So you've come into some money and you're looking to invest it.
Investing can be a great way to grow your money, but it's important to do it carefully as you could risk losing your small fortune by making the wrong investments.
If you invest wisely, you can easily grow your $250k into $1 million or more over a few years.
In this post, I'll explore how to invest $250k, some tips to maximize your returns, and much more. Let's get started!
How to Invest $250k
1. Invest in Rental Properties with Arrived
One of the best investments you can make with $250k is in real estate. Real estate is a more stable investment that can produce great returns on your money.
With Arrived, you can invest in individual rental properties with just $100 – meaning just about anyone can get started.
The income generated from the property is then distributed to everyone who funded the deal each quarter. Best of all, there's no work on your part and you can choose the exact properties you want to invest in.
Overall, this is an excellent way to invest a portion of your portfolio to generate great returns while keeping your risk low.
$100 minimum investment so anyone can get started
- Access to individual properties so you can pick and choose which properties to fund
- Quarterly payouts depending on your properties performance
- Open to both accredited and non accredited investors
- Minimal 1% management fee
- Some offerings are funded quickly
2. Crowdfunded Real Estate with Realty Mogul
You can get started with as little as $5,000, but you can unlock more features and investment opportunities when you invest more.
The average returns on Realty Mogul are around 15%, but you could potentially make more with a some investments.
These platforms work by crowdsourcing money to purchase larger investments that would be difficult to invest in on your own.
For example, if you wanted to start investing in apartment buildings, you would need millions of dollars to buy an entire property.
However, with crowdfunded real estate, you can invest as little as $5,000 and own a small portion of the entire property.
The beautiful part is that once you invest, you don't have to do additional work like vetting new tenants, keeping up with maintenance requests, or any other work that comes with real estate.
3. Invest in Commercial Real Estate
Commercial real estate focuses on buildings or properties that are dedicated to business purposes. This could include anything like office buildings, warehouses, retail space, and much more.
Investing in commercial real estate is a great way to grow your money as it can offer high returns and strong appreciation.
Commercial real estate is known to be a great hedge against inflation because as the cost of living goes up, so does the rent on commercial properties.
Plus, if you choose to invest in a popular area, you can also benefit from the appreciation of the land value. Most people overlook the value of the land real estate is on, but it's a critical component of your overall returns.
Another key benefit of commercial property is that retail locations have strong interests in maintaining the look of the property to attract new customers to their store. This can mean less maintenance and hassle because it's in the tenants best interest. For example, because they want to attract visitors, they might clean their windows routinely.
The one main downside of commercial real estate is that it's a more illiquid investment, meaning it can be harder to sell your property if you need the money quickly.
And you don't need a fortune to get started. By using a platform like EquityMultiple, you can start investing in commercial real estate with just $5,000. You'll need to be an accredited investor to get started, otherwise you can invest with Streitwise.
4. Invest in Real Estate Debts
Another way to get started with real estate investing is through a lesser known method like real estate debts.
In simple terms, this is when you lend money to a real estate investor who uses it to complete an investment of their own.
For example, if a house flipper needs $100,000 to buy and fix up a house, they might take out a loan from a lending platform like Groundfloor in order to pay for new carpet or cabinets for their project.
For investors and people looking to make money, this can be a tremendous way to earn passive income as you can collect interest payments on the money you lend.
And for borrowers, they can get the financing they need to grow their business. It's a win win for both parties.
You can get started with as little as $10 with Groundfloor and it can be an excellent way to invest $250k.
REITs (Real Estate Investment Trusts) are a special type of investment fund that own, operate, or finance income-producing real estate assets across the country.
You can think of them as an investment fund specifically designed for real estate, similar to a mutual fund.
REITs are a great way to invest in real estate without having to actually buy or manage any property, just like crowdfunding.
Plus, they offer high dividends and are relatively stable investments when compared to other investments.
Investing in REITs is attractive because just like crowdfunded real estate, you don't need a fortune to get started and you can generate strong returns.
6. Purchase Your Own Rental Properties
Rental properties can be the most lucrative real estate investment to invest $250k.
Rental properties can make money through multiple ways including:
- Rental income – the money you collect each month from tenants
- Appreciation – the increase in value of your property when you sell
- Equity – if you have a mortgage you'll build equity each month you pay it
- Rental appreciation – as your property increases in value, so will the rental income
There are many different types of rental properties you can invest in.
Some investors might prefer working on long term rentals via single family homes.
Others might prefer to invest in vacation rentals through sites like Airbnb.
No matter which method you choose, rental properties can offer a great return on investment.
As the real estate market continues to grow and property values increase – real estate can be one of the best ways to earn passive income and achieve a financially successful future.
However, rental properties will require much more work and money to get going.
For example, you'll need to collect monthly rent payments, pay for repairs and maintenance, and deal with difficult tenants – all of which can be a pain.
To combat this additional work, some rental owners will hire a property management company to do the work for them.
This can alleviate some of the headache that comes with being a landlord but it comes at a cost.
Most property management companies will charge around 10% of your rental income plus a placement fee for finding a tenant for your property.
This means if you charge $1,500 a month for rent, they will take $150 plus a fee for finding tenants.
Having a property manager is nice – but it does eat into your profits, so you'll want to determine if the reduced cash flow is worth it.
But if you're willing to put in the work, rental properties can be a great way to make money on autopilot.
You can also checkout my Fundrise vs rental property comparison to make the best decision!
7. Invest in Index Funds with Acorns
The stock market is another great place to invest your $250k if you're looking for a relatively safe and rewarding option.
While you can certainly lose money in the stock market, it's also one of the best places to grow your money over the long term.
Index funds are one of the most popular stock market investments that many people use to earn passive income for a few good reasons.
First, they're much safer than individual stocks. Because you're investing in many stocks at once, there's a smaller chance you'll lose money from your investments.
Secondly, you can easily invest without having to complete hours of research to find the stocks you want to invest in. Simply invest in a single index fund and watch your money grow.
For example, the S&P 500 has averaged an annual return of 10% over the last 50 years.
So if you invested $250,000 in an S&P 500 Index fund, your investment would be worth over $4 million after 30 years.
That's a pretty impressive return!
There are many different index funds you can invest in, each with its own specific risk and return so be sure to do your research before investing.
8. Invest in ETFs
ETFs, or exchange traded funds, are similar to index funds but with a slight difference.
The only real difference is that ETFs can be bought and sold during normal trading hours whereas index funds can only be traded at the end of the day.
Otherwise, they're essentially the same thing making each of them a worthwhile investment!
9. Mutual Funds
Mutual funds are an easy way to build wealth in the stock market and are also similar to ETFs and index funds, but it have a key difference that's important to consider.
Mutual funds are actively managed, which means there is a human behind the scenes making decisions about which investments the fund holds.
This means they can outperform other stock market investing methods, BUT – you have to consider the fees. Mutual funds have higher fees than ETFs and index funds so it's often a breakeven with the stronger performance.
You can purchase mutual funds with a traditional brokerage account or through a robo advisor like Acorns.
10. Dividend Stocks
Investing $250k in dividend stocks is a reliable way to generate income over time from your investments.
But what exactly are dividends and why do investors love them so much?
Dividend payments are a portion of a company's profits that are distributed to shareholders. Whenever a company makes a profit, they can choose to reinvest their profits back into the business to grow it further, or give it out to shareholders in the form of cash payments.
Dividends are typically paid out quarterly, but some companies also pay monthly or yearly dividends. It's up to the company to decide how often they pay dividends.
So why do investors crave dividends?
It's a great way to generate cash from your investments. Instead of seeing the value of a stock go up and up on a computer screen, you'll receive physical cash.
Some people even live off dividends alone, making it a great option if you want to invest $250k for income.
11. Individual Growth Stocks
Just like dividend stocks, growth stocks can be another lucrative method to invest $250k.
With this method, you're essentially betting on an individual company to increase in value and raise their market cap.
If you can't tell already, this can be risky. I wouldn't invest all $250k into individual stocks, but if you have some companies you really believe in, they can be a wise investment.
You can use a standard brokerage account like M1 Finance to invest in individual stocks.
12. Invest in Small Businesses
Did you know that it's possible to invest in small businesses?
You can do this through platforms like Mainvest with the click of a button.
Mainvest allows you to invest in a variety of small businesses across the country with as little as $100.
From breweries, to restaurants, and many other types of businesses – it's never been easier to diversify your investment strategy and invest in small businesses.
Not only is investing in small businesses a great way to diversify your portfolio, but it's also a great way to support your local community.
Create your free Mainvest account below to get started!
13. Bond Investing
When you think of bonds, you probably don't think of them as a great way to build wealth. But they certainly can be.
There are several different types of bonds you can invest in. For example, government or treasury bonds will offer more safety and security while corporate bonds will offer a better yield.
Bonds can be a great addition to your portfolio when you invest $250k. I'd highly recommend holding a small portion of your investments in bonds.
Check out the video below for more info on investing in bonds!
14. Start Your Own Business
If you've ever wanted to start your own business, there's no better opportunity than when you have a large amount of cash.
While I wouldn't recommend investing all of your money in a new business idea, there are tons of small business ideas you can get off the ground for under a few thousand dollars.
You can also opt to buy an existing business with this amount of money. If you do this, you can bypass the difficulties of growing a business from scratch – which can make your job easier.
15. High Yield Savings Accounts
A high yield savings account is a type of savings account that offers a higher interest rate than a traditional savings account.
This means you can earn more money on your savings without doing anything.
High yield savings accounts are a great way to grow your money without taking on too much risk.
Because your account is backed by the FDIC, you know your money is safe and you won't lose any of it.
The only downside is that the interest rate may not be as high as other investments, but it's still a great way to grow your money.
You can open a high yield savings account with banks like CIT Bank with as little as $100 – making it a no brainer decision for anyone.
16. Alternative Investments
There are many alternative investment ideas that many new investors overlook.
From investing in wine to investing in artwork, there are many unique ways to invest your money.
Some of these methods can help to boost your overall investment returns while others can provide you with a more passive income.
17. Retirement Accounts
If you're nearing retirement age, it's important to start thinking about how you're going to invest your money for the future.
There are many different retirement accounts that you can choose from, each with their own set of rules and regulations.
The most important thing is to start saving for retirement as early as possible.
The sooner you start, the more time your money has to grow.
Tax advantaged retirement plans like a 401k or IRA are a great way to save for retirement.
A 401k is a tax advantaged retirement plan that allows you to save for retirement with pretax dollars.
This means you can save more money for retirement because you won't have to pay taxes on the money you put into your account.
Many employers will offer a contribution match of some sort – which is essentially free money that is invested for you.
An IRA is a retirement account that allows you to contribute after tax dollars.
You won't get a tax deduction for the money you contribute, but you will be able to grow your money tax free.
Both of these retirement accounts are a great way to save for your future and invest your money.
18. Invest in Cryptocurrency
As cryptocurrency continues to gain mainstream acceptance, it's hard to go against this investment trend.
There are many different types of cryptocurrency that you can invest in, each with their own set of benefits and risks.
However, this form of digital real estate investing can be extremely volatile.
It's common to see swings of prices of 10% throughout the day, so if you have a low risk tolerance this investment vehicle might not be the best option for your portfolio.
You can use a platform like Binance to start investing with as little as $10! Create your free account below to get started!
19. Precious Metals
Precious metals are a great way to invest in tangible assets.
From gold to silver, these metals have been used as a form of currency and investment for centuries.
One of the benefits of investing in precious metals is that they can act as a hedge against inflation.
This means that if the price of gold goes up, the purchasing power of your money goes up as well.
Another benefit is that precious metals can be stored and don't take up a lot of space.
This makes them a great option for investors who want to diversify their portfolio but don't have a lot of space to store physical assets.
20. Peer to Peer Lending
Peer to peer lending is a popular way to invest money and earn passive income from your money.
This form of investing is similar to bonds, expect instead of loaning money to companies or the government, you'll loan your money to other people – or peers.
Your returns are ultimately based on the creditworthiness of the borrower.
For borrowers with great credit, interest rates will be lower. For borrowers with poor credit, interest rates will be much higher.
Balancing your risk and reward is key with peer to peer lending to ensure you don't lose your money while still earning a decent return.
21. Invest in Yourself
Many famous investors have said that the best investment you can make is in yourself.
By investing in yourself, you're able to improve your skillset and knowledge base.
This can lead to better job opportunities and higher earnings potential.
There are many different ways to invest in yourself, from taking courses and getting certifications, to reading books and listening to podcasts.
No matter what method you choose, investing in yourself is one of the best ways to grow your wealth. Check out the video below for a few ideas on investing in yourself.
How to Invest $250k for Income
The best way to invest $250k for income is to invest in a combination of real estate, bonds, dividend stocks, and a high yield savings accounts.
This will give you a diversified portfolio that will provide you with a steady stream of income.
Bonds and high yield savings accounts are a great investment because they're relatively safe and provide a guaranteed return on your investment.
Real estate and dividend stocks are a great investment because they offer the potential for high returns and provide you with a stream of income.
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How to Invest $250k in Real Estate
If you want to reach financial freedom, investing in real estate is a no brainer.
But what's the best way to invest $250k in real estate?
Some of the best methods include:
- Investing in crowdfunded real estate with Realty Mogul
- Purchasing an investment property or investing with Arrived
- Investing in real estate debt with Groundfloor
- Invest in commercial real estate with EquityMultiple
How to Turn $250k into $1 Million
If you want to turn $250k into $1 million, I recommend a mix of index funds, real estate investments, and a high yield savings account.
By keeping your portfolio diversified, you can turn your $250k into $1 million faster than you might think.
While it's not going to happen overnight, it will realistically take around 15 years to 4x your money.
Safest Way to Invest $250,000
Some methods of investing are safer than others. Depending on your risk tolerance – it might be wise to allocate assets into different types of investments to reach your goals.
If you want a secure financial future, you'll want to invest your money in a safe manner. This could include investing in:
- High yield savings accounts
- Dividend stocks
- Real estate
These are all relatively safe investments that will help you reach your financial goals.
How much interest will you earn each year with $250,000?
The amount of interest you can make from a $250,000 investment will depend on the type of investing and amount of risk you're willing to take. Assuming a diversified portfolio that returns 7%, you can earn $17,500 per year in interest.
Is $250k a lot of money in savings?
Yes! $250,000 is a significant amount of money to have in your savings, especially if you're under the age of 60.
Before You Invest
Before investing your money, there are a few considerations you should take into account.
Do you have an emergency fund?
Having an established emergency fund is essential before you start investing.
This will ensure that you have money to cover unexpected expenses in case your investments don't perform as well as you'd hoped.
You should have at least 3-6 months of living expenses saved in an emergency fund before you start investing.
There are many examples of times to use emergency funds such as a job loss, medical bills, unexpected car repairs. or a few other expenses.
Do you have debt?
If you have large amounts of debts, you should focus on paying those off before investing.
This is because the interest you're paying on your debt is likely higher than the returns you would receive from investing.
For example, if you have credit card debt or personal loans with interest rates larger than 10% – you should always focus on paying these down before making any investments.
By paying off your debt, you're essentially earning a guaranteed return on your investment.
What are your financial goals?
Before investing, you should have a clear understanding of your financial goals. Are you looking to grow your wealth?
Are you looking to generate income? Are you looking to preserve your capital?
Your investment strategy should be aligned with your financial goals.
For example, if you're looking to generate income, investing in high yield savings accounts or bonds is a good idea.
On the other hand, if you're looking to grow your wealth, investing in stocks or small businesses is a better idea.
What tax benefits can I take advantage of?
Making investments with tax advantages can help you to grow your wealth faster.
There are many different types of investment accounts and methods with tax benefits, such as 401(k)s, IRAs, and when you invest in real estate.
For example, real estate offers profound tax advantages, such as the ability to write off depreciation even with the housing market and real estate prices rising.
Limiting your short term capital gains taxes is critical to growing your investment portfolio.
Any time you can take advantage of a tax deduction or deferral, you should do so.
Final Thoughts on How to Invest $250k
Learning how to invest $250k is easier than you might think.
Between real estate, the stock market, and alternative investments, there are many options available to you.
The most important thing is to make sure you have a clear understanding of your financial goals before you start investing.
Once you know your goals, you can align your investment strategy and choose the best investments for you based on your risk tolerance
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