How To Invest $20k In 2021

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By: Scam Risk - Expert Reviewer

So, you’ve save up a decent amount of money!

We’re not talking about just enough for an emergency fund… no, you’re searching for ways to invest 20,000 into something that’s more long term, right?

A lot of people will suggest that you look into the stock market, try your had in real estate, or maybe they’ll even tell you that “California’s the place you ought to be” (if you know, then you know – LOL!).

But if you take a good hard look at the way things are today, you know that there’s really no such thing as saving yourself to retirement.

Especially if you take into consideration the last stock market boondoggle!

Check Out This Simple Way To Run A Digital Real Estate Empire Online
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Table of Contents

Anyone who has any degree of wealth will tell you that the most lucrative way to invest 20,000 would be to start your own business.

But what kind?

You may not see much in short term gains, but in the long run, your ROI over the following several years will be incredible!

The most ideal ways on how to invest 20k wouldn’t necessarily be real estate investment or sinking your money into a 401k… but into a business that you can do from home.

Now, we’ll cover things like investing in the stock market and cryptocurrency… selling products on Amazon, Affiliate Marketing, Network Marketing (MLM) and why these are all legitimate options.

Then lastly, we’ll go over our #1 way to make money online in 2021!

So let’s jump into it…

What Is The Best Way To Invest $20,000?

Now, it would be a good idea to make sure you have following things in place before you invest $20k:

  • Emergency Fund: Preferably, you would want to have a 3-6 month cushion for expenses in a high-yield savings account. So, the portion of your $20k invested will be based on your cost of living
  • No high-interest debt: Try to get your all or at least the majority of your debts paid off, this way you can avoid any high interest payments cutting into your investment dividends.
  • Your Child’s College Fund: Putting away some of your $20k for your child’s college education would also be a good decision.

Start Investing Into Your 401(k)

The way this works is that your employer contributes to your 401(k) directly out of your salary. So, if you want to invest more money into it, you’ll need to increase the % of your contribution. Of course, your paycheck will be smaller, you could make up the difference with your $20k investment.


  • Company Match: Your employer does a 1-to-1 match of your contribution, this is basically free money for you.
  • Tax Sheltered Account: You use pre-tax money to contribute to your 401(k) which decreases your annual tax bill.


  • Illiquid Investment: You’ll pay a penalty for withdrawing your money before the age of 59 1/2.
  • Direct Contributions are not allowed: You can’t make a one-time contribution because your employee deducts your 401(k) funds directly from your paycheck.
  • Minimum Distributions Required: Since the IRS essentially forces you to take payouts from your 401(k) at the age of 70 1/2, you could get placed into a higher tax bracket leaving less time for your assets to grow.


Robo-Advisor Investing

Robo-advisor investing is great for those investors who need professional direction from an investment advisor but doesn’t have the money to hire one.


  • Strategic Automation: Robo-advisors use your goals, timeline and risk tolerance to make recommendations for you portfolio.
  • Low Maintenance: By using rebalancing and tax-loss harvesting, Robo-advisors keeps your assets in line with your portfolio.
  • Low Fees: A Robo-advisor will typically cost you less than a conventional financial advisor.


  • Few Recommendations: The financial advice you get on how to invest 20k is actually Artificial Intelligence, and the quality will vary from company to company.
  • No live support: Unfortunately, there’s no real person to call when you have questions about your investment portfolio.

Invest In A Brokerage Account

If you would like to get started with an online broker since you’re more of a take control kind of investor, then $20k should be plenty


  • Variety: A lot of brokers provide stocks, bonds, ETFs and mutual funds options.
  • Freedom: You have total control over your investment account
  • 24/7 Support: A lot of the top online brokerage house provide investment advice with research centers, automated investment strategies and round-the-clock support


  • Possible mistakes: You might make mistakes that could take a big wet bite out of your $20k if you have little investing experience.
  • Fees: Quite a few online brokers have decided not to charge commissions for investment advice, but there are still some stragglers.

Invest In Real Estate

If you want to invest in real estate, there are still many crowdfunding sites you can join for under $10k.


  • Income Generation: Real estate investment typically pay out monthly or quarterly.
  • Pre-vetted Properties: A lot of these crowdfunding site will pre-vet so you don’t have to find properties on your own.
  • Tax Deductions: Direct investing can be deducted from your taxes.


  • Illiquid Investments: Real estate is known as an illiquid investment, this means that just because you’re ready to sell, there’s not guarantee someone else is ready to buy.
  • Accreditation Required: Even if you can make the min payment, you may still have to be an accredited investor for these platforms.
  • Fees Vary: Fees can be different based on individual investments and the platforms.

Invest in peer-to-peer lending

Peer-to-peer lending is when other are in need of money for investing and you lend it out to them.


  • Profitable returns: According to this 2018 Forbes article, may lenders see and ROI of more than 6%.
  • Passive Income: You get monthly dividends when borrowers repay the interest and principal.
  • Simplicity: For the most part, investing is much simpler than newbies than getting into stocks


  • Can’t get out of the loan. Once you commit to lending out funds, you can’t sell the loan to someone else.
  • Risk: Borrowers might on the loan, so in order to leverage the risk you’ll need to provide funding for various borrowers
  • You’re Stuck: Once you provide funding for the loan, you can’t take your initial investment back

9 Steps To Building Out Your $20,000 Investment Portfolio

So long as your immediate financial needs are taken care of, you should be in a good place to look at ways start building your investment portfolio. You can do this pretty easily with automatic investment plans.

Here are some of the best ways to get started on your journey to invest $20,000.

Step 1. Cover Your Financial Needs

If your goal is to invest $20k and you have other obligations that might take precedent over the short term, then it would be a good idea to consider the following before channeling your assets to your investments:

Build an Emergency Fund

Financial emergencies like a car that’s broken down or some home repair that was unexpected have a tendency to rear it’s ugly head. An emergency fund is kind of a savings account for these instances.

It also comes in handy when you unexpectedly lose a job or get laid off. For the most part, investors say to have an emergency fund that’s enough to cover you for 3-6 months.

Roughly 40% of the household in the U.S. can’t cover even a $400 emergency, this according to the Federal Reserve. If you can relate, it would be a good idea to build up your emergency fund prior to investing.

For the most part, you should keep your emergency fund within a high yield savings account. This is ideal due to the favorable interest rates and the ability to access your money when it’s necessary.

A Betterment Cash Reserve account really appeals to investors because it’s one that works hand in hand with other banks. Plus it’s FDIC insured so it’s safer than a standard savings account.

Pay Off Your Debt

Paying off high-interest debt is also a good idea before moving too much of your money into any of your nonretirement investments.

So let’s say you have credit cards that are costing you more than 20% in interest. You would actually get a better return by paying it off first than investing in the stock market and only getting a 10% yield.

It should always be a priority to pay of any extra debt so that you can have the necessary money for future investments. Aside from any long-term, low-interest debts (Mortgage, Student Loans), try to make it a point to get your debts paid off before investing $20,000.

Not only will this help in ramping up your investment returns, it will also help with your credit score.

Step 2. Invest in an Employer-sponsored Retirement Account

One of the best ways to save yourself on paying a lot in taxes is to invest in a retirement account that has inherent tax advantages like a 401(k), Roth IRA, or a conventional IRA.

For most people, the first investment they usually jump into is the 401(k) that’s offered through their employer. As it’s automatic, it’s a fantastic venue to get started investing.

A big drawback when dealing with 401(k) plans is the huge account management fees. So, if your investments are based on high-end funds, it will take a while for you investments to see their full potential. Worse yet if the options don’t offer the type of investments you prefer.

Regarding a 401(k) that is employer matched, the advantages of the tax benefits dwarf the downside risk. If you have the opportunity to get access to a 401(k) that offers an employer matching feature, then you should go all in… it’s FREE money!

Step 3. Invest in a Self-directed Retirement Account

Since accounts that are sponsored by your employer have a tendency to strap you with high fees and few choices for investment, you could open and IRA or Roth IRA at a brokerage of your choice.

IRA accounts typically don’t charge any recurring fees and they provide you access to just about every stock and ETF without a trading commission charge.

  • Like a 401(k), IRAs are pre-tax accounts. Which means that you don’t pay taxes on income that you use for investment. However, you will pay tax on any money that you pull out. Also the tax rate for retirement will be list than the rate you’re paying now.
  • Roth IRAs are post-tax accounts. Meaning that you pay taxes on the money you invest, but not on any qualified future withdrawals.

So, if it’s going to be a while before you retire, it would be better to go with a Roth IRA due to the fact that you won’t pay any tax on the money that your investments make. Now, if you really don’t have that long until retirement, then a traditional IRA would be a better option since you won’t taxed as much.

The IRS has set contribution limits on both Roth IRAs and traditional IRAs. For example, in 2021, if you’re under 50 yrs old, the most you can contribute is $6k.

Although, you CAN contribute as much as $7k if you’re over 50. However, keep in mind that there might be income limits.

Step 4. Invest With a Robo Advisor

Don’t know which investment to choose?

Robo Advisors are here to help. With a robo advisor, you can have a computer pick your investments for you after completing a short survey after joining.

Depending on whether your investment goals are short-term or long-term, your robo advisor will work hard to pick the best portfolio. Robo advisors typically offer taxable and retirement accounts.

Keep in mind that robo advisor portfolios aren’t totally based on an algorithm. For the most part, they are based on in depth research by real life managers.

For example, someone in their 30s will typically have the same retirement needs as other investors in their 30s, so it’s possible that you could do well with the same type of portfolios.

With all the technology that goes into robo advisors, they are usually quite a bit cheaper than a traditional financial advisor. In fact, some of the best robo advisors only charge as much a 0.25% annually, some just a flat fee, and some are even Free!

In order to create investment portfolios, most robo advisors use low-fee ETFs. If you’re still pretty new to the investment game, or would rather not get your hands dirty… then robo advisors are hands down the most cost efficient way to go.

Step 5. Invest in Stocks with a Brokerage Account

Now, I’m sure there are some of you who are pretty savvy when it comes to the stock market and you would rather build your own portfolio of stocks, ETFs, mutual funds and other investments. If so, then you should get your own brokerage account.

Of course, these account may not offer any special tax benefits; but they will permit you to make deposits and withdrawals, or make investment of your choosing.

Just like a bank account, a brokerage account is similar in many ways. However, rather than holding cash for you, it’s holds investment products.

A brokerage account also allows you to use checks for making purchases or withdrawing funds from the profits on your investments.

It’s also similar to retirement accounts in that you can set up a recurring deposit into your brokerage account to build out your portfolio. You could reach a $20,000 account balance in as little as 4 years by depositing just $100 per week barring any investment losses (or gains).

At Scam Risk, we believe investing with Ally Invest to be one of the best decisions for a newbie investor given the low fees and stellar customer service.

Step 6. Create a College Fund for Your Kids

College costs are sky-rocketing at an enormous rate in recent years. To counter this, you might consider opening a 529 college savings account.

529 plans are in many ways similar to Roth IRAs. You make contributions with after-tax money, but future withdrawals are tax-free.

You can join through your state’s 529 plan. Just make sure that you know the rules for investments and if they plans you want are offered.

Step 7. Invest in Real Estate

Of course, one of the best ways regarding how to invest 20k would be in both residential and commercial real estate. However, this require quite a bit more attention for the long-term in order to make your investment worth while.

You’re not limited to just rental property, however. There are many ways to invest in real estate with smaller amounts of money.

REITs (real estate investment trusts) is a type of stock specifically for real estate investments.

Though it is a requirement that REITs pay out dividends to their investors. These real estate stocks can be purchased with just about any brokerage account.

Now if you want to be more deliberate in your real estate investment, you could check out real estate crowdfunding platforms like Fundrise, Crowdstreet or Streitwise.

Now, you can certainly make money with real estate, but if you’re gonna put in the amount of grueling work to become a real estate investor (which, trust me, isn’t easy), you might as well bring in some REAL money.

The program that helped skyrocket my online business to $40,000+ per month teaches some of the real estate skills, but shows you how to monetize them in a much, MUCH more profitable way.

Step 8. Invest in Peer-to-Peer Lending

Peer-to-peer lending, or P2P, is when you make a loan to someone and they pay you back on the principal an interest of that loan. Kind of like a how a bank works. P2P platforms offer allow you to loan out money for home improvement, credit card consolidation, or just about anything else people would need.

One very popular P2P platform is Prosper. Just be aware that if your borrower defaults, your investment money will be at risk.

Peer-to-peer lending can be a great addition to your investment portfolio since it’s well-liked alternative to investments in the stock market. With a diverse portfolio, investors can see returns for many years.

Step 9. Align Your Investments With Your Needs

$20k is a great point at which to begin your investment career. However, it’s more than just the amount of the investment, it’s also about how to invest 20k. It’s a good idea to know why you’re investing. You may find that your investments far outweigh your risk tolerance as an investor. In which case, you should adjust your investments goals.

As a beginning investor, the goal of investing $20,ooo may seem somewhat daunting, but not unattainable. If you educated yourself and stick with an investment roadmap, you’ll be making thousands in short order.

It’s a matter of baby steps. And it all starts with that first dollar of investment.

Frequently Asked Questions

How Can I Boost My 401(k)?

You probably won’t be in the same career for the rest of your life. So, this begs the questions… what happens to your 401(k) when you leave your job?

Well, a variety of things…

For the most part, employers will let you roll over you 401(k) to a different account. Many people go this route since your still able to take advantage of the tax benefits while still making your contributions.

Now, if you don’t have a 401(k), you should open one ASAP. If you plan on being at your job for a while, this long-term investment strategy will serve you well into the future.

Just keep in mind that a 401(k) are mostly suited for those investors with long-term goals. Once you’ve saved a significant amount of money, the tax deferral feature is optimized. This is the type of investing product for those that want a robust retirement fund.

In addition, one thing to make note of is that you can’t just simply deposit $20k into your 401(k). It must come from your employer. So, the thing to do in this scenario would be to boost your contribution level, then use the $20,000 for that period of time in which you increase your contributions.

Should I Invest in Real Estate?

You may think that fixing up houses is a fast way to make some money. You buy a house with relatively small amount of money and sell it for profit. 

It couldn’t be simpler, right? 

Not necessarily. 

If you aren’t careful with your money, you could lose your shirt big time. Flipping houses is a potentially dangerous trap for the newbie.

However, savvy investments in the housing market can jumpstart your profits. Many internet real estate brokers find investors golden opportunities to help in this venture.

The only obstacle is that you may need significant investment capital before you can start.

Many real estate investment organizations require that meet qualifications–meaning you need to earn(typically) at least $250,000 annually or have more than $1 million in net worth. Note that not all brokers require this.

Should I Put the Money in a High-Yield Savings Account?

Now this may not sound like a really sexy thing to do if you have a decent amount of money, but it can be quite profitable.

The way a high-yield savings accounts are different from your typical checking account is the higher interest rates. Your returns are much higher the longer you keep your money in place.

Sure, it isn’t as much fun as a high-risk investment, but there is method to the madness. The idea here is to grow your money gradually over time. Most investors like this due to the low risk involved. Your savings account won’t destroy your funds. It’s main purpose is to make it grow.

Compare savings accounts offered by numerous banks and go where the money is. You can keep healthy interest returns coming in. Your profits will be plentiful if you are smart about investing this amount.

What Is Digital Real Estate Investing?

What if you could have 10 house or rental units that you could charge anywhere from $750-1000 per month?

That’s $7,500-10,000 per month in passive income!

What if you have 100 rental units?

But instead of spending $Millions to build house or apartment complexes… you spend a minimum investment to build websites.

You then get those websites ranked in the search engines for specific home-based services that customers are searching for. 

Next, you find local business owners who are looking for customers and are willing to pay you for their information. 

And Then… 


You’ve just created Digital Real Estate that is potentially earning you 4-5 figures in PASSIVE INCOME on a monthly basis without spending a single dime on ads.

With Affiliate Marketing, you have to compete with thousands, if not millions of others who are selling the SAME product to the SAME customers.    

With Digital Real Estate, the competition is virtually nothing and your profit margins are 85-90%. 

Now, I could go on and on, but I’m sure you have tons of questions about how to create Digital Real Estate assets and start building YOUR digital empire!

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