For the past ten years, Andrew Goldman has been investing and writing for more than twenty years. He currently writes about personal finance and investing for Wealthsimple. Previous publications of Andrew’s work can be found in Wired, Bloomberg Businessweek, New York Magazine, and The New York Times Magazine. Appearances on television include Fox News and NBC’s Today show. Andrew graduated from the University of Texas with a Bachelor of Arts in English. He resides in Westport, Connecticut with his spouse Robin, their two sons, and a Bedlington terrier. In his spare time, he hosts “The Originals” podcast.
Michael Allen is a Certified Investment Manager (CIM). He has managed money for high net worth individuals for the past 14 years. Michael is a Senior Investment Specialist at Wealthsimple. He worked as an investment advisor at BMO Nesbitt Burns Securities before this. His financial guidance has appeared in numerous publications, including the Toronto Star and the Globe and Mail. Michael graduated from Dalhousie University with a Bachelor of Commerce and owes his clients a fiduciary duty.
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So you got your hands on $75k. Nicely done! Saving any amount of money is difficult, so reaching a goal of $75,000 is very impressive. It’s time to decide what to do with that large mound of dough now. Pay off your credit card debt first. You should also save up three to six months’ worth of living expenses in case of emergency. Once those are taken care of, you are free to begin investing. Here’s how
Investing $75,000 wisely can significantly impact your financial future. Whether you’re seeking steady income, long-term growth, or a combination of both, there are numerous options available. This guide explores seven savvy ways to invest $75k, considering various risk profiles and investment goals.
Before You Invest: Setting the Stage for Success
Before diving into specific investment options, it’s crucial to ensure your financial house is in order. This includes:
- Paying off high-interest debt: High-interest debt can significantly hinder your financial progress. Prioritize paying off credit cards, personal loans, and other high-interest debts before investing.
- Maxing out retirement contributions: Contribute as much as possible to your retirement accounts, such as 401(k)s and IRAs. These contributions offer tax advantages and help secure your future.
- Building an emergency fund: Set aside 3-6 months worth of living expenses in an emergency fund to cover unexpected costs and avoid dipping into your investments.
Key Considerations for Investing $75k
Once your financial foundation is secure, consider these key factors when choosing your investment strategy:
- Risk Tolerance: Determine your comfort level with risk. Are you comfortable with potentially volatile assets that offer higher potential returns, or do you prefer safer options with lower potential returns?
- Investment Time Horizon: How long do you plan to invest your money? A longer time horizon allows for more risk-taking, while a shorter time horizon may necessitate more conservative investments.
- Investment Goals: Clearly define your goals for investing. Are you aiming for income generation, capital appreciation, or a combination of both? Aligning your investments with your goals is crucial for success.
7 Savvy Ways to Invest $75k
With your financial foundation and key considerations in mind, explore these seven investment options:
1 Stocks:
- Pros: Potential for high returns, long-term growth, diversification through ETFs and mutual funds.
- Cons: Volatility, risk of loss, requires research and monitoring.
- Consider if: You have a high risk tolerance, a long investment horizon, and are comfortable with market fluctuations.
2. Bonds:
- Pros: Lower risk than stocks, steady income through regular interest payments, diversification through bond funds.
- Cons: Lower potential returns than stocks, susceptible to inflation, less liquidity than stocks.
- Consider if: You prioritize capital preservation, have a moderate risk tolerance, and seek a steady income stream.
3. Real Estate:
- Pros: Potential for high returns, long-term appreciation, diversification through REITs or crowdfunding platforms.
- Cons: Requires significant capital, illiquidity, management responsibilities.
- Consider if: You have a high risk tolerance, a long investment horizon, and are comfortable with the responsibilities of owning real estate.
4. Peer-to-Peer Lending:
- Pros: Potential for higher returns than traditional savings accounts, diversification across multiple borrowers.
- Cons: Risk of borrower default, illiquidity, requires research and monitoring.
- Consider if: You have a moderate risk tolerance, seek a steady income stream, and are comfortable with the potential for borrower defaults.
5. Cryptocurrencies:
- Pros: Potential for high returns, diversification across various cryptocurrencies.
- Cons: High volatility, risk of loss, lack of regulation.
- Consider if: You have a very high risk tolerance, a short investment horizon, and are comfortable with the extreme volatility of the cryptocurrency market.
6. Precious Metals:
- Pros: Potential hedge against inflation, diversification across gold, silver, and other metals.
- Cons: Lower potential returns than stocks or real estate, illiquidity, storage costs.
- Consider if: You seek a safe haven asset to protect against inflation and economic uncertainty.
7. High-Yield Savings Accounts:
- Pros: Low risk, FDIC-insured, readily accessible.
- Cons: Low potential returns, susceptible to inflation.
- Consider if: You prioritize capital preservation, have a short investment horizon, and need easy access to your funds.
The best way to invest $75k depends on your individual circumstances, risk tolerance, and investment goals. Carefully consider each option, conduct thorough research, and seek professional guidance if needed. Remember, diversification is key to mitigating risk and achieving long-term financial success.
By following these tips and choosing an investment strategy that aligns with your goals, you can put your $75k to work and build a brighter financial future.
Best way to invest $75,000
Investments are nothing like that Slanket your mom bought you; one size will absolutely not fit all (and you probably won’t try to re-gift your investments.) So without knowing your specific situation, it’s hard to tell you precisely where to put your $75,000 dollars. That being said, there are some best practices we recommend for all investments.
Keep fees low
Just like taxes, fees are like investment termites too; left unchecked, they’ll devour everything you value. If you can become a cold-hearted fee exterminator, you won’t believe how much money you’ll be able to save over the long term. It’s not uncommon for an actively managed mutual fund to carry a 1% management expense ratio (MER). This means that every year, regardless of how well the fund performs, 1% of the entire fund will be deducted to pay salaries and expenses of everyone who works on the fund. One or two percent might not sound like a huge sum, but one investment advisor showed that a fee of just 2% could decrease investment gains by half over the course of 25 years. Fiddle with a fee calculator to see how trading a 2% MER for a .5% one could affect a hypothetical $75,000 investment.
Invest in a passive portfolio
Hold on, you might be thinking. The fees that mutual fund managers charge should not be an issue if they are exceptionally skilled at selecting the highest-performing stocks. The funds will yield returns that are significantly higher than those of the overall stock market. The problem is they’re not. The majority of research indicates that experts who are compensated to select stocks will not beat the market as a whole in the long run. Passive investing is a particularly effective way to achieve most goals, time horizons, and risk tolerances if active pickers can’t beat the stock market and still charge fees. This can be done by using robo-advisor. Most robo-advisors try to mimic the market by spreading your money across a wide variety of ETFs, as opposed to trying to outperform it. Thats a job easily handled by a computer algorithm. You can design low-fee passive ETF portfolios with any objective, time horizon, and risk tolerance in mind.
With more than 25 years of experience, Jeff has worked in all facets of the real estate business, including residential, commercial, property management, brokerage, and investing. He writes articles to assist other investors in managing and expanding their real estate portfolios, even though his real estate business operates autonomously.
I Have $60,000 and Don’t Know What To Do With It
FAQ
What should I do with 75k in savings?
How to turn $75,000 into a million?
What to do with $75K?
Wondering what to do with $75k is a nice situation to be in, especially with all of the investment options that are available today. While some investors focus strictly on protecting their principal, others may want to put their capital to work to generate a recurring stream of income.
What are the 7 ways to invest $75K?
Some of the 7 ways to invest $75k include buying traditional stocks and bonds, doing peer-to-peer lending, and investing in real estate. There are a few things for an investor to do before investing $75k. First, make sure their “financial house” is in order. Then, consider factors that may dictate where and what to invest all of that money in.
Should you invest $75K in a retirement account?
If you do not need to draw any income from your investment of $75k, then retirement accounts are a great place to invest. Depending on your income and marital status, you could be able to invest $40,000 in tax-deferred or tax-advantaged accounts between self-employed, personal, and employer-sponsored retirement accounts.
What should I do before investing $75K?
The first thing to do before investing $75k is to pay off high-interest debt. According to Experian, the average consumer has outstanding debt of more than $80,000 from credit card, auto, personal, and student loans. Low-interest debt such as a mortgage loan isn’t necessarily bad.