Best Ways to Invest $10,000 [10 Clever Strategies for 2022]

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the millennial money woman blog post "best ways to invest 10000"

Looking for the best ways to invest $10,000?

Then you’ve come to the right blog post.

I’ll show you how to optimize your $10,000 investment to maximize your ROI [return on investment].

Keep reading.

My Top 3 Picks for Investing $10,000

1. Best Investment Platform: M1 Finance

2. High-Yield Savings Account: Axos Bank

3. Peer to Peer Lending: GroundFloor

$10,000 is a large chunk of money that could make a difference in your financial picture in the long run – if you invest wisely and follow my guidelines.

Even if you only earn an extra 3% of return on your $10,000 investment, that means you would earn an extra $27, 816 over 45 years.

$10,000 Investment Example
Investment Time Frame
45 Years
Initial Investment
Annual Rate
Ending Portfolio Value
$27, 816

And if you read the rest of this blog article, I am positive that you will find a way to earn more than $27, 816 in a 45-year timeframe.

 Are you ready? Here are the 10 best ways to invest $10,000!

10 Best Ways to Invest $10,000

Check out my in-depth analysis of each investment strategy below!

the millennial money woman blog post "best way to invest 10000 invest for yourself"

1. Invest for Yourself

If you are looking to invest your $10,000 for the future and you want to:

  • Let it grow
  • Avoid high-risk investments
  • Invest in low-cost investments

It’s time to consider investing in index funds.

Index Funds are typically:

  • Low cost
  • Hands-off
  • Long-term

The best thing about index funds is that they offer diversification. 

Let’s take the S&P 500 (which is an index of the 500 largest US companies).

This includes companies like:

  • Apple
  • Google
  • Amazon
  • Microsoft
  • Facebook
  • Johnson & Johnson

There are many different types of S&P 500 index funds out there – so they track the top 500 companies of the S&P 500. 

Some of these S&P 500 index funds include:

S&P 500 Index Fund Name Ticker Symbol Expense Ratio
Vanguard 500 Index Investor Share Class
Vanguard S&P 500 ETF
Fidelity 500 Index Fund
Schwab S&P 500 Index Fund
iShares S&P 500 Index Fund
T. Rowe Price Equity Index 500 Fund

Now all of these index funds are excellent choices. 

Personally speaking, I would look for the lowest expense ratio fund, which would be the FXAIX fund. 

Remember: The lower the expense ratio, the more money in your pocket.

If you are serious about investing and want to analyze your investments further for:

  • Total assets
  • Turnover ratio
  • Net asset value
  • Investment style
  • Adjusted expense ratios

Then check out Morningstar, which is a platform most investment analysts use to determine which investments to buy or trade.

On the other hand, if you simply want some basic investment advice and which index funds, bonds, etc. are performing well during any given time, then the Motley Fool will send you regular updates.

Typically speaking, the S&P 500 index fund can produce an average return between 7% and 8% if you:

  • Reinvest your dividends
  • Never withdraw your cash
  • Focus on the long-term (decades)

Believe it or not, studies have proven that when you invest for the long-term in an index fund, you will see a higher return than if you invest in just individual stocks.

the millennial money woman blog post "active investors fail to beat their index benchmark in any given year statistic"

Image: The Millennial Money Woman | Source: Nerd Wallet

So really all you have to do is to buy and hold your index funds for the long term.

Active investing Passive (index) investing
Average return
7% to 10%
Typically around 0.82%**
Typically around 0.09%**
Outperform the stock market
Return the same as the stock market

*Over a 30-year period, per Dalbar’s 22nd Annual Quantitative Analysis of Investor Behavior, 2016
**ICI Research Perspective, May 2017

Ok, enough about investment returns. 

Let’s focus on how you start to invest, which is simply by opening up an investment account. 

I’d suggest opening your account with M1 Finance.

M1 Finance is for the serious investor who is looking to add money consistently to their investment accounts and has a long-term mindset.

Investing for the long term is truly a key to building wealth.

the millennial money woman blog post "best way to invest 10000 emergency savings fund"

2. Emergency Savings Fund

This is likely the most boring and non-sexy option – investing your $10,000 in an 
emergency savings fund.

However, it’s essential to building and especially maintaining your wealth.

This is a type of account where you use your money for – you guessed it – emergencies. 

Why are emergency funds beneficial?

  • You don’t have to use credit cards 
  • You don’t have to sell your car to get out of debt
  • You don’t have to sell your stocks or other investments

This means that an emergency savings account can:

  • Avoid taking on high-interest debt (credit cards)
  • Avoid you selling stocks during an economic recession (never a good idea)

An emergency savings fund, in essence, is like an insurance account that gives you peace of mind and helps you cover any unexpected costs, if something were to happen. 

If you don’t have an emergency savings fund, then you’ll have to:

  1. Calculate your monthly living expenses, which can be done by budgeting.
  2. Depending on your expenses, move that money to your emergency savings fund.

Here’s 1 trick that can help you earn a little extra on your emergency savings cash: 

Open up a high yield savings account, like with Axos Bank.

high-yield savings account is just like any other regular savings account.

Instead of earning 0.10% on what you invest (let’s say $10,000), you’ll be earning 0.60% (at least in the 2021 low-interest rate environment). 

Regular savings account earnings:

Regular Savings Account
Initial investment
Investment Time Frame
30 Years
Annual Return
Ending Portfolio Value

Now let’s take a look at how much you’ll earn with a high yield savings account:

High-Yield Savings Account
Initial investment
Investment Time Frame
30 Years
Interest Rate
Ending Portfolio Value

You can see the clear winner: A high yield savings account can earn you $1,966 while a regular savings account only earns you $304 over the same time frame. 

And you won’t even have to lift a finger!