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How to Invest $25k: 19 Safe Methods (2024 Guide)

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  By Forrest McCall | Last Updated:  January 26, 2022

If you have $25k to invest, you might be wondering what your options are? What are the best ways to invest $25,000?

Maybe you're looking for the safest way to invest $25k. There are many things you can do with a large lump sum of cash, but some are better than others.

In this post, I'll explore how to invest $25k to optimize returns and limit risk, what to do before investing $25,000, how to double $25k, and much more. Let's get started!

Best Ways to Invest $25,000

19 Best Ways to Invest $25k

These are the best ways to invest $25,000 to grow your money and build wealth. When learning how to invest $25k, remember to consult an investment advisor to account for your unique financial situation.

Invest $25k in Index Funds

Invest $25k in Index Funds

Index funds are a great way to invest in the stock market and earn passive income from your money.

By investing $25k into index funds, you can earn returns of around 7% to 10% per year. Many financial advisors recommend index funds because they are a simple investment with solid diversification that offer strong returns.

What is an index fund?

In simplest terms, you can think of an index fund as a large group of individual stocks that you can invest in. They are traded through the stock market on a stock exchange and can be purchased through almost all brokerage accounts or robo advisors.

Some of the best index funds include:

  • Schwab S&P 500 Index Fund (SWPPX)
  • Fidelity Zero large Cap Index (FNILX)
  • Shelton NASDAQ-100 Index Direct (NASDX)

It's hard to go wrong when it comes to index fund investing.

When you have a large lump sum of cash to invest, the best way to invest it is by using the dollar cost average method in which you routinely purchase the index fund so you don't invest all of your money before a significant drop in the market. By using this strategy, you can limit some risk that comes with making a significant investment.

Not sure how to get started investing in index funds?

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Invest $25,000 in Crowdfunded Real Estate

Invest in Crowdfunded Real Estate

Crowdfunded real estate is another great investment vehicle to increase your wealth.

With crowdfunded real estate, you can invest in commercial and residential properties without needing a massive lump sum of cash.

It works by pooling money together from many investors enabling the fund to purchase these massive real estate assets.

Because real estate investments offer multiple ways of generating income, it's a great method to grow your wealth.

By investing $25k into crowdfunded real estate, you can expect to earn around 11% on average per year. These returns can fluctuate depending on market conditions but it's an excellent passive investing strategy to boost your earnings.

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Invest $25k in Mutual Funds

Invest in Mutual Funds

Mutual funds are another method to grow your wealth in the stock market.

With mutual funds, a team of professional investors chooses stocks based on a specific set of criteria for the fund.

The money from the mutual fund is then divided among these stocks to diversify your investments and limit risk.

Mutual funds can have higher fees when compared to other stock market investments because they are more actively managed.

How much money can you make by investing $25k in a mutual fund?

Ultimately it will depend on the fund. Past performance suggests that many mutual funds can grow at a rate of 7% to 10% annually.

Overall, mutual funds are well received in the financial world and are a superb way to diversify your investment portfolio and make more money.

You can invest in mutual funds through a traditional brokerage account or through robo advisors like Acorns. Register below to claim your free $10!

Invest $25,000 in Rental Properties

Invest in Rental Properties

Looking to invest $25k in an appreciating asset that generates cash flow and has tax benefits?

That’s precisely what rental properties can be!

Many people have achieved financial freedom by investing in rental real estate – making it a trusted way to build wealth in the long term.

So how can you use rental properties to reach your investing goals?

It starts by acquiring a property. This tends to be the most difficult part of the entire process. Depending on your situation, you’ll likely need at least 20% for a down payment on an investment property mortgage.

However, if the property is highly distressed, the bank might not loan you any money at all.

Other options for funding your real estate venture include obtaining a hard money loan or forming a partnership with an investor to get the capital you need.

If you have $25k to invest, this would net you a property just over $100,000 – so you might need some additional funding depending on your area.

Once you obtain the property, it’s time to get it rented. Understanding the rental market and how to price your rental can be challenging for beginners.

Try to find similar properties around your home to get a better idea of your individual market.

If you do not have any experience with rental real estate, you might consider hiring a property management company to complete this for you. In addition, these companies will collect rent payments, deal with tenants, and much more. However, this does come with a cost. Most firms will charge a 10% fee to manage your rental property.

TIP: If you want your real estate investment to be passive, hire a property management company.

If you decide to manage the property yourself, you’ll need to draft a lease agreement and have it reviewed professionally to protect yourself and your assets.

Once you have a lease agreement in good condition, it’s time to put your property up for rent. You’ll need to market your property to attract potential tenants.

If you have applicants, you’ll need to vet them to ensure they will make payments on time and keep your property in good condition.

You can purchase software to help you with this process. It’s wise to communicate with their current employer and any references they provide to ensure they can be trusted with your property.

Finally, you’ll need to collect a security deposit (if applicable) and have them move in.

The most attractive part of rental real estate is the amount of money you can make. While your profits will ultimately depend on your individual property, it’s possible to make over 20% annually for some properties.

Related: How to Invest 10k in Real Estate

Invest in Art

Art investing is one of the more robust alternative investments that the average investor doesn’t think of.

But with platforms like Masterworks you can start investing money into famous pieces of artwork to make passive income.

The amount of money you can make with this investment varies, but Masterworks has held an average return of 15% over the past few years. Register below to get started!

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Invest in Crypto to Build Wealth

Invest in Cryptocurrency

Cryptocurrency is another great alternative investment that can be a great way to add diversity to your investment strategy.

While I certainly wouldn’t recommend investing all $25k into cryptocurrency, holding a small portion can be a great way to optimize your returns.

With so many different cryptocurrencies it can be easy to get overwhelmed. That’s why I recommend sticking to some of the most popular coins like Bitcoin and Ethereum.

In the crypto world, it's common to see swings in prices of anywhere from 2% to over 25% some days. Cryptocurrency is an extremely volatile asset so be sure you can afford to lose any money that you invest.

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Invest in Peer to Peer Lending

Peer-to-peer lending can be a simple way to earn passive income and grow your wealth by lending money to others in exchange for interest payments.

The amount of money you can make will depend on your risk tolerance. Borrowers with a lower credit score can yield much more, but you’ll assume more risk. Borrowers with stronger credit will be much less risky but will also yield less.

With peer-to-peer lending, it's possible to make anywhere from 3% to over 8%, depending on the borrower's credit. You can use platforms like Prosper or Peerform to get started.

Related: Investments That Pay You Every Month

Invest in REITs

Invest in REITs

Want to invest in real estate without dealing with tenants, collecting rent payments, and managing a property?

That’s where REITs come into play.

Similar to crowdfunded real estate, investing in a real estate investment trust can be a great way to grow your money.

REITs are a publicly-traded stock that focus on real estate assets to make money. You can invest in REITs through most online brokers or robo advisors to get started. Don't forget to claim your free $10 with Acorns!

The amount of money you can make is quite substantial, ranging from 5% to over 15% annually.

Some of my favorite REITs include:

  • W. P. Carey (WPC)
  • Iron Mountain (IRM)
  • Store Capital (STOR)
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Invest in Bonds to Make Money

Invest in Bonds

Bonds are some of the best low-risk investments to round out your portfolio to earn compound interest.

There are several kinds of bonds you can invest in including treasury bonds, corporate bonds, and municipal bonds.

Treasury bonds (also called government bonds) tend to have the lowest interest rate because they are also the safest investment.

Corporate bonds can have much higher interest rates but they also come with more risk.

Depending on your risk tolerance, bonds can be a good way to diversify your portfolio and invest $25,000 safely.

Related: How to Double $50k

Invest in Precious Metals

Invest in Precious Metals

Precious metals are a solid tangible investment that you can use to keep your money safe.

Many personal finance experts see precious metals as a way to protect your money against inflation.

If you have a low-risk tolerance and want to keep your initial investment safe, consider investing in precious metals like gold, silver, or platinum.

Invest in ETFs

ETFs (or exchange traded funds) are just like mutual funds except they are not actively managed. This means they have lower fees and are perfect low cost investment vehicles to increase your net worth.

Some of my favorite ETFs include:

  • Vanguard S&P 500 ETF (VOO)
  • SPDR S&P 500 ETF Trust (SPY)
  • Vanguard Russell 2000 ETF (VTWO)

Just like with other investments in the stock market, you can use a traditional brokerage account or a robo advisor to invest your money.

Related: How to Invest and Make Money Daily

Invest in a High Yield Savings Account

While I wouldn’t necessarily consider high yield savings accounts an investment – they're a great way to generate interest when saving money.

If you want to ensure you won’t start losing money, opening a high interest savings account can be the easiest way to earn money.

My favorite high yield savings account is through CIT Bank. You can earn up to 10 times the national average on a traditional savings account so why not give it a try?

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Open a Money Market Account

A money market account is similar to many savings accounts except they pay higher interest rates.

While you cannot write checks or easily pay bills with a money market account, they can be great to store money for longer periods of time.

These accounts tend to have a higher interest rate than normal savings accounts – so keep this in mind!

Related: How to Invest $200k: 16 Safe Ways

Consider a CD

A certificate of deposit is extremely similar to a money market account and high interest savings accounts.

While the returns are nothing to boast about, it's one of the safest ways to store your money and make a little money with virtually no risk.

CDs require you to store your money for a certain amount of time and making a withdrawal before can trigger a penalty. Rates for CDs are currently less than 1% annually but it will depend on the bank you choose.

Build Wealth by Starting a Business

Starting a business can be one of the riskier investment ideas on this list, but it can also be the most profitable. While you might be thinking you need the next big idea for this method, that's certainly not the case.

I prefer businesses that are low-cost and don't require a ton of effort to start. For example, starting a lawn care business can cost less than $10,000 and earn you thousands of dollars each month.

Starting a business will require more work than any other idea. You’ll need to have a solid business plan to start and grow a successful business.

Starting a business requires a unique skill set that not everyone has. If you have some extra cash and you love business, consider starting your next venture to build wealth.

Build Wealth with Individual Stocks

Individual stocks can be a riskier way to invest $25k but if you pick the right stock, it can pay off big time.

If can be extremely difficult to make a living trading stocks, but some investors are capable of doing it. If you have a system for finding undervalued stocks, this can be a good way to grow your money.

Use Annuities for Residual Income

Annuities are another way to make recurring income from your money. While this investment doesn't have the strongest returns, it's a good way to ensure you have funds coming in on a routine basis.

Your returns are very safe with annuities making them a great way to save money and build wealth.

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Invest $25,000 with Retirement Accounts

While this isn’t a specific investment, investing via retirement accounts like a 401k, Roth IRA, or traditional IRA are great ways to grow your net worth with tax benefits.

With these accounts, you can invest in the stock market and grow your money without a massive tax burden come tax season.

For example, a 401k retirement account allows you to invest pre-tax dollars into the stock market and withdraw tax-free once you reach retirement age.

Another benefit of a 401k is that many employers will offer some sort of match on your contributions. It’s literally free money!

An individual retirement account allows you to invest post-tax earnings and withdraw your money tax-free.

Retirement accounts are an essential way to save money for your retirement and can be an excellent way to build wealth for the future.

There is one main drawback to these accounts, however. You can face large penalties if you withdraw your money before the age of 59 1/2.

This can cost you tens of thousands of dollars between penalty payments and taxes assessed so be sure you're willing to keep money in these accounts for the long term.

If you want to retire early, you'll want to utilize additional accounts that do not have penalties to reach your financial goals.

Furthering Education

Invest in Yourself for Future Income

Investing in yourself is one of the most forgotten ways to grow your future earnings.

Investing in yourself could mean an assortment of things. For example, furthering your education is one great way to grow your knowledge and make more money in the future from it.

Here are some other ways to invest in yourself:

  • Exercising
  • Taking some time away from work
  • Seeing a therapist

What to do before investing $25,000?

If you have $25,000 to invest, there are a few other situations to consider before investing all of your capital.

Establish an Emergency Fund

Having an emergency fund is vital for your finances to help you deal with unexpected expenses that will eventually arise.

To build an emergency fund, start by aiming to accumulate around 6 months of your normal monthly living expenses. This should include things like your rent or mortgage payment, car payments, groceries, utility bills, and any other monthly expenses you may have.

Your emergency savings should only be used for true emergencies. Many people make the mistake of using their emergency fund for things like car maintenance, home maintenance, and other expenses that should be a part of your budget.

Expenses like an unexpected hospital trip, car repairs, or a job loss are great examples of when it's time to use your emergency fund to keep your bills paid.

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Pay Off High Interest Debt

If you have high interest debts like credit card debt, personal loans, or some student loans, it's a good idea to pay these off before investing $25k.

The reasoning is actually quite easy to understand and it boils down to a simple math equation.

If the interest rate on your debts averages out to 10%, this is much higher than your potential returns when investing in the stock market or most other investments. This means that any returns you could potentially make would be offset by interest payments.

Another reason is that returns are never guaranteed with any investment. You could potentially lose money in the stock market which would bury you further in debt.

Fund Your HSA (If Applicable)

If you have a health savings account through your employer, it can be wise to deposit money into this account to save money for health costs.

When you have money in your HSA, you won't have to use the funds for health care costs like trips to the doctor's office or prescriptions.

By utilizing your HSA you can reduce your taxable income to save money come tax season. Employee contributions are limited to $3,650 in 2022.

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Budget Your Money

Budgeting is an essential part of your finances. Between living expenses like your mortgage and rent payments and your grocery bill, it can be easy to stretch your finances and limit your savings.

Budgeting is a great way to track your spending and ensure you have money left over at the end of the month to save or invest for the future.

To start budgeting, you can use an app like Mint to track your spending over the course of a few months.

Once you have a good idea of your monthly spending, you can create your budget and track your savings. You'll want to divide your money into several categories so you can keep tabs of how much money you're spending in certain areas.

It can take a few months to get used to your budget, but once you do it will be a great way to track your finances and set aside money for savings.

Tp track your wealth, I recommend using a platform like Personal Capital. It is highly recommended by many personal finance experts.

Best Short Term Investments with $25k

While investing should always be a long-term venture, some people might be looking for short-term investments for their money.

There are many short term investment options, but if you're looking to invest your $25k, some of my favorite options include:

What to Do with $25k

If you have $25k, you might be wondering what to do with it. Is investing $25k a good idea? Or should I do other things with my money? Below are the best things to do with $25,000.

Invest $25k to Better Your Finances

Investing $25,000 is your best option if you want to make more money and grow your personal finances.

With $25,000 you can afford to take on more risk while still having enough capital to take advantage of larger returns.

The amount of money you can make with $25,000 is enough to retire off of given enough time.

Donate Your Money

If you have $25k, another option would be to donate some (or all) of your money. If you're passionate about a certain cause, donating your money can make a big impact.

Donating money will not only help the charity you donate to but it can also make you feel better about yourself. Some people say that the money you donate and give back can help you to attract money in the future.

Help Out Friends and Family

If you have friends or family that are plagued by high interest debt, you might offer to help them out with your cash. This can go a long way in strengthening your relationships and helping others.

Purchase a Home

If you have $25k, that's a good chunk of a down payment for a home in some locations. Depending on the terms of your mortgage, you might be required to pay anywhere from 3.5% to 20% of the selling price as a down payment.

Some people view their primary residence as an investment because they are often appreciating assets – but I like to think of your home as a living expense that might make you money.

Investing $25,000

How to Double $25k

If you want to double $25k through your investment strategy, it could take some time. You can use the rule of 70 to help you determine how long it might take to double $25,000.

The rule of 70 states that the number of years it will take your money to double is equal to 70 divided by your rate of return.

For example, let's assume you invest in a mutual fund that returns 8% annually. The number of years it will take your money to double would equate to 8.75 years.

However, if you make an investment with an average return of 20%, it would only take 3.5 years to double your money.

You'll need to remember that the rule of 70 works on averages. Some years might be better than others and you might need to adjust your numbers depending on the investment horizon.

If your goal is to double your cash, learning how to invest $25k is vital. The best way to invest will depend on your situation, but's it's wise to find investments that are low cost so you don't end up losing money to unnecessary fees.

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How Can I Make Money with $25k?

If you have $25k in your bank account and you want to make money with it, the good news is that there are plenty of options.

Investing $25,000 for income will require you to find opportunities that offer cash flow like investing in a dividend mutual fund, starting a cash flowing business, or obtaining rental properties to receive rent payments.

With $25k, it's possible to earn $2,000 to $5,000 per year with your money depending on the investments you choose.

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Final Thoughts on How to Invest $25k

There are many profitable ways to invest $25k. Between investing in the stock market, starting your own business, or real estate investments, it’s hard to go wrong. But understanding how to invest $25k is something you'll want to take your time when researching.

When you start investing, you’ll want to spread your money out over several asset classes so you don’t put all your eggs in one basket. This will help to maximize your returns and limit risk.

Only invest money that you can afford to lose and consult a financial advisor for more information. Always remember that past performance is not a guarantee of future performance.


Forrest is a personal finance, entrepreneurship, and investing expert dedicated to helping others obtain life long wealth. He has a Bachelor's degree in business and has been featured in many popular publications including Forbes, Business Insider, Bankrate, CNET Money, and many others. To learn more about Forrest, visit the About Us Page for more info.
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