How to Invest $20K

If you had $20,000, how would you spend it? One of the smartest things you could do if you suddenly came into an extra $20,000 – or managed to save that much money over time – would be to invest it. But where? And how?

The right answer differs for everyone and depends on your financial objectives, comfort level with risk, and time horizon. This guide illuminates 10 ideal ways to invest $20,000 and maximize your returns.

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Set Your Investment Goals and Assess Your Risk Tolerance

Establishing clear financial objectives and measuring your tolerance for risk should serve as the cornerstone of your investment decisions. For instance, if you’re eyeing retirement, long-term investments like stocks or real estate might be right up your alley. Conversely, if your goal is to accumulate funds for a house down payment in five years, safer options like a high yield savings account may be more appealing.

Risk tolerance plays an equally critical role. If the thought of market volatility unsettles you, safer options with lower returns might suit you better. But if you can handle a higher level of risk for the prospect of higher returns, you might explore riskier ventures like individual stocks or even cryptocurrencies. A consultation with an in-person financial advisor can help you determine your financial goals and risk tolerance.

10 Best Ways to Invest $20K

As you prepare to grow your $20k investment, an array of options awaits. Your financial goals, risk tolerance, and timeline will guide you to the ideal choice. Here are 10 ways to strategically invest your $20k:

1. High-Yield Savings Accounts

High-yield savings accounts are a low-risk, steady-growth choice for those looking to invest $20k. They offer more competitive interest rates than traditional savings accounts, meaning your money works harder for you. The Federal Deposit Insurance Corporation (FDIC) protects these accounts, offering an additional layer of security and peace of mind.

This investment route is particularly beneficial if you prefer having your emergency fund accessible, or if you’re saving for near-term goals. Despite the returns being lower than riskier investment options, the safety and stability they provide make high-yield savings accounts an attractive option for many investors.

2. Bitcoin

Bitcoin has emerged as a prominent player in the investment world, offering a high-risk, high-reward dynamic that appeals to some investors. The value of Bitcoin is notoriously volatile, yet its remarkable growth cannot be ignored.

Over the past decade, Bitcoin has experienced gains exceeding 5,700%, significantly outpacing traditional markets like the NASDAQ, which had a gain of 336% over the same period. Even within a five-year timeframe, Bitcoin still came out ahead with a 96% increase compared to the NASDAQ’s 69%.

Given its digital nature and decentralized structure, investing in Bitcoin can be complex and fraught with unique risks. Unlike traditional currencies, Bitcoin operates independently of a central bank. Furthermore, its value is susceptible to sharp fluctuations influenced by various factors, including market demand, investor sentiments, regulatory news, and macroeconomic trends.

Ready to dive into Bitcoin investing? Consider Swan Bitcoin, where you can easily set up recurring buys or make instant purchases right from your bank account.

3. Stock Market Investing

Stock market investing is a viable path for those seeking to grow their $20k investment, especially for long-term financial goals. Today’s investing apps make it easy to start investing with as little as $1 and to diversify your investments with fractional shares if you desire.

When considering individual stocks, potential returns can be substantial, but they often come with a higher level of risk. By holding various stocks across different sectors and regions, a diversified portfolio can help mitigate these risks, providing a buffer against market volatility.

As an investor, it’s important to remember that past performance doesn’t guarantee future results. The stock market has demonstrated remarkable growth over time, but it’s not immune to periods of downturn. Staying resilient and maintaining a long-term perspective can help you deal with these fluctuations.

4. Mutual Funds and Exchange-Traded Funds (ETFs)

Mutual funds and ETFs offer investors an easy way to diversify their portfolios. These funds allow investors to buy a stake in a wide range of stocks and bonds, spreading the risk and potentially improving the returns over time.

Financial institutions manage mutual funds and ETFs, charging management fees for the expertise they provide in managing and selecting the assets within the funds. While mutual funds often require a significant initial investment, ETFs are more accessible for investors, as most brokerage firms offer a wide variety of ETFs with no minimum investment requirements.

Index funds, a subtype of mutual funds or ETFs, aim to replicate the performance of a specific market index, such as the S&P 500. These types of funds are a popular choice among passive investors due to their typically lower management fees compared to actively managed funds. The strategy of mimicking the market rather than attempting to outperform it allows investors to enjoy broad market returns while keeping costs low.

5. Bonds and Treasury Securities

For more conservative investors, bonds and Treasury securities offer a safer, lower-yield alternative. When you purchase a bond, you’re essentially loaning money to a corporation or government entity. In return, you receive interest payments over a specified period and the return of the principal amount at the bond’s maturity.

Treasury securities are a type of bond issued by the U.S. government, widely regarded as one of the safest investment vehicles. For broader exposure, bond ETFs and bond mutual funds allow you to diversify across different types of bonds, reducing the impact of any single bond defaulting.

6. Robo-Advisors

For those who prefer a hands-off approach to investing, robo-advisors can be an excellent option. These digital platforms create and manage your investment portfolio using sophisticated algorithms, taking into account factors such as your risk tolerance, investment goals, and time horizon.

Robo-advisors typically charge lower fees than traditional financial advisors, making them a cost-effective choice, especially for beginners or those with simpler financial situations. They offer a straightforward path to diversification and automatic portfolio rebalancing, reducing the need for constant monitoring and manual adjustments. It’s an appealing solution for those looking to invest $20k while minimizing time and effort spent on investment management.

Most robo-advisor platforms offer exposure to stocks, bonds, ETFs, and mutual funds.

7. Real Estate Investing

Real estate has proven to be a lucrative asset class for many investors. Income-producing real estate, like rental properties, can generate a steady flow of rental income, with potential property appreciation over time. However, property management can be time-intensive and comes with additional costs such as maintenance and property taxes.

If the idea of becoming a landlord doesn’t appeal to you, you might want to consider investing in real estate investment trusts (REITs). These publicly traded companies own, operate, or finance income-producing real estate, allowing you to dip your toes into real estate without the hassle of managing properties.

8. Peer-to-Peer Lending

Peer-to-peer lending, an alternative form of investing, involves lending money to individuals or small businesses through online platforms that match lenders with borrowers. As an investor, you can potentially enjoy higher returns than those offered by traditional savings or money market accounts. However, this approach comes with its own set of risks, including the risk of borrower default.

To safeguard against potential losses from defaults, it’s wise to diversify your lending across different borrowers. This practice, similar to diversification in a stock portfolio, can help spread the risk, increasing your chances of overall success.

9. Investing in a Small Business or Start-up

Investing in a small business or a start-up offers an opportunity to potentially reap significant returns. However, it is a high-risk venture and typically requires becoming an accredited investor. As an accredited investor, you’ll need to meet specific income and net worth criteria, emphasizing the fact that this investment option is not for everyone.

Due to the inherent risk, this investment path should only be considered if you’re financially secure enough to withstand potential losses. Remember, while investing in a burgeoning business can be lucrative, it could also result in losing your entire investment.

10. Education and Skill-Building

Often overlooked in investment discussions, investing in yourself through education and skill-building can offer meaningful long-term returns. Whether it’s advancing your current job skills, earning a new certification, or exploring a new field, enhancing your knowledge base and skills can lead to increased earning potential and greater job satisfaction.

While the returns may not be immediate or easily quantifiable like other investments, investing in your personal and professional growth can open doors to new opportunities and provide long-lasting benefits. This is a valuable investment that you can make, regardless of market conditions.

What to Consider Before Investing

Before you venture into investing, make sure you have an emergency fund, ideally three to six months’ worth of living expenses, set aside. Additionally, paying off high-interest debt, like credit card debt, should be a priority. The average credit card account interest rates often outpace the returns you’d earn from investments.

Consider the tax implications of your investments. Some investments, like taxable brokerage accounts, are subject to capital gains tax, while others, like Roth IRAs, offer tax-free income in retirement.

Finally, diversification is a key strategy to manage risk. By spreading your money across different types of investments (stocks, bonds, real estate), you can better weather market fluctuations.


Wisely investing 20k requires careful consideration of your financial goals, comfort level with risk, and investment timeline. Whether you choose high-yield savings accounts, the stock market, real estate, or another option, the goal is to grow your wealth over time and move closer to achieving financial freedom.

Regardless of your chosen path, remember that investing involves risks, including potential loss of principal. So, remember to review any investment strategy periodically to ensure it still aligns with your financial objectives. Consider seeking advice from a financial planner or other professionals to help guide your investment journey.

Dawn Allcot
Meet the author

Dawn Allot is a personal finance writer and content marketing expert specializing in finance, travel, real estate, and technology. In addition to her work at Crediful, Dawn regularly writes for Bankrate, GoBankingRates, and The Balance.