First to start with, $50,000 is a huge amount of money that could help you in many ways and it’s a very reasonable amount to invest with and would be profitable to you. So if you’re able to invest $50,000 there are several options available to you. But there are some important things such as taxes to keep in mind
If you have $50,000, or a large amount of money, sitting on the sidelines — maybe in a checking account or a big bank savings account paying little interest — putting it to work for you is a good idea.
Best Profitable ways to invest $50,000
- Invest in diverse assets
Plenty of things get easier when you have more money, and diversification is one of them. With $50,000, you can easily add some diversification to your portfolio.
One of the easiest investment vehicles to explore is an index funds. These funds allow you to invest in many companies at the same time (all at once) and are less risky than investing in a single stock.
A Standard & Poor’s 500 index fund, for example, holds some of the largest companies in the U.S.
You can also explore funds that hold small and medium-size companies and those that hold assets from international and emerging markets.
2. Optimize for tax implications
If you’re adding new investments to your portfolio, it’s worth looking at them in terms of their tax efficiency. Because a taxable brokerage account is taxable, it makes sense to hold investments that carry a low tax burden.
Investments that are taxed as ordinary income or that generate capital gains, like corporate bond funds and mutual funds should go in a tax-deferred account like a traditional IRA.
- Open a brokerage account
If you want to invest in stocks, bonds, ETFs, or mutual funds, you’ll need a brokerage account. In a nutshell, this is a special type of financial account that allows you to contribute money to buy and hold investments.
There are plenty of brokerage firms that offer accounts, and all have slightly different features. Some are rather minimalist and could be ideal for investors who simply want a place to buy and sell stocks. Others have features such as sophisticated trading platforms, educational resources, fully functional mobile apps, and lots more.
- Contribute to an HSA
A health savings account or HSA is an overlooked investment tool. It is often confused with the other popular healthcare savings account, the flexible spending account (FSA), but it is very different in some ways. Unlike an FSA, money in an HSA can carry over from year to year. Contributions are tax-deductible, and money can be withdrawn with no taxes or penalties for qualified healthcare expenses.
Money in an HSA can be invested, much like money in a 401(k). And tax-free withdrawals for healthcare expenses can be made at any time, regardless of the profits your investments have earned. Once you turn 65, you can withdraw money from your HSA for any reason, although non-healthcare withdrawals are taxable income.
For you to be able to contribute to an HSA, you’ll need a high-deductible health insurance plan as defined by the government. Annual HSA contributions are limited, so you won’t be able to invest all $50,000 this way, but an HSA is certainly worth considering if you qualify.
- Mutual Funds
Mutual funds are a type of investment that pool investors’ money to buy a portfolio of stocks, bonds, commodities, etc. The idea is that professional managers will allocate the portfolio on your behalf, taking the need for research and single-stock risk out of the equation.
Mutual funds can be active or passive index funds. In passive the fund managers simply try to match the performance of an index.
- I Bonds
One of the best ways to put some of your $50,000 to work involves Series I Savings Bonds, commonly known as I Bonds.
I Bonds are special type of savings bond issued by the U.S. They pay interest rate that is a combination of a fixed rate that stays the same for the life of the bond and an inflation-based adjustment which resets every 6 months.
I Bond purchases are capped annually at $10,000 per person, which is one of the main drawbacks of investing in bonds.
- Buy a rental property
Being a landlord isn’t right for everyone. Even if you hire a property manager — which quite frankly is the best move for most investors — owning rental properties is still a more hands-on type of investment than stocks, ETFs, and most other choices.
A rental property can generate rental income, and the value of the property is likely to increase over time. And, unlike stock market investing, you can use significant leverage in a responsible manner to acquire real estate. Assuming a 20% down payment on a rental property, your $50,000 could have $250,000 of purchasing power, more than enough to buy your first investment property in many U.S. markets.
And also you can invest into crypto currency but the risk is high in this way of investing your money, but also profitable.