Having the opportunity to invest $70k is a great achievement and presents many opportunities.
Whether you saved up this much money, got a windfall from a sale, or inherited it, this is an excellent opportunity to make that money grow. So let’s get started!
Ways to Invest $70,000
The problem for most people is deciding where to invest their money. While each person has different priorities, these are some of the best places to invest 70k dollars.
While savings accounts are by no means a glamorous way to go. They are a great place to keep your money until you know exactly where you want to put it.
If you don’t have an emergency fund, then putting enough money into a savings account for three to six months of expenses is what we call a fully-funded emergency fund.
You don’t want to put a large sum of money into any old savings account; you want one that offers the highest interest rates. The latest rates for savings are:
Betterment is a robo-advisor. This means that you place the money into your account, and the service does all the investing for you.
These investments are based on a survey that you complete when you sign up for a Betterment account. So how much risk is taken is determined by your preferences.
If you want to get into stock investing, but don’t want to do any research, Betterment is one of the best hands-off options.
Fundrise allows you to invest in real estate without managing the properties. Instead, you place the money in the account, and their managers do all the real estate investing for you.
Most commonly referred to as a “real estate investment trust” (REIT), Fundrise opened this type of investment up to almost anyone. Previously you had to have $1,0000,000 in assets to be eligible for these types of investments.
Bonds are one of the safest investments you can make, but the ones you get from the government have such low interest it may not be worth your time.
Worthy Bonds changes that by allowing you to invest in bonds made to small and medium-sized businesses. These bonds are loans that are secured by assets (usually company inventory).
These assets are always worth 25% more than what is being loaned to the company. So even if the business defaults, Worthy Bonds will claim the assets, sell them off, and recover your investment.
You receive a flat 5% interest and the money is 100% liquid.
If you received a windfall payment to get your $70,000 investment, you will want to look at retirement accounts to shield your money from taxes.
Anyone can invest in an IRA up to $6,000, and that money goes in tax-free. If you are married, both you and your spouse can invest up to $6,000 so you could avoid paying taxes on $12,000 of your $70k.
The main types of investment accounts with their limits are:
All of these accounts can be opened through any online brokerage account.
Exchange-traded funds are an easy way to diversify your investments. They work by allowing you to buy into the fund for the low price of a single “share” (yes, just like buying a single stock).
These shares you buy are invested for you into a broad mix of investments. ETFs can focus on stocks, bonds, or a combination of different assets.
Currently, you can purchase ETFs with no trading fees using Ally Invest as your brokerage. They also have top tools for researching your investments.
Investing in individual stocks can be very lucrative. It can also be financially devastating.
If you are going to pursue this type of investing, do your research extensively. Understanding al the indicators of a good stock and how to read the charts will help you from make bad investments.
You could also go a little safer and look at stocks that pay dividends each year. This gets you away from just watching stock prices and maybe a little safer. Either way, do your research.
As with ETFs, you can avoid paying any fees on trades by using Ally Invest as your brokerage. They also have great tools for researching your stock investing.
A $70,000 investment is enough to get you started with one or several real estate investment properties.
Whether you want to do a flip or are looking to get into rental properties, real estate can be a great investment if you do your research and know your market.
College seems to be getting more and more expensive with every passing year. That means if you are going to go to school for yourself or if you plan for your kids to attend, you will need to have some money ready to go.
A 529 college savings plan allows you to invest that money and have it grow tax-free. Since you have already paid taxes on the money when it goes in, you do not have to pay taxes when taking it out.
A state government administers each of the 529 plans, and some states will let you write off the contribution on your state taxes.
If you have a small business or are have an idea for one, investing $70,000 into it can lead to massive growth and gains.
Another option would be to invest in someone else’s business and become a silent partner. No matter which way you go, do your homework, make a plan, and make sure to execute. Small business is not for the faint of heart.
While donating to charity is not going to give you a financial return, it will provide you with a fantastic return on your investment.
When you look at different bible verses on giving, it becomes clear that one of the reasons we were created was to give to others. When we give to our local church or other charities is brings life into perspective and helps us appreciate what we have.
Also, when you see the money you donated, improving the lives of others, that is a feeling you cannot trade for all the money in the world.
How I Would Invest $70,000
Running different scenarios with friends and family is a great way to make sure you are investing properly.
Here is how I would invest $70k if I just received it as a lump sum payment.
My family puts a priority on tithing. That means we give 10% of the gross of everything we make to our local church.
Since this is money that came as a lump sum payment, we would immediately make a $7,000 investment in our church.
Retirement Accounts ($15,000)
Not paying Uncle Sam money is a big deal when you are looking at investments. If you put your entire $70k into regular investments without tax advantages, then you are probably going to pay about 20% in taxes.
I want to diversify my investments and have access to much of this money before retirement, so $15,000 invested in retirement accounts is right for me. You may want to max these out if you have a lot of taxes or haven’t done much retirement investing in the past.
I do a lot of investing in accounts where I can set and forget. Betterment makes this easier than just about any other brokerage.
Not only do I not have to do any research, they even have ways of reducing the taxes that I pay. As I said before, if you are looking for hands-off options, Betterment is the brokerage you want.
Fundrise is a great place to put money and let it work for you. Not only do you get out of the stock market, but you also get to enjoy the benefits of high-level real estate investors doing all the work for you.
This $10,000 investment is a definite diversity and hands-off investing play.
I do almost all my investing for retirement into mutual funds and ETFs. I would, however, like to try my hand at buying stocks.
Investing $9,000 into me learning different forms of stock investing is worth it to gain the knowledge.
I have three kids and make it a priority to put money away for their college or trade training. Also, my wife is a teacher, so if she wants to get her masters, that translates into a better pension at retirement.
An $8,000 investment into either of those options is well worth not having that money working in other areas.
Worthy Bonds ($5,000)
I love the diversification into small business loans that Worthy Bonds provides. Along with all assets being liquid, this is an easy win at 5% interest.
While a $5,000 investment is less than 10% of my total, I will probably use these funds on some other more lucrative investment down the road.
Savings Account ($3,000)
Even though we already have an emergency fund, I like to keep some money liquid should another opportunity arise. Having another $3,000 for investing in something down the road helps me be ready for a deal.
Fun with Kids ($2,000)
This could be a simple trip with my family or several day trips that are low cost. I cannot replace the few years I have with my children all in the house, so we will be making fun family time a priority until they get out on their own.
An investment of $2,000 may not be enough to do a lot of things, but it can buy many memories that I will not have the chance to ever make later in life.
My wife and I are very frugal, but we consistently invest in our marriage. Whether that is weekly date nights or short trips by ourselves, we make the investment in us.
The reason we do this is that our kids will be out of the house in less than 15 years. When they are all gone, we want to be able to enjoy each other, not strangers learning each other again. A $1,000 investment in us isn’t a lot, but it pays major dividends.
Final Thoughts on Investing 70k Dollars
You probably noticed that not only do I want to make sure I am diversifying my investments for financial gain, I also want to make sure that I am investing in a way that balances my life.
Does that mean that not every penny is maximized for making the most money? Absolutely!
What this type of investing does is make sure that not only do I get to the finish line, I also lived a good life while getting there.
Every person needs to figure out exactly what that balance is for them. It’s going to be different if you are single or marries, with or without children, fun or not fun (just kidding!).
What matters is that we use our financial lives to not only prepare for the future but make sure the present is pretty awesome too.