Best Ways to Invest $10,000 [10 Clever Strategies for 2021]

Disclaimer: This post may contain affiliate links. Please read my disclosure for more information.

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!

the millennial money woman blog post "best way to invest 10000 peer to peer lending"

3. Peer to Peer Lending

Peer to Peer lending (also known as P2P) could be another option for you when it comes to investing your $10,000.

Now think about how much money banks earn when they charge interest on the money they loan. It’s a lot of money, isn’t it?

With P2P, you are the bank.

That means you are paid that higher interest by the people borrowing your money.

The reason why some like P2P as an investment option is because:

  • P2P offers diversification
  • P2P offers you higher interest rates (up to 10%)
  • You don’t have to invest a large amount of money (as little as $10)

By higher risk, I mean that you may not see your money back from the borrowers. 

That’s the risk banks also undergo – they lend their money to people but don’t know whether that money (plus interest) will ever be returned.

Here’s when I would recommend against investing your $10,000 in peer-to-peer lending:

  • You have not maxed out your 401k 
  • You haven’t invested in index funds
  • You still need to pay off credit card debt
  • You don’t have an adequate emergency savings fund

Assuming you’ve done all of those steps and are willing to take on a little more risk in your investment portfolio, then I would suggest taking a look at GroundFloor.

The reason why I suggest GroundFloor as a possibility to invest a small portion of your 10,000 (and I emphasize “small portion”) is because:

  • There are no investor fees
  • You have a high deal flow potential
  • You can start by lending as little as $10
  • There is a large selection of deal risk / return loans 

As GroundFloor underwrites loan applications, its goal is not to see a loan in default status (meaning a borrower cannot pay back the lender – you). 

That doesn’t mean that loan defaults don’t happen though.

To become more familiar with GroundFloor, check out their website and what they offer.

the millennial money woman blog post "best way to invest 10000 pay off debt"

4. Pay off Debt

You just can’t go wrong with investing your $10,000 by paying off debt. 

And when I say pay off debt with your $10,000 – I mean use your entire $10,000 if that’s what it takes to pay off your entire debt load – permanently. 

Remember, there are 2 types of debt:

  • Smart debt
  • Bad debt
Smart Debt Example Bad Debt Example
Credit Cards

Credit cards are one of the worst forms of bad debt because they come with high-interest rates, averaging around a 24% interest rate.

the millennial money woman blog post "average US household credit card debt statistic"

Image: The Millennial Money Woman | Source: Value Penguin

If I had any type of credit card debt, then I would make sure that my $10,000 would be used to pay that off first – before I do anything else. 

Here’s why credit card debt is bad:

  • Stress
  • Costs you money
  • High-interest rates
  • Low minimum payments
  • Credit card debt typically purchases depreciating assets

Think about it this way:

Credit card debt takes away from your future income.

Let’s consider the following scenario:

Credit Card Debt Example
Credit Card Debt
Credit Card Interest Rate

If you pay off your $10,000 credit card debt, not only do you:

  • Eliminate your credit card debt

But you also:

  • Lock in a 24% return 

And by a 24% return on your $10,000 investment, I mean that you no longer have to pay a 24% interest rate because you wiped out your credit card debt. 

If you find yourself having more credit card debt, even after you used your $10,000 to pay it off, then I would suggest checking out 2 programs:

Tally is an application that’s available in 30 states (and growing) that helps consolidate your credit card debt, helps you avoid late payments and decreases the interest rate you pay.

If you’re in 1 of the states that Tally does not cover, then LendingTree is another fantastic option to:

  • Consolidate your credit card debt
  • Find 0% intro APY card offers
  • Find the best credit cards

The point is this: Get rid of your credit card debt and do it now.

the millennial money woman blog post "best way to invest 10000 start a business"

5. Start a Business

Sometimes you may want to think outside of the box when it comes to investing $10,000 – like investing your $10,000 to start your very own business. 

Starting a business is one way to propel yourself to success.

the millennial money woman blog post "millionaire business owner statistic"

Image: The Millennial Money Woman | Source: AskMen

Clearly, starting your own business gives you a 2/3 advantage over the rest of the country toward millionaire status and financial success

However, you’ll have to remember that starting your own business will require you take every ounce of advantage of:

  • Your skills
  • Your network
  • Your expertise
  • Your experience

Owning a business is no cake-walk. 

The rewards, however, are well worth the effort.

Since we are in the age of the Internet, you can virtually do anything with just a few $100 or $1,000 dollars:

  • You have information at your fingertips
  • You can market for free with social media
  • You can build your own website with HostGator
  • You can ask an expert within seconds with JustAnswer

There are multiple ways you can build your own business, which include:

  • Home-based business
  • In-store business
  • Online business

If you are building a home-based or online business, please don’t spend more than a few $1,000 dollars. At least not initially. 

If you are building a business – or already in the process of building a business and need more than just your $10,000 I’d say to check out LendingTree.

LendingTree is a platform that arguably offers the largest number of potential lenders for you. 

These lenders compete for your business, which means the interest rates that you are charged are often times much lower. 

In addition to business loans, LendingTree can offer you:

Building a business takes time and patience. 

But it’s such a fulfilling and satisfying way to live life.

the millennial money woman blog post "best way to invest 10000 start a website"

6. Start a Website

Honestly, the best decision I’ve ever made in my life was starting this blog. 

Not only does it:

  • Improve my life
  • Give me freedom
  • Give me flexibility
  • Pay dividends (literally)
  • Offer unlimited income potential

But my blog has allowed me to build my wealth – and the opportunities are virtually endless. 

A blog doesn’t cost a lot of money to start. 

In fact, I spent about $300 total when it came to the following expenses:

  • Webhosting platform (with HostGator)
  • Domain name (also with HostGator)
  • Graphic designing platform
  • WordPress website builder
  • Email service provider
  • Your internet

Of course, the more advanced your website/blog becomes and the bigger your website grows, the more expenses will pile up.

However, relative to starting a new in-store business (which hovers around $100,000), spending a few $100 dollars is nothing, considering your unlimited income potential. 

So, if you:

  • Are considered an expert in a specific area
  • Love engaging with your audience
  • Are ready to put in the work
  • Are somewhat tech-savvy
  • Love graphic design
  • Enjoy writing
  • Are patient

Then you should start a blog… Right now. 

I’d suggest starting with HostGator, which is my go-to web hosting platform.

Pro Tip: Use my coupon code TMMW at the checkout.

Host Gator offers 24/7 customer service (which is typically excellent) and it’s honestly one of the most low-cost (I pay just under $12 per month). 

To earn money from your blog, you want to start dabbling in affiliate marketing.

With affiliate marketing, your income potential is unlimited. 

I’m not kidding. 

However, I highly, suggest mastering the art of affiliate marketing before you start blindly promoting products. 

When I started my affiliate marketing journey, I took arguably the best course there is, known as Making Sense of Affiliate Marketing.

After about 1 to 2 weeks of studying the Making Sense of Affiliate Marketing course, I made my first sale. 

Talk about using your $10,000 to make 10’s of k’s.

However, to become a successful blogger, you need to:

  • Stay consistent
  • Build your network
  • Never miss a deadline
  • Put in [a lot] of hard work
  • Persevere during dry spots

It’s not easy, I’ll tell you that.

But blogging is the best life decision I ever made.

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

7. Invest in yourself

When I ask my mentees “how would you invest $10,000?” I hear a diverse set of answers.

However, I can tell you that 99% of the time, I do not hear my mentees say that they would use a portion – or all – of their $10,000 to invest in themselves. 

In a recent survey, asking respondents how they would invest $10,000, not many responded they would invest in themselves, either.

the millennial money woman blog post "percentage of americans that would invest in themselves statistic"

Image: The Millennial Money Woman | Source: GOBankingRates

However, compare that to the percent of millionaires who state that education and knowledge is so important to their successful lives.

the millennial money woman blog post "percentage of millionaires that stated education is important to them and their success statistic"

Image: The Millennial Money Woman | Source: Millionaire Foundry

My philosophy is that if you want to be successful, you should follow what the successful people have done.

"Why would you want to change a winning team?"

And that’s why I am such an advocate for education – which in turn can transform your career trajectory into a very lucrative and profitable one.

And by education, I don’t just mean college. 

Sure, college can offer you some excellent benefits to reshaping your career trajectory – but college can also be:

  • Expensive
  • Money consuming
  • Time-consuming (2+ years)

If you’re looking to further your career instead through alternatives while still receiving excellent advice from the best of the best, then I’d suggest to check out Mindvalley.

Mind Valley takes an approach that most educational institutions fail to pursue. 

Here, you learn everything you wished you were taught in school, such as:

  • How to grow your influence
  • How to increase productivity
  • How to become a better leader
  • How to achieve entrepreneurial success

The more you invest and believe in yourself, the higher the chance that you will see and become a success.

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8. Real Estate Crowdfunding

When I started my investing journey, I only thought about investing in the stock market – and quite frankly, I only have invested in the stock market. 

However, as I gained more experience with investing, I realized that at some point in my future, I should look to diversify my investments into real estate.

And that’s where the question dawned on me:

How can I invest $10,000 in real estate?

With $10,000 you can invest in many different real estate areas, include:

  • REITs
  • Roofstock
  • Real estate partnerships
  • Renting out a room on Airbnb
  • Real estate crowdfunding platforms

And many other options.

Investing in real estate would make sense if you:

  • Don’t have credit card debt
  • Want to generate passive income
  • Preferably have multiple sources of income
  • Have enough money invested in the markets
  • You have enough money in an emergency savings fund
  • Don’t care if a portion of your money is illiquid and tied up in real estate

My favorite part about real estate investing is that it serves as a passive income stream – one that you typically don’t need to work much for. 

So, if you’re ready take a leap of faith and invest in real estate using a crowdfunding platform, then PeerStreet may be the right option for you.