How to Invest $50k - 8 Best Ways to Invest $50,000 in January 2024 (2024)

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You’ve got $50,000 to invest.

As a former financial advisor, here’s how I recommend you should invest your $50,000 (and how I invested my first $50,000).

Don’t worry, it’s not as complicated as it seems.

What is Asset Allocation?

There’s an important concept you need to understand: Asset allocation.

Asset allocation is how you divide your money between different asset classes, such as stocks, bonds, cash, and more – it’s how you diversify your investment portfolio.

Instead of investing all $50,000 into a single asset, you should spread it amongst multiple assets so you’re not overexposed to any one area.

Therefore, the question isn’t “What is the best investment for 50k?” (which implies there’s a single investment you should make). The question is “How to invest $50,000?”

In my opinion, this is the best way to invest $50,000.

The Best Way to Invest $50k

Here’s my list of the 8 best ways how to invest 50k which are divided into 3 “buckets”:

• Safety ~ 20% ($10,000)
• Growth ~ 70% ($35,000)
• Risk ~ 10% ($5,000)

Each investment below falls into 1 of these 3 buckets.

For example, I list 3 options for “Growth”. It’s up to you to decide how to allocate the $35,000 of “Growth” money between those 3 options (though I’ll make some recommendations).

There is no “perfect” allocation, so feel free to tweak my suggestions to fit your goals and needs as an investor.

By the way, if you’re working with a smaller account, we’ve got you covered. Check out how to invest $1,000.

Now, here’s how to invest 50k wisely.

*Disclaimer: Not investment advice. Lincoln Olson and WallStreetZen are not liable for any investment risk you undertake. Invest wisely.

The 9 Best Ways to Invest $50,000 in 2024

1. High-End Artwork (Masterworks)

Bucket: Risk

How much I would allocate: 0% – 10% ($0 – $5,000)

Like real estate, investing in art is both lucrative and very capital intensive.

Until now…

Masterworks allows you to start investing in high-end art for a fraction of the usual cost.

Masterworks purchases high-end artwork, registers it with the SEC, and then allows investors to buy shares in it. You can hold on to your shares or sell them to another investor. But the people who hold on to their shares have done quite well.

In fact, Masterworks offers one of the best returns on money on this list.

Members got +10%, +14%, and +35% net returns from their last three exits. These results also came through when big banks like SVB, First Republic and Credit Suisse were shuttering their doors.

Masterworks holds the art to allow it to appreciate. When the art is sold, investors receive a profit based upon their number of shares.

The returns, especially during periods of inflation, are exceptional:

Want to hear the best part? With our exclusive link, you can skip their waitlist with a few easy clicks.

2. Private Credit

Bucket: Growth

How much I would allocate: 0% – 10% ($0 – $5,000)

Percent is the only platform exclusively dedicated to bringing private credit to accredited investors.

Private credit is an alternative asset class of debt financing that can offer:

• Higher yields
• Shorter durations
• Diversification outside of public markets

Private credit borrowers include small businesses and startups without access to public markets. They borrow to finance their operations and growth, and the debt is often collateralized by assets, loan portfolios, or corporate debt.

Research from KKR suggests adding alternative investments including private credit could improve risk-adjusted portfolio returns, which is why institutional investors are flocking to this multi-trillion dollar asset class.

Percent unlocks the exclusive private credit investments for retail accredited investors, so you can diversify and grow your portfolio with up to 20% APY from inflation- and recession-resilient alternative assets:

Percent charges variable fees depending on the investment product.

• For direct deals, 0% management + a % of yield
• For managed products like Percent Blended Notes, 1% management + a % of yield

For example, if a deal paid 15% APY and the fee charged was 10% of interest, your effective APY is 13.5% after fees.

Private credit investments through Percent are shorter term (9-month average) and priced at prevailing rates, making them responsive to current market conditions and the macro credit and interest rate environment. With shorter-term investments, you can regularly re-evaluate and calibrate your investments to meet your portfolio needs.

Plus, you only need $500 to get started investing.

If you’re an accredited investor, Percent can give you access to a wide variety of high-yield, short-duration offerings. And the best part is they’ll provide a bonus of up to $500 for making your first investment.

3. High-Yield Savings Account

Bucket: Safety

How much I would allocate: 10% – 20% ($5,000 – $10,000)

Everybody needs an emergency fund.

Life happens – the car breaks down, there’s a medical emergency, you lose your job. These things happen.

And while we can’t plan for them, we can be prepared for them.

I recommend having 3-12 months of savings in an emergency fund. This way, you can easily cover the costs of any unforeseen emergency without needing to take on debt.

In addition to its practicality, an emergency fund also provides psychological benefits – the reassurance of a safety net removes significant stress.

But traditional savings accounts are horrible savings vehicles. My old bank paid me 0.045% in interest.

That’s $4.50 for every $10,000 I had saved.

Fortunately, there’s a better option.

Online banks are able to offer much higher interest rates because they don’t have to pay to operate physical buildings and pay staff to operate them. By doing this, these banks can pass their savings on to you in the form of higher interest rates.

I like M1 Finance. While you have to be an M1 Plus member to access their best rates, they offer some of the highest interest rates around for high-yield savings accounts.

Currently, M1 Finance offers 5% APY for qualifying high-yield savings accounts.

Other banks can offer similar yields, or offer large cash bonuses when you open a new account (which you can later transfer to a higher yielding savings account).

4. Real Estate

Bucket: Growth

How much I would allocate: Varies

Historically, you’ve needed a lot of money to start real estate investing. But it’s 2024.

Yieldstreetis a crowdfunding platform for people who want to start investing in real estate.

And $15,000 (a lot less than buying a rental property!) is all you need to unlock the potential of private real estate investing, an asset class that has consistently outperformed stocks for the last 20 years:

Real estate investing taps into 2 types of returns: Investment income (from rent) and price appreciation (from the rise in property value).

Plus, in periods of high inflation, real estate has historically increased in price well above the rate of inflation. It’s also tax efficient and offers diversification outside of public markets (stocks and bonds).

And unlike self-owned real estate, there is no management, maintenance, or deal analysis.

Real estate investing is no longer only for the wealthy.

5. Stocks and ETFs

Bucket: Growth

How much I would allocate: 0% – 20% ($0 – $10,000)

If you’d like to take more of a hands-on approach to your investing, then you should allocate some of your “Growth” bucket toward individual stocks and ETFs.

eToro securities trading is offered by eToro USA Securities, Inc. (“the BD”), member of FINRA and SIPC. Cryptocurrency is offered by eToro USA LLC (“the MSB”) (NMLS: 1769299) and is not FDIC or SIPC insured. Investing involves risk, and content is provided for educational purposes only, does not imply a recommendation, and is not a guarantee of future performance. https://www.wallstreetzen.com is not an affiliate and may be compensated if you access certain products or services offered by the MSB and/or the BD.

Stocks are publicly-traded companies, meaning you can own a small portion (share) of a company. You can buy a tiny slice of companies like Apple, Tesla, Costco, Amazon, and more.

Exchange-Traded Funds (ETFs) are baskets of stocks, bonds, or both which let you invest in many securities with a single investment. For example, Vanguard’s Total Stock Market Index Fund ($VTI) is an index fund ETF which owns every publicly-traded company in the United States.

If you want to start analyzing individual companies, head over to WallStreetZen. You can start by looking into Apple (NASDAQ: AAPL), Tesla (NASDAQ: TSLA), Costco (NASDAQ: COST), and Amazon (NASDAQ: AMZN).

If you’re interested in buying individual stocks but don’t want to perform your own analysis, check out a subscription to Motley Fool Stock Advisor.

This option will require significantly more work, however, than simply using Bettermentto automate your investing. You will need to perform research, due diligence, and familiarize yourself with financial jargon and many personal finance topics (not the case with Betterment).

6. Betterment

Bucket: Growth

How much I would allocate: 40% – 70% ($20,000 – $35,000)

Betterment is a robo-advisor, an automated financial advisor that provides wealth management services.

It’s like having a personal financial advisor who works 24/7.

Bettermentoffers algorithm-driven financial planning services which provide you with easy account setup, robust goal planning, portfolio management, tax-efficient investment strategies, diversified asset allocation, and more.

Like I said, personal financial advisor.

You can get started on Betterment by filling out a short surveycovering your age, risk tolerance, current financial situation, and future goals. Your answers are transformed into advice and a custom financial plan tailored to meet your needs into which you can automatically invest.

After setting up your accountand making your initial deposit, you can turn on auto-deposit and make recurring contributions to your portfolio which Betterment will automatically spread across your optimal investment mix.

Betterment will create a custom portfolio for you filled with ETFs (low-cost, well-diversified investments) that invest in stocks and bonds. The younger and/or more pro-risk you are, the more stocks will be in your portfolio. The older and/or more risk-averse you are, the more bonds will be in your portfolio.

This is the exact approach a financial advisor would take (remember, I would know).

Except there’s one major difference: Betterment is FAR cheaper than a typical financial advisor.

• Betterment charges just 0.25% of the assets you have invested with them ($40,000 invested will cost $100/year in fees).
• Most financial advisors will charge at least 1% for the same service ($400 for the same $40,000 invested).

Betterment is the best solution for the vast majority of people. I can’t tell you how many former prospects I referred to Betterment – it’s that good.

7. Pay off High-Interest Debt

Bucket: n/a

If you have credit card debt or other high-interest consumer debt, pay it off immediately.

Although not an investment per-se, one of the best investments you can make is eliminating your high-interest debt. Most credit cards charge APYs above 20%. By paying off those balances, you’re instantly “earning” a 20% ROI – the highest guaranteed rate of return you will find.

While it’s not necessarily earning you money like a traditional investment, the end result is the same: More money in your pocket.

8. Series I-Bonds

Bucket: Safety

How much I would allocate: 0% – 5% ($0 – $2,500)

While a high-yield savings account can fulfill all of your “Safety” bucket’s needs, there is a way to turn up your returns, if you’re willing to work a little harder.

The U.S. government sells bonds to its citizens which are inflation-protected. These bonds are known as Series I-Bonds.

I-Bonds pay interest rates that are made up of 2 parts: A fixed rate and a variable rate. The variable rate is tied to inflation; when inflation is high, these bonds can pay high interest rates.

Right now, I-Bonds have a 4.30% composite rate.

There are a few rules and regulations to consider:

• Series I-Bonds are only available to U.S. citizens
• The minimum purchase amount is $25
• You can buy up to $10,000 annually
• They can be held for anywhere between 1-30 years but there is a penalty for redeeming them before 5 years (forfeiture of the previous 3 months’ interest).
• The variable interest rate adjusts every 6 months based on the latest inflation data.

This list is not exhaustive – be sure to research these in more depth before investing.

You can learn more about and invest in Series I-Bonds at TreasuryDirect.gov.

9. Cryptocurrency

Bucket: Risk

How much I would allocate: 0% – 5% ($0 – $2,500)

Like art investing, investing in cryptocurrencies is a bit of a black box.

If you have conviction about the future of cryptocurrency and want to make an investment in its future, I won’t stop you. But if you’re doubtful and don’t see the value in it, don’t worry about making it a portion of your portfolio.

Cryptocurrency is highly volatile – prices fluctuate wildly. Today, Bitcoin is down nearly 7%, which would be a massive one-day swing in the stock market but it’s far more common in crypto.

If you’re bullish on the future of cryptocurrencies then don’t hesitate to make an investment. Make sure to check out the best crypto IRAs if you’re a long-term investor. My only other recommendation is to keep it a relatively small part of your investment portfolio.

BONUS: Gold IRAs

If you’re like me, you’ve read a lot about the benefits of investing a percentage of your portfolio into gold:

• It’s a natural inflation hedge
• Risk-reducing characteristics, especially in volatile markets
• Stable, long-term returns of around 7%

In my opinion, the biggest benefit to investing in gold is as a portfolio stabilizer. That’s why Ray Dalio, founder of the world’s largest hedge fund, has gold make up 7.5% of his All Weather Portfolio.

Despite knowing it’s a good idea, most investors don’t ever use gold in their investment mix. Don’t let that be you.

You can now invest in gold in tax-efficient IRAs. The top gold IRA providers are:

In 2024, now may be the perfect time to allocation a portion of your portfolio to one of history’s most reliable assets.

Final Word: How to Invest $50k

Based on my allocations above, here’s what my portfolio looks like:

1. Betterment– 80% ($40,000)
2. Emergency fund (M1 Finance) – 20% ($10,000)

2 accounts – that’s all I need.

Anyone who tells you that how to invest 50k is more complicated than that is lying to you.

But that’s just my opinion.

Feel free to mix in some higher-risk assets like art (Masterworks) and cryptocurrency (eToro). You may also want to add some real estate to your portfolio (Yieldstreet).

And if the Bettermentroute is too hands-off for you, open your eToro accountand start investing in individual stocks and ETFs, after doing your homework.

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