal Reserve lowers benchmark rates in 2024—all historically strong indicators for EM outperformance. Additionally, since most developing nations have low inflation, EM central banks ought to be able to cut interest rates to promote growth.
The idea: At a fundamental level we remain cautious. The high yields on short-term US government bonds and low-risk money market funds continue to compete with the high prices of US stocks. But instead of just offering defensive stock and sector recommendations, we are focusing our investment advice on sectors that were overlooked in the most recent rally and appear oversold based on our in-house sentiment indicators.
The plan: We recommend two defensive industries: food and beverage and utilities. If inflation stays low and interest rates decline, both should gain. As a precaution, we would draw attention to the potential for a turnaround in the two cyclical industries, autos and energy, which are oversold according to our sentiment indicators.
If the Federal Reserve lowers rates later this year and the US dollar loses some of its appeal, you might also want to consider purchasing an emerging market exchange-traded fund (ETF) if you want to take risks with your investments. Those parts of the global market look oversold. Lastly, we maintain our optimism regarding two of our structural themes and recommend defense stocks and manufacturing plays, which should both rise in the event that President Trump’s bid for a second term becomes more likely.
The big picture: 2023 was a terrible year for new portfolio allocation suggestions from the standpoint of a top-down strategy. Purchasing American AI-related tech stocks was the only option available. So far in 2024, these trends have largely continued. It seems that passive investors who purchase exchange-traded funds (ETFs) that mimic the S However, there is a drawback to this investment strategy: it works until it doesn’t. This self-reinforcing process may reverse itself if the market trend shifts, as we have seen with Tesla.
The concept: Because today’s income stream can be locked in for years to come, we believe that investment-grade corporate bonds are one of the best ways to generate income in this environment and a more alluring way to manage risk than short-term bonds or cash. Bottom line: Buy bonds when everything looks awesome. You can receive compensation while you wait for the delayed effects of Fed policy to become apparent.
The plan is as follows: The Bloomberg US Corporate Bond Index, which focuses on investment-grade bonds, is currently yielding over 5%, which is significantly higher than what we’ve seen for the majority of the previous 2015 years. Furthermore, investment-grade corporates are trading at 92 cents on the dollar, which is the biggest discount to par since 2009. Ultimately, investors recently went through the worst drawdown (peak to trough decline) for the aggregate bond index in history, which occurred from early 2016 to October 202022. Even though it hurt, it means that a sizable portion of the value in premium bonds has now been revealed.
The big picture: When everything appears bad, that is the ideal time to take on risk in your portfolio. Right now, everything looks awesome. The US economy is still defying gravity, inflation is declining, corporate profits are beating estimates, and investor confidence is high. The Fed remaining on hold until something “breaks,” however, is more likely than the no-landing or soft-landing narrative. Recall that we recently witnessed the biggest and fastest shift in monetary policy in decades, going from the loosest to the tightest, the effects of which are still unclear. History indicates that in a late cycle environment, everything appears perfect until it doesn’t. Although things appear promising at the moment, tighter monetary policy will eventually cause the economy to contract.
Investing $10,000 can be a great way to start building your wealth and achieving your financial goals. Whether you’re looking to save for retirement, a down payment on a house, or simply grow your nest egg, there are many different investment options available to you. However, with so many choices, it can be difficult to know where to start.
This guide will provide you with 10 proven strategies for investing $10,000, along with helpful tips and resources to help you make the best decision for your individual circumstances.
1. Pay Off High-Interest Debt
Before you invest any money, it’s important to make sure you’re not carrying any high-interest debt. This is because the interest you pay on your debt will likely be higher than the return you’ll earn on your investments. For example, if you have a credit card with a 20% interest rate, you’ll need to earn at least 20% on your investments just to break even. In most cases, it’s much better to pay off your high-interest debt first and then start investing.
2. Build an Emergency Fund
An emergency fund is a stash of money that you can use to cover unexpected expenses, such as car repairs, medical bills, or job loss. Having an emergency fund can help you avoid going into debt or selling your investments at a loss. Most financial experts recommend saving three to six months’ worth of living expenses in your emergency fund. However, depending on your family needs, job stability, lifestyle, and other factors, you might need to save more.
3. Open a High-Yield Savings Account
If you’re not sure where to invest your $10,000, consider stashing it in a high-yield savings account while you compare your options. The best high-yield savings accounts earn more than 5% APY. Unlike with a CD, you can withdraw your cash at any time without owing an early withdrawal penalty. Still, remember that some savings accounts limit the number of transactions you can make each month before an excess transaction fee kicks in. And the interest rate can change, unlike that of a CD, which is guaranteed for the length of the CD term.
4. Build a CD Ladder
A certificate of deposit (CD) is a time deposit that pays a fixed interest rate for a specific time, typically three to 60 months. With the best CD rates topping 5% annual percentage yield (APY), a CD can be a smart, low-risk investment. However, you’ll pay an early withdrawal penalty if you need your cash before the CD matures.
To avoid locking your money up in a single CD, consider building a CD ladder by dividing your deposit among multiple CDs with various maturities. A CD ladder lets you manage changing interest rates and provides greater liquidity than putting all your money into a single, long-term CD.
5. Get Your 401(k) Match
If you have a 401(k) match, it means your employer wholly or partially matches your 401(k) contributions. When you have a full match, your employer matches your contributions dollar for dollar, typically up to a percentage of your salary. A partial match means your employer puts in a percentage of your contributions, such as 50%—or $0.50 on the dollar. Ideally, you’ll contribute enough to get the full match and avoid leaving free money on the table. Here’s a rundown of 401(k) contribution limits for 2023 and 2024.
| Year | Employee Contribution | Employee Contribution if 50 or Older | Employee Plus Employer Contribution | Employee Plus Employer Contribution if 50 or Older |
|---|---|---|---|---|
| 2023 | $22,500 | $30,000 | $66,000 | $73,500 |
| 2024 | $23,000 | $30,500 | $69,000 | $76,500 |
6. Max Out Your IRA
An individual retirement account (IRA) is like a 401(k) you open yourself at a financial institution, such as a bank or brokerage firm. IRAs generally offer more flexibility and investment choices than 401(k)s, but the contribution limits are lower. For 2023 the limit is $6,500 ($7,500 if you’re 50 or older), increasing to $7,000 ($8,000 if you’re 50 or older) in 2024. Contributions to traditional IRAs may be tax deductible, but you’ll pay taxes when you withdraw money during retirement. Roth IRAs don’t offer an up-front tax break, but qualified distributions in retirement are tax free.
7. Contribute to Your HSA
A health savings account (HSA) is a tax-advantaged account used to pay for copays, prescriptions, dental care, glasses and contact lenses, and more. You can claim a tax deduction for your HSA contributions (even if you don’t itemize), lowering your taxable income and tax bill. Contributions and any interest or earnings stay in the account tax free, and withdrawals are tax free when used to pay for qualified medical expenses.
You’ll need an HSA-eligible health insurance plan, sometimes called a “high deductible health plan (HDHP)” to open and fund an HSA. For 2023 the contribution limit is $3,850 for self-only coverage and $7,750 for family coverage, increasing to $4,150 and $8,300, respectively, in 2024. If you’re 55 or older, you can contribute an additional $1,000 as a catch-up contribution.
8. Invest through a Self-Directed Brokerage Account
A brokerage account, such as J.P. Morgan Self-Directed Investing, gives you complete control over how you invest your money. Depending on the broker, you can buy and sell stocks, bonds, options, mutual funds, exchange-traded funds (ETFs), cryptocurrencies, commodities, futures, and more. Self-directed brokerage accounts typically offer low costs, plenty of research tools to help you make investment decisions, and an easy-to-use platform for placing trades.
9. Invest in a Robo-Advisor
If you don’t have the time, interest, or expertise to choose your own investments, consider using a robo-advisor, such as M1 Finance, that builds and automatically rebalances a portfolio based on your risk profile. For an even more hands-off experience, consider working with a financial advisor. WiserAdvisor helps you find and compare top vetted financial advisors in your area.
10. Invest in Yourself
Investing in yourself represents different things to different people, but it generally means spending money (and time) on yourself to improve your quality of life. For example, you might invest in yourself by going back to school, learning a new skill, starting a new business, even a side hustle. Investing in yourself can also mean prioritizing your physical or mental health—whether you join a gym, pick up a new sport, or work with a coach. Warren Buffett, one of the greatest investors of all time, wrote in Forbes that investing in yourself is the one investment that supersedes all others. “Nobody can take away what you’ve got in yourself—and everybody has potential they haven’t used yet.”
Investing $10,000 can be a great way to start building your wealth and achieving your financial goals. By following the tips and strategies outlined in this guide, you can make the most of your investment and set yourself up for a successful financial future.
Frequently Asked Questions
How much should I invest each month?
The amount you should invest each month depends on your income, expenses, and financial goals. However, a good rule of thumb is to invest 10% of your income. If you can’t afford to invest 10%, start with 5% or even 1%. The important thing is to start investing and increase your contributions as you’re able.
What is the best investment for me?
The best investment for you depends on your individual circumstances, such as your risk tolerance, time horizon, and financial goals. If you’re not sure where to start, consider talking to a financial advisor.
How can I track my investments?
There are many different ways to track your investments. You can use a spreadsheet, a personal finance app, or a dedicated investment tracking tool. The important thing is to choose a method that works for you and that you’ll use regularly.
How often should I rebalance my portfolio?
You should rebalance your portfolio at least once a year. However, you may need to rebalance more often if you experience a major life change, such as a job loss or a new baby.
What should I do if the market crashes?
If the market crashes, don’t panic. Stay invested and ride out the storm. The market has always recovered from previous crashes, and it will likely recover from this one as well.
Additional Resources
- NerdWallet: Best Ways to Invest $10,000
- TIME: How to Invest $10K
- Inves
In the 1970s, economists such as Richard Zeckhauser and Donald Shepard developed QALYs as a tool to combine estimates of individuals’ quality and length of life into a single measure for use in decision-making. The goal was to guide discussions of whether, for example, scaling up newborn screening programs was worth the added cost of administering tests.
However, the episode shows that Democrats are still more likely to use economic analysis tools to shape policy, even though these tools were originally developed to limit the expansion of the welfare state that their party created. This is despite the widespread belief that Democrats are weak on the economy.
However, as new treatments became available and Medicare and Medicaid injected more money into the healthcare system, the 1970s saw a sharp increase in healthcare costs. In a bipartisan first step, Congress established new federal agencies, including the National Center for Health Care Technology and the Office of Technology Assessment, to use cost-effectiveness analysis to look into ways the government could control the skyrocketing cost of healthcare.
The creation of Medicare and Medicaid in the 1960s prompted policy experts to pay more attention to the cost-effectiveness of health care administration. This led to the creation of health economics as a research field. Through federal agencies such as the National Center for Health Services Research and Development, established in 1968 by the Democrats as part of a broader reorganization of the Public Health Service, the nascent tools of this new discipline became a way to identify potential inefficiencies in government-run health care programs.
Democrats disagree, arguing that the bill’s expansive language will jeopardize federal agencies’ attempts to bargain for drug prices and control health care spending.
A Case for Consistency
The concept: Investors took more risks last year as the economy showed resilience and inflation decreased. Many of 2022’s worst performers were last year’s biggest winners. This year may witness a similar, albeit less dramatic shift. Although I anticipate a respectable year for stocks, I would look to companies that can deliver predictable earnings with less price volatility rather than adding to last year’s leaders.
The strategy: Compared to 2020–23, this year the emphasis will probably return to earnings after higher multiples drove the stock market to a nearly 25% gain. Given the normalization of inflation and growth, investors are likely to give preference to businesses that can generate steady growth, ideally with fewer setbacks along the way.
Historically, companies with lower risk or volatility have benefited from moderating growth. Furthermore, although stock price volatility is the primary factor used by investors to characterize this style, I would propose a more comprehensive definition of low volatility: low fundamental volatility or consistency.
This implies that instead of investing in defensive industries like utilities and staples, concentrate on a larger group of businesses that consistently outperform their competitors in terms of fundamentals. According to our research, when growth slows down, stocks with stable revenue, earnings, and margins typically perform better.
The big picture: After four turbulent years, things will probably return to more of the pre-pandemic state. Businesses that can deliver consistently throughout this shift will probably dominate the market.