Before you throw your $10k into investments, consider tackling these common financial tasks:
Pay off high-interest debt. If you have any credit card debt or personal loans, pay these off first. They often have interest rates higher than what you’d earn in any investment vehicle, so you’ll come out ahead if you pay them down.
Beef up your emergency fund. Keep 3-6 months’ worth of bare-bones expenses in a high-yield savings account where you can have instant access to it in an emergency.
Create a vacation or holiday fund. If vacation or holiday expenses tend to creep up on you every year, consider setting aside part of your $10k to cover these expenses. Keep this money in a high-yield savings account the same as you would your emergency fund.
Kids’ education fund. If you have children, you may consider setting aside a portion of the $10k for their post-secondary education.
How to invest $10k
How you should invest $10k depends on a host of things: your age, goals, investment knowledge, and risk tolerance. You’ll need to have a clear picture of these to build a $10k portfolio.
If you’re in your early 30s and want a long-term portfolio focused on growth, here’s what it might look like:
Investment type
Percentage
GICs and bonds
0-15%
Stocks, ETFs and mutual funds
70-90%
Real estate and alternative investments
0-25%
To make the most of many of the investments below, you may need a new brokerage account.
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Invest in an RRSP
If you’re looking to save for retirement, you can get a jump start by opening a Registered Retirement Savings Account (RRSP).
Pros
Tax-free growth. You fund an RRSP with pre-tax money, so it can grow in the account without being subject to tax.
Use funds for qualifying expenses. You can withdraw funds before you turn 71 for qualifying expenses, such as your first home (through the Home Buyers’ Plan) or certain educational expenses (through the Lifelong Learning Plan).
Cons
Can’t use funds until retirement. You’ll pay a penalty if you withdraw RRSP funds before you’re 71.
Limited investment options. RRSP plans use simple investment vehicles like stocks, bonds and mutual funds.
Can’t invest funds directly. RRSP contributions are deducted straight from your salary, so you can’t make a one-time, lump-sum contribution.
Investments that can be held in an RRSP
RRSPs are designed to hold certain types of assets including:
Stocks
Bonds
Guaranteed Investment Certificates
Mutual Funds
Exchange-Traded Funds
Labour-Sponsored Funds
Mortgage Loans
Foreign Currency
Income Trusts
Invest with a robo-advisor
If you’d like some guidance on how to invest $10k, a robo-advisor may be a good alternative to a traditional adviser.
Pros
Inexpensive. Required fees and investment minimums are much lower than with a traditional financial adviser.
Goals-based investing. Robo-advisors make algorithmic recommendations based on your goals, risk tolerance and investing timeline.
Requires minimal time or effort. Robo-advisors keep your portfolio in tip-top shape by performing routine tax-loss harvesting and automatic rebalancing.
Some offer human assistance. Robo-advisors like CI Direct Investing give you access to professional financial advisors to answer your questions and provide advice.
Cons
Limited flexibility. You typically can’t choose your own investments.
Not entirely personalized. Robo-advisors give advice based on the questions they ask you. But they can’t ask follow-up questions if your situation is unique.
Relatively new. Robo-advisors came on the scene after the Great Recession, so we don’t know how they’ll help investors during the next economic downturn.
Compare robo-advisors
1 - 3 of 3
Invest in stocks with a self-directed brokerage account
Brokerage accounts are accounts opened with an investment company. It’s like a bank account, only the account holds stocks instead of cash deposits. If you’re more of a hands-on investor, $10k is more than enough to get started with an online broker.
Pros
Variety. Many brokers offer stocks, mutual funds, bonds, ETFs and options.
Freedom. You have full control to invest however you want.
Help when you need it. Many top online brokers offer investment advice in the form of extensive research centers, in-person support and automated investment strategies.
Cons
Potential mistakes. You could make costly mistakes with your $10k if you don’t have a lot of investing experience.
Fees. Many online brokers are moving toward a commission-free model, but there are still some that charge hefty fees.
Compare online stock trading platforms
1 - 4 of 4
Invest in bonds
If you plan on making a big purchase in the near future, such as buying a home or sending the kids to college or university, it may make sense to invest your money in bonds. Terms typically range from a few months up to 30 years.
Pros
Little risk. Bonds are considered stable investments and carry less risk than other securities.
Provide passive income. Bonds produce a steady, fixed income and offer higher returns than other safe investments like savings accounts.
Cons
Risk varies. Government bonds are typically safer than corporate bonds, although this isn’t always the case. You’ll want to check what letter grade it was assigned by the credit rating agencies.
High investment minimums. Bond prices usually start at $1,000. But some can cost much more than that.
Could lose value. Your bond could lose value if the issuing entity defaults or interest rates rise when you’re ready to sell.
Lucrative returns. The average investor earns between 5% and 9% interest with P2P lending.
Steady cash flow. You’ll receive steady monthly income as the borrower repays their loan.
You’re helping someone in need. Most P2P investors enjoy lending money to help someone who needs it more than they do.
Cons
Risk of default. There’s a chance you could lose your money if someone defaults on their loan.
P2P lending is new. This industry has only been around since the Great Recession, so it’s hard to tell how it will do during the next economic downturn.
Unsecured loans. Often, borrowers don’t put up collateral for the loans, so there’s a slim chance you’ll get your money back if something happens.
Bottom line
There are many different ways you could invest $10k. Whatever you choose, make sure your investments align with your needs. Weigh the pros and cons and nail down which investments will help you accomplish your goals. Then, shop around for top-rated investment accounts until you find one that suits you.
Frequently asked questions
Possibly. It depends on your contribution room for the year – any deposits you make beyond this amount are not tax deductible. Check tax Form T1028 to see what your RRSP information is for the year.
Unfortunately, there are no get-rich-quick schemes that can help you turn $10k into $100k. Remember, return is directly tied to risk. If you find an investment offering high returns, be prepared to lose everything if it doesn’t work out.
The safest way to turn $10k into 100k is to take the long-term approach.
If you want to invest in REITs, find a broker like TD Direct Investing that can help you open an investing account and start sifting through your options. If you want to invest directly in real estate, check out Lending Loop, a peer-to-peer lending platform that connects borrowers with investors and vice versa.
You can even take a look at a crowdfunding platform like FrontFundr that advertises investment opportunities (including real estate projects) to solicit funds from members of the public. To be on the FrontFundr platform, all business have to pass a highly rigorous screening process.
If you know exactly when you’ll need your money, consider opening a GIC with a bank or credit union. Terms typically range from 30 days to 5 years or more. Otherwise, invest in bonds.
The best P2P lending site depends on your needs. There are several established platforms like Lending Loop, Mintos or for real estate, ReInvest24. Check out real user reviews on sites like Trustpilot and the Better Business Bureau to find out which P2P platforms are reliable and offer the most competitive fee structures.
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades. Read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the product on the provider's website.
Cassidy Horton is a freelance personal finance copywriter and past contributing writer for Finder. Her writing and banking expertise have been featured in Forbes Advisor, Money, The Balance, Money Under 30, Insure.com, and other top digital publishers. She holds a BS in public relations and an MBA from Georgia Southern University. See full bio
Stacie Hurst is an editor at Finder, specializing in a wide range of topics including stock trading, money transfers, loans, banking products, online shopping and streaming. She has a Bachelor of Arts in Psychology and Writing, and she completed one year of law school in the United States before deciding to pursue a career in the publishing industry. When not working, Stacie can usually be found watching K-dramas or playing games with her friends and family. See full bio
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