Have $20,000 Set Aside? Here’s How You Can Make Good Use Of It
If you have $20,000 set aside, you have some amazing options to invest your money and build your fortune. How is that possible? You can take the help of financial advisors and online brokerages, investment firms, etc. You will have a host of investment choices at your fingertips, including retirement savings accounts, trust accounts, education savings plans, custodial accounts, and a lot more.
While you might find it tempting to avail the safest option and put the money in one place, experts suggest otherwise. According to them, you should always diversify your portfolio by distributing your finances across several investments. Go through the following points to know more about the options.
Opt For A Brokerage Account
Online brokerages are similar to retail centers that offer products that aid in wealth building. You get access to various options, and the list comprises retirement savings accounts, investment accounts, education plans, and cash management accounts.
Thanks to the brokerages, you get access to human advisors, investment choices, investment tools, research, and trading devoid of any commission. Besides that, you might feel like focusing on management fees and the requirements concerning the minimum account size of your brokerage.
Invest Passively With The Help Of A Robo-Advisor
Opt for an account with a robot-advisor to invest your $20,000. This would be a wise decision for passive investors who prefer their money to do all the work instead of doing it. In the brokerage account, it is your responsibility to manage your investments and place the trades. With robot-advisors, they will do everything on your behalf. You will be required to shell out the fees of the robot-advisors and decide when you should go ahead with an investment.
There is an asset-based fee which you have to pay every year. In addition to that, you would have to pay a subscription fee every month. But that is dependent on the advisor only. Advisors such as Ellevest and Betterment have no minimum balance requirement. Betterment will charge you something in the range of 0.25% and 0.45% for its investment accounts. As far as Ellevest is concerned, you will have to pay a subscription fee in the range of $1 to $9 every month. There is no question of preferring one to the other.
Consult A Financial Advisor
With the help of a financial advisor, you can see your money grow over the due course of time. You will have to pay more to these advisors, in comparison to robot-advisors and brokerage accounts. But, an essential benefit that you get is face-to-face interaction. They will advise you on how to build your wealth. When you interact with someone personally, you feel a lot more comfortable, because it’s your money. You wouldn’t have to fulfill the minimum balance requirements in the case of all advisors.
However, you might have to keep $2 million in your account, for starters. The minimum account balance varies from one financial advisor to another. Therefore, it will be in your best interests if you ask your financial advisor about the fees at the very beginning. It might include fixed fees, hourly fees, or fees according to assets. Fixed fees might range between $1000 and $3000 annually. Hourly fees might fall between $100 and $300. Asset-based fees might fall in the range of 1% to 2% of your assets.
Your Investment Options
The most common form through which you invest your money is stock-trading. To expand their operations, public entities tend to offer stocks on their trading exchanges. When you invest in stocks, you get a small share of ownership of that entity. ETF investing has lower risks than stock trading.
ETFs are considered to be a melting point of various securities. Bonds are a great option. They come with a maturity date, and after their expiry, you receive the face value of the invested amount with interest. Mutual Funds are also thought of as a smart way to invest your $20,000.
Talking about alternative investments, you have real estate, cryptocurrency, precious metals, etc. All of them would give you impressive returns on your $20,000. But, do talk to an expert before you go ahead.
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