Table of Contents Hide
- What investors look for before investing $10000?
- What Is value investing?
- Why Does Value Investing Still Work?
- What Are The Average Returns When You Invest $10000?
- What Is The Best Way To Invest $10000?
Bernard Mannes Baruch is often quoted as saying “Now is always the hardest time to invest.” Invariably, the best way to invest $10000 is to start now. I will explain it.
The best way to invest $10000 and most probably get 5x your money has never really been about the way, but about the certainty of the way and timing of said investment.
TVM (Time Value of Money) is one good reason why anyone should invest. Investopedia defines it as “the concept that money you have now is worth more than the identical sum in the future due to its potential earning capacity.
This core principle of finance holds that provided money can earn interest, any amount of money is worth more the sooner it is received. TVM is also sometimes referred to as present discounted value.”
This article discusses the best ways to invest $10000 and ways to get up to 5x your money.
There are many things that anyone with enough money to invest in something meaningful think about before considering any way of investing the best way.
You who do not have enough and want to do the same would need to understand how things work and temper your need to invest with caution.
Warren Buffet says “risk comes from not knowing what you’re doing.”
What investors look for before investing $10000?
#1 – Fit
Most times the best way for someone who wants to invest $10000 is not the same for someone who wants to invest a bigger sum. This is not because of the difference in the sums, but the difference in fit.
Some who want to invest $10000 need to relate to whatever it is they are investing their money in. Some would relate to buying penny stocks(perhaps), while some would relate better with investing their $10000 in tech.
The best way to find out where your fit is is to ask yourself what you have previously invested in, and how comfortable you were with the investment.
If you are a new investor, you have to ask yourself what your likes are and if you are ready to follow them.
#2 – Size
Size does not only affect the amount of money you are investing but on the market size of the destination, your money is headed.
The size of an investor’s pockets will determine where he puts his money, and the size of the market will determine what the returns per investment will be like.
An investor who wants 5 times his invested money cannot afford to spend time on some things. The target market has to be large.
Investors typically have few qualms about passing on an investment that will struggle to grow beyond a million dollars someday, but an opportunity elegantly addressing a billion-dollar market is one that even the most cautious investor will consider carefully.
#3 – Results
One reason why some investors shy away from investing in some ways is because of an apparent lack of results. If a business or a new way of investing has not shown any promise, then why would anyone consider sinking money into it. It just does not sound right.
What Is value investing?
Schroders defines value investing as the art of buying stocks that trade at a significant discount to their intrinsic value.
Value investors achieve this by looking for companies on cheap valuation metrics, typically low multiples of their profits or assets, for reasons which are not justified over the longer term. Value investors recognize two things.
Firstly, most businesses are long-term in nature and the real effect of short term profits falls on the long term value of a business is often small.
Secondly, they recognize that, on average, most company profits are mean-reverting over time. i.e. over the longer term, disastrous profit falls are frequently reversed and conversely, extremely strong profit growth.
Why Does Value Investing Still Work?
A financial times article titled “why value investing still works in markets” gives us a clue as to why it still does. The article relates to risk and reward.
Since buying, stocks will low multiples and waiting it out to gain is understood as value investing, it is safe to say that it still works because the correlation between what makes a company valuable on paper and what makes it less so, is vague.
The article is quoted as saying in the concluding paragraphs “fundamental value investors should focus on gaps between price and value for individual securities. The present value of future cash flows, not misleading multiples, are the source of value.
As Charlie Munger, Warren Buffet’s partner at Berkshire Hathaway has said: ‘All good investing is value investing.’ The value factor may be floundering, but value investing remains as relevant and useful as ever.”
What Are The Average Returns When You Invest $10000?
Keeping in mind that when we talk about the average returns, we are addressing the average of the S&P 500 index which comprises about 500 of America’s largest publicly traded companies and is considered the benchmark measure for annual returns.
When investors say “the market,” they mean the S&P 500. The average return of the market is 10% per year. This has been like this for the last century.
While this is the average, markets are not linear and tend to swell rapidly, resulting in a rise in value capture and a far more increased annual market return. To make more than average returns, you need to play for longer.
What Is The Best Way To Invest $10000?
These suggestions come with the assumption that you are open to risk and that this is not the last influx of funds. You can choose either one as the best way to invest $10000.
#1 – By storing the money
To have a meaningful impact, sometimes we have to take a step back and have a look at the bigger picture. The bigger picture could perhaps help us see where we can go bigger. Storing money can also be helpful.
Instead of buying things right now that do not have that much value and may end up underperforming and causing you money issues, you can keep the money for while.
By keeping the money in a fund where interest rates are considerable, inflation does not bite down hard on it, and taxes do not carve out their mega share, then that way, you get to grow, and bide your time until you are eventually prepared with more funds and better direction.
#2 – Individual stocks
An important thing to note here is that diversification is good. Achieving this diversification is harder the less money you have. Especially when you start investing, you are subjecting yourself to more risk due to the lack of diversity.
Achieving this diversification is harder the less money you have. Especially when you start investing, you are subjecting yourself to more risk due to the lack of diversity.
#3 – Invest in yourself
One of the best ways to invest $10000 and have very good prospects to get up to 5x your money is to invest in yourself. The skills you have, education, etc. If you worked to get the $10000, then the way you work can be amplified to prepare you to earn multiple times that amount of money.
This way, it does not just sit around waiting to build up, but it goes into you, your learning. Something that no one can take away from you. So go for that course or that program that you have always wanted to do.
After doing proper research for the courses that prepare you to earn more, go for that financial literacy course, self-improvement course, just get better by investing that $10000 or some part of it on you.
#4 – Invest in Cryptocurrencies
It is not only the rave right now, it is the future. Satoshi Nakamoto revolutionalized the world of finance. The leverage is adoption and multi-faceted use. The more people adopt cryptocurrencies, the more the value rises, and the more the potential drops as well.
Cryptocurrencies can give you those long term gains as they are almost always on the rise. The only advice here is to educate yourself. Yes, educate yourself because if you do not, you could just as well say goodbye to your money.
Find courses on platforms like Udemy, Kajabi, or Teachable. And learn the intricacies of trading things like Bitcoin, Ether, Litecoin, and others. While there are over 3000 cryptocurrencies in existence, only a handful matter today.
Find an exchange, research the trading patterns, look for breakouts of long-term moving averages, and get busy trading.
#5 – Real estate
Real estate offers predictable cash flow; it appreciates, thus keeping up with inflation; it provides a higher return because of positive leverage, and it offers equity growth through debt reduction.
The main reason why many investors who know how real estate is run refuse to leave it is because of the leverage that it offers. Once you have built up an equity position in an investment property, you can leverage that investment for cash.
Secure a second loan against the increased equity or refinance the original loan amount plus the increased equity. This frees up money to buy another investment property. If your $10000 is too small to go into this business, you can get some people to also throw in some money with you.
As in all things, get yourself educated first, as it will be a shame to lose all your money while seeking some more.
Man’s inability to comprehend the exponential function is a phase that many people labor to cross. You should too if you are to make more money than you are putting in.
As compound interest continues to function, so do many continue to tap into its effect on their money.
There are many ways to invest $10000; This article helps to articulate the 5 best ways that can spin your $10,000 or more into greater financial proportions.