by Taylor J. Kovar – CEO/Founder, Kovar Wealth Management

 

–Hey Taylor – I’m sitting on about $15,000 in my savings account and feel like I need to put that money somewhere. I want to keep some of it for emergency savings, but the rest should be growing. Any idea where to start? I’ve never really played with money in the markets so I’m a little unsure.

 

–Hey Robert – There are a lot of fruitful ways to invest $10,000—it all depends on your goals and what investments you already have. Putting that money right into retirement accounts is always a good idea, but if you’ve got an IRA or 401(k) that’s automatically funded, you’ve got plenty of other fun options.

 

  1. Think about your goals first. We always want to grow our wealth, but it’s worth taking a moment to think about why. Are you looking to build up a downpayment for a house? Do you want to save every penny for 10 years and retire early? How you invest depends on what you hope to accomplish, as some investments need to stay put for a while and others can deliver in the short term. That’s where a high-yield savings account can come in handy; while you think about these bigger investment decisions, your $15,000 could be earning upwards of 4% just sitting in savings somewhere like SoFi or Amex Savings.
  2. Think about your risk tolerance. Putting your money on the line is a very personal decision, but there’s also a general formula for how much risk you can comfortably consider. Higher risk = higher reward, and younger investors = higher risk tolerance. If you’re in your 20s or 30s, you get to consider a broader range of investments because you and your money have more time to recover from a loss (and continue growing). Business lending and angel investing should be on the table, as should the stock market and real estate. You might not invest in a house for $10K, but if that nest egg reaches $30K, you can think very seriously about buying a rental property or a house to fix and flip. Again, don’t get too excited if you don’t have an IRA yet. As long as you do, you have every reason to consider more exciting investments.
  3. Think about your level of involvement. For many, if not most, the goal is to passively grow income while you pay attention to your work and family. I’m all for this approach, especially as an alternative to making uninformed investment choices that don’t pay off. If the retirement account is funded and you have a safety net in place, opening a brokerage account with a robo advisor might be the best choice. You get to set your goals and let the algorithm do the rest. As long as you use a legitimate platform and let the money sit, you should see better returns than what you’d get with a savings account, government bond, or a CD.

 

You’ve got lots of choices ahead of you. Before you make any moves, think about your goals for the next five or 10 years, and then invest in accordance with those plans. Good luck, Robert!