The BEST way to invest 10,000 dollars! It’s not “stocks”

So you started mastering saving and now you’re wondering what’s the best way to invest 10,000 dollars! 

First of all, congratulations. Seeing a chunk of money like that sitting in your account must feel nice. Take a moment to pat yourself on the back.

Second, check back into reality. You’re not a millionaire yet – nowhere close, so don’t bother trying to invest like one. But I guarantee you that if you set yourself up nicely now, within a year you’ll see huge benefits and begin to launch to superstar status. 

What we WON’T cover today…

Stocks! 

This pains me a little because stocks are in all my other “how to invest” guides where we go all the way from $1K to $10M. I love stocks, but it’s not the best way to invest 10,000 dollars. Don’t get me wrong, it would still be a good investment… just not THE BEST, and it won’t send you up to millionaire-land as quickly as what I have planned. 

(I do recommend that you have an account and get comfortable with stocks though.) 

Why are normal things not the best way to invest 10,000 dollars?

Here’s a quick recap of stocks and investing:

  • You can expect an average annual return of 7% with stocks. (S&P 500 inflation adjusted average.) 
  • You should be able to live off 4% what you have invested for the rest of your life (via the 4% rule

When you have a few million dollars, those 4%-7% returns are an impressive amount. But at $10K, your stock investment would be moving at a glacial pace. Maybe you’ll get lucky and hit a 20% year right off the bat.

Yay, $2K but…meh…it’s only $2K. It doesn’t compare to what I have lined up for you. 

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3 Best ways to invest 10,000 dollars

1 – Renovate your house 

I know roughly two types of people. Those who worship at the altar of Home Depot and those who don’t know their Phillips from their Robertsons. 

If you’re in the second camp, you probably couldn’t scroll to the next section fast enough. 

If you’re in the first camp, you’ve probably just stopped reading, jumped into your truck, and drove off to blow your $10K on fancy new flooring at the first excuse to do so. 

But that’s not what I’m talking about. I’m talking about making part of your home rentable. 

You could spruce up a basement for a few thousand dollars and make it inviting enough to get $500+/mo in rent. Or even better, you live in the basement and rent out the upstairs for more!

Let’s look at the numbers:

Where I live, a basement apartment goes for over $1200, and a ground floor apartment in a triplex rents out for over $2K per month! So… invest $10K to get $14K-$24K back every year? Sounds like broken slot-machine level returns. 

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2 – Refinance your home

If it took you a long while to save up your $10K, I know how painful it would be to just give it to the bank. Unfortunately, most banks want a hefty fee for doing pretty much anything. 

But paying to re-mortgage your home, will quickly put that $10K back in your savings account.

Let’s look at the numbers:

Mortgage refinance fees are usually around 2% of the cost of your home. So if you have the US-average $230,000 home, 2% is $4,600. 

Taking your interest rate from 5.52% to 4.3% could bring your monthly payments down from $1299 to $1133. (I made the calculation based on a 30-year mortgage, assuming nothing’s paid down already to make it easy.) 

This saves you a minimum $166 every month or $1992 every year. So you’ll get your $4,600 back in just over 2 years. (The numbers are even better if you have less of a mortgage to pay off.) 

But that’s not $10K! 

You’re right. Having $10K to invest just means you can buy some points which can save you more money. Or it would help you pay for refinancing if you have a pricier home. 

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save money fast infographic

You have to make me a promise though… 

It’s not an investment if you get nothing out of it. So when you start getting lower monthly payments, SAVE THE DIFFERENCE! And then you can invest your savings any way you want. 

If you’re getting a few extra hundred dollars a month and you’re just spending it – then you’ve just missed the point. 

Same thing goes if you go the home-reno route. Save up the money you get from rent and invest it again! THAT’S what makes it the best way to invest 10,000 dollars! 

Related reading:
I wrote more about refinancing your home here
and refinancing your student loan here

3 – Employer matching

Okay, this is the sexiest of the 3 best ways to invest $10,000.

Just kidding. But it’s still good if you can get it. 

If your employer has an investment matching program, you should definitely take advantage! If you’re lucky enough, your employer will incentivize you to invest in your retirement by offering you an investing match. 

Take it. 

Let’s look at the numbers

So if you invest your $10,000 in index funds at their average, inflation-adjusted 7%/yr, instead of getting just $700/year, you’d be getting $1,400 all funnelling into your retirement account. 

Usually there is a low cap (5% of your salary is normal) but doing this is like having a whole other secret stock market for lucky people. 

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Learn more about investing at any wealth level here

Honorable mention

eREITs (aka FundRise)

FundRise and other forms of crowdfunded real estate (known as eREITs) are an interesting way to get into the upsides of real estate and avoid the hard parts. 

The minimum investment is usually $500-$5,000 but oftentimes there are too many limits if you just have the minimum. FundRise in particular requires a $10,000 investment for the full-access account. 

It’s kind of nice, but I don’t wholeheartedly recommend it for the same reason I don’t recommend stock investing at this level. FundRise claims 9% returns (minus the fees), so at best you’ll be making <$1K/yr. 

I mean, getting an extra thousand dollars for doing nothing is nice, but it doesn’t really compare to the three above, does it? 

Also, FundRise has limits on how much of your net worth can be tied up with them. (For example, the SEC limits you to investing a max of 10% of your net worth for any given project.) 

So if your net worth is $10,000… you’ll have trouble getting into real estate that way. 

Oh, and if you haven’t already done this, start here:

So, are you excited to start investing your $10K? I hope so! 

Follow this guide you can rocket yourself to superstar status way faster than just stuffing your money into the stock market. 

Let me know how it works out! 

TL;DR – best way to invest 10,000 dollars.

  • Don’t bother with stocks yet (except to get comfortable with it) because the returns are too low at this level
  • Reno your home to make it rentable (for broken slot-machine level returns)
  • Refinance your mortgage. 
  • Use employee matching (for secret, lucky-people stock market returns) 
  • And you have to save and invest any extra money you get as a return!


Mr. FYFE's Top Tips to get into Financial Shape

#1 - The news is bad for you. It takes up too much time, makes you dumb, and stresses you out. You should spend that time on other things. Limit yourself to JUST 1 newsletter per day. I recommend MorningBrew which I review here.

#2 - Take a course about real estate investing. Real estate is an AMAZING vehicle to build wealth quickly and build income long term. I tested a few to find SparkRental's course to be king.
Sept 2020 Update: I temporarily have a MEGA discount ($500 off) for my readers who take the course. #WorthIt. (Buy button appears near the end of the video which you can fast forward/skip if you want.


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