What to do with 50k in cash? When it comes to spending or investing a large sum of cash, there are a lot of options to consider.
Of course, it’s not the worst problem to have! But it’s definitely worth considering the question of, if you find yourself in possession of 50 thousand dollars, what should you do? This can be a difficult question to answer, but I’m here to help!
In this blog post, we’ll take a look at some of the best ways to spend or invest your money.
We’ll also provide some tips on how to make the most out of your investment. So whether you’re looking for ways to increase your savings or want to explore new investment opportunities, read on for advice that can help you make the most of your money.
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What should I do with 50k in cash?
Without further ado, here are a few options for what to do with 50k in cash:
1. Pay off your debt
One of the most important pathways to financial freedom is becoming debt-free. If you have high-interest debt, such as credit card debt, it can be beneficial to use your cash to pay it off. This will reduce the amount of interest you’re paying and free up more money in your budget each month.
Compounding interest works in your favor when you’re investing, but against you when you owe debt, so paying off debt is essentially like earning a guaranteed return on your investment. For example, if you have $10,000 in debt with 10% interest, you’re essentially paying $1000 a year in interest.
This means it would take you ten years to pay off the debt, and in that time, you’d end up paying a total of $20,000 – double what you originally borrowed! So, if you have debt, paying it off should be one of your top priorities in your personal financial plan.
2. Start an emergency savings account
Another important financial move is to start an emergency savings account. This account should have enough money in it to cover at least three to six months of your living expenses, and ideally one year of expenses.
The goal of an emergency fund is to provide a cushion in case you experience a financial setback, such as job loss or unexpected medical bills. Having this safety net can help you avoid going into debt or selling investments at a loss.
In a savings account, your emergency money will steadily grow at a very modest interest rate and will be easy to withdraw when needed. Make sure to choose a savings account with no monthly fees and a high-interest rate, such as the ones offered by online banks.
Our pick: Best high interest savings account
Why? Well, because it’s got:
- 1.00% interest (over 11 times higher than the national average)
- No fees and only a $100 minimum deposit
- FDIC insured, meaning your money’s safe
3. Invest in a CD
A CD, or certificate of deposit, is a type of savings account. With a CD, you agree to leave your money in the account for a set period of time, usually six months to five years.
Your money will grow at a fixed interest rate, which is usually higher than what you would get with a regular savings account. This makes CDs a good option for people who want to save for a specific goal, such as retirement or a down payment on a house.
FYI: Check out SaveBetter, a platform that lets you review a number of different CDs in one place to find the best one for you.
The downside to CDs is that you can’t withdraw your money early without incurring a penalty. So, if you need access to your funds before the CD matures, this may not be the best investment for you. But if you’re debt free and have modest savings in case of an emergency, this is a secure and low-risk way to grow your 50k.
4. Invest in a Roth IRA
A Roth IRA is an individual retirement account that offers tax-free growth and tax-free withdrawals in retirement. With a Roth IRA, you contribute money that you’ve already paid taxes on. This means your contributions grow tax-free, and you don’t have to pay taxes on withdrawals in retirement.
The Roth IRA contribution limit changes each year and currently is $6000. If you’re 50 or older, you can contribute an additional $1000, for a total contribution of $ 7000. So this investment would only take a portion of your 50k in assets.
This investment could compound to provide a significant nest egg in retirement. If you’re not sure how to invest the money in your Roth IRA, consider using a robo-advisor. These services offer low-cost investment portfolios that are diversified and automated based on the risk tolerance you select.
You may also be interested in: How to Get Rich From Nothing: The One Strategy That’s Proven to Work
5. Invest in a taxable brokerage account
A taxable brokerage account is an investment account where you can buy and sell stocks, bonds, and other investments. The money you earn in this account is taxed at your marginal tax rate.
The advantage of a taxable brokerage account is that there are no restrictions on when or how you withdraw your money. So, if you need to access your funds, you can do so without penalty.
Another advantage is that you can choose to invest in a wide variety of investments, including individual stocks, bonds, and mutual funds. This gives you more control over your investment portfolio.
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6. Buy property for yourself
If you’ve wanted to invest in a condo or house for yourself and suddenly find yourself in possession of 50k, this could be a great opportunity to do so using the 50k in cash as the deposit. Buying property is a big financial decision, but it can be a great way to build equity and wealth over time.
Before making an offer on a property, make sure you have a realistic idea of what you can afford. Once you find a property you’re interested in, get a home inspection to ensure there are no major problems.
If you’re not sure whether buying property is the right move for you, consider speaking with a financial advisor. They can help you weigh the pros and cons of investing in real estate and decide if it’s the right decision for you.
7. Buy a property as a rental investment
If you’re not interested in buying property for yourself, you could consider purchasing a rental property. This can be a great way to earn passive income and build wealth over time.
Before buying a rental property, make sure you research the local market to ensure there is demand for rentals.
You’ll also need to factor in the costs of maintaining the property, such as repairs and property taxes. That is, while it’s tempting to use your 50k in cash to pay as large a deposit as possible, it may be worthwhile keeping some of this cash aside for the other costs that you’ll need to cover when doing this.
You can rent a property with leases of varying lengths, or use your space as a short-term vacation rental. Each type of rental opportunity has its own set of pros and cons, so be sure to do your research before making a decision.
8. Go back to school
If there are vocational or academic programs you’ve been wanting to take, getting a 50k windfall could be enough to cover the costs of tuition and other associated expenses.
Before enrolling in a program, make sure you research the job market to ensure there is a demand for the skills you’ll learn. You should also consider whether you’re willing and able to commit to the time and effort required to complete the program.
Going back to school can be a great way to invest in yourself and your future. You may be able to evolve your job position, or even make a change in your career. This could ultimately result in a higher income and an improved quality of life.
9. Renovate your home
If your home needs repair or you’ve been wanting to make some cosmetic changes, 50k could be enough to cover the costs and you may be able to make several updates. You could replace your roof, expand a room, or add a deck.
Making improvements and renovations to your home can be a great way to improve your quality of life and potentially increase the value of your property. When starting any renovation project, make sure you have a realistic idea of the costs. You should also factor in the amount of time and effort required to complete it as well as additional expenses such as permits.
You can extend the mileage of your money by doing some of the work yourself, but be sure to only take on projects that you’re confident you can complete safely and correctly.
10. Get into peer-to-peer lending
Peer-to-peer lending is a form of investing that allows you to lend money to individuals or businesses in exchange for interest payments. This can be a great way to earn passive income and potentially receive higher returns than you would with other investments.
Peer-to-peer lending works by matching investors with borrowers. You can choose to lend money to people or businesses who need a loan and fit the criteria you’ve set.
When setting up your account, you’ll be able to choose the amount of money you want to invest, as well as the interest rate you’re willing to receive.
Before getting started, research the different platforms available and compare the interest rates, fees, and minimum investment amounts. You’ll also want to consider the risk involved and whether you’re comfortable with the idea of lending money. It isn’t a guarantee you’ll get it back, let alone earn profits from it.
11. Start a dropshipping business
If you’re looking to start your own business, dropshipping could be a great option. Dropshipping is a type of e-commerce business where you sell products without having to carry any inventory. This works by purchasing products made by a supplier and having them ship the items directly to your customers.
Dropshipping can be a great way to start a business with little up-front investment. You can also run your business entirely online, which makes it a great option if you’re looking for flexibility. Before starting a dropshipping business, you’ll need to choose a niche and find a supplier.
You’ll also need to create a website and set up a payment gateway. You can also use a major marketplace like Amazon or eBay to sell your products. Done properly, this investment could lead to a great return down the road.
12. Invest in a franchise
An easy way to start a business is by buying a franchise. Franchises come with an established brand, customer base, and marketing strategy. This can make it easier to get your business up and running quickly and with less risk than starting a business from scratch.
Of course, there are also some drawbacks to franchises. They can be expensive to buy into and you may have less control over the business than if you started it yourself. You’ll also need to follow the rules and guidelines set out by the franchisor.
Before investing in a franchise, do your research and speak with existing franchisees. This will help you to get a better understanding of what’s involved and whether it’s the right decision for you.
13. Buy a profitable website
If you’re looking for a more passive way to invest your money, you could buy a profitable website. This is a great option if you’re not interested in running a business but still want to earn an income from your investment.
When buying a website, it’s important to look for one that’s already generating revenue. This could be ad revenue, affiliate revenue, or even selling products or services. You’ll also want to make sure the website has a good reputation and is in a niche that you’re interested in.
Buying a website can be a great way to earn money without having to put in a lot of work. However, it’s important to learn how websites work and possibly even hire someone who can help you manage your website’s assets. When properly done, this could be a very profitable investment.
14. Gift the money to a loved one or organization
Say you’re not interested in making a profit from your cash. You could always gift it to a loved one or organization. This is a great way to help someone in need or give back to a cause you’re passionate about.
You could set up a college fund for a child, donate to a charity, or invest in an organization you believe in. If you’re looking for a tax break, you could also gift the money to an organization that’s eligible for 501(c)(03) status.
Of course, there are also some tax implications to consider before giving away large sums of money. Be sure to speak with a financial advisor to ensure you’re making the best decision for your situation.
15. Diversify your investments
Instead of planning on one big return, you could diversify your investments to reduce risk. You could pay off 10k of debt, put 20k into the stock market, and buy a profitable website with 20k.
By diversifying your investments, you’re essentially hedging your bets. This means that if one investment doesn’t perform well, you’ll still have others that could potentially offset the loss.
Of course, diversification isn’t a guaranteed way to make money. But it can help to reduce risk and protect your investment portfolio. It’s also a great choice if you’re not 100% sure about what you want to do with your money but don’t want it sitting in cash.
Is $50k too much in savings?
$50k can often cover one year of expenses for a full year or longer, so it is a good amount to put into an emergency savings account. However, if you have more money than this, you may want to consider investing it in a longer-term option or using it to create new forms of income.
It’s important to eventually put your money into other assets so it can grow and eventually become six figures – or more! Otherwise, you may find yourself in the same financial situation year after year without making any progress. Even worse, with inflation, your money may devalue over time if it’s not invested.
Your own personal tolerance will determine whether $50k is too much to have in savings. That is, your liquid net worth is going to largely depend on things like your age, your health, and your general financial stability.
If you’re young and healthy, you may want to take more risks with your money to really put you on the path to being able to live without a job. However, if you’re older or have health concerns, you may want to keep a larger emergency fund.
No matter how much money you choose to keep in savings, make sure that you choose a bank that is a high-yield savings account. This will help you to earn more money on your cash so it can grow over time.
I have $50k in savings – what should I do with it?
The most important thing to do with your $50k is to make sure it’s used in a way that meets your goals. This could mean saving for retirement, buying a home, or simply having more money for emergencies. You’ll also want to make sure the money is put somewhere where it grows over time.
There are a few different ways you can invest your $50k, but it’s important to do some research before making any decisions. You may want to speak with a financial advisor to get started. Reading books about investing or taking courses can also be helpful.
Being psychologically prepared to invest is just as important as being financially prepared (and these financial planning quotes may help as a starting point). This means that you need to be comfortable with the idea of taking risks. Remember, no investment is ever guaranteed, but diversifying your portfolio can help to reduce risk.
So don’t rush into any decisions – take your time and carefully consider all your options before making a move. $50k in cash is a lot of money, and you want to be sure you’re doing what’s best for you and your financial future.
Is 50k a lot of money?
Yes, $50k is a lot of money. In fact, it’s more money than most people make in a year. With this much money, you have the ability to make some major changes in your life. You could pay off all your debt, start investing for retirement or even buy a home.
Of course, with this much money comes responsibility. You’ll need to be smart about how you invest and spend your money. This means being mindful of risks, doing your research, and knowing your goals.
Even well-off people with millions of dollars understand the value of $50k. They know that it’s not a lot of money in the grand scheme of things (although earning $50,000 a year is definitely not a bad place to be), but it can still make a big difference when utilized correctly.
Because 50k in cash is a large sum, it can be overwhelming and anxiety-inducing to suddenly receive or have in your bank account. While many people don’t always talk about these aspects of becoming rich overnight, or at least getting an overnight windfall of this amount, it’s completely normal to feel stressed when money is received as an inheritance or through a legal settlement.
If you have 50k and don’t know what to do with it, the first step is to take a deep breath and relax. This is a good problem to have and there are many options available to you. Being mindful, clear, and seeking support from financially savvy individuals can help ensure you make the best decision for your unique situation.
Where should I put 50k (when figuring out what to do with it)
Put your $50k in a secure account that is insured by the FDIC. This could be a savings account, a checking account, or a money market account. You want to make sure your money is safe and accessible in case you need it.
You can start by putting the money into one account and as you learn how to better manage it, you can expand it to multiple accounts. You may even want to open an account with a different bank so you can compare interest rates and fees.
You can find reviews of different banks and credit unions online. It’s important to compare multiple options before making a decision. Once you’ve chosen a bank, you can open an account and begin saving your money.
Look for low-fee accounts and avoid account fees altogether if possible. You want to make sure your money is working for you, not the bank.
Don’t keep more than a couple of thousand dollars in actual cash, and make sure to keep it in a safe place like a fireproof lockbox. Any money that you use for everyday expenses should be kept in a checking or savings account since it’s uninsured and could be lost or stolen.
About the author
Anna is the founder of LogicalDollar and a personal finance expert, having been seen in Forbes, HuffPost, Reader’s Digest, MSN Money, Yahoo! Finance, CreditCards.com and many more. She’s committed to helping others get on the path to financial freedom using the experience gained from turning $60,000 in debt into a thriving investment portfolio. Find out more.