If you’ve accumulated $10,000 through saving or you’ve come across a windfall, you might be wondering how to best put those dollars to work. To find out what investors would do with that cash, Empower surveyed over 1,000 stock owners and asked them how they would invest $10,000.
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Here’s what they said — and what financial experts say you should do.
The largest proportion of the investors surveyed — 35% — said they would invest $10,000 in stocks. Robert R. Johnson, Ph.D., CFA, professor of finance at the Heider College of Business at Creighton University, believes this is a wise investment, particularly if you invest in an index fund or exchange-traded fund (ETF) rather than individual stocks.
“People should invest in a low-fee, diversified equity index fund and continue to invest consistently whether the market is up, down or sideways,” he said.
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Adding the funds to a retirement account was the second most popular response, with 32% of investors saying they would put that money away for the long term.
“Retirement accounts are important to invest in for your future,” said David Kemmerer, CEO of CoinLedger.
This can be an especially good option for those looking to catch up on savings.
“For example, if a person is in their late 40s and is behind on their retirement savings, they may want to increase the percentage they invest into their retirement accounts,” Kemmerer said.
Eighteen percent of stock owners said they would invest the $10,000 in real estate. While this can be a good investment for the long term, this would not be a wise choice for someone who wants easy access to these funds.
“I wouldn’t recommend real estate,” said Adam Koprucki, founder at RealWorldInvestor.com. “It is illiquid, meaning you cannot easily buy or sell real estate. So if you unexpectedly need money, you’re generally unable to access your funds when [they are] invested in real estate.”
A small portion of stock owners (12%) said they would not invest the $10,000 at all. Instead, they would hold onto it as cash.
This may be the best choice for anyone who knows they will need those funds in the short term, said Keith Jones, senior financial advisor at Empower.
“How and where you invest depends on your individual financial goals,” he said. “If you’re someone who is going to need that money within the next one to two years, they most likely shouldn’t invest at all.”
