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- If you have $20,000 set aside to invest, you can allocate your money across more than just one investment or account type.
- You can generally invest using financial advisors, online brokerages and investment apps, or robo-advisors.
- Your investment options include stocks, bonds, ETFs, mutual funds, retirement plans, real estate, and much more.
- Consult with a fiduciary advisor to make sure you are doing everything necessary to grow your wealth in this challenging time »
If you’ve got $20,000 to invest, it can be overwhelming to figure out where to put the money to build wealth.
When it comes to the “how,” you can generally invest through traditional financial advisors and investment firms, online brokerages, and robo-advisors. As for the “what,” you’ll have access to various investment choices, including retirement savings accounts, education savings plans, trust accounts, custodial accounts, and more.
While it can be tempting to take the safe route and plant your $20,000 in one spot, experts recommend diversifying your portfolio by spreading money across multiple investments. Keep reading to learn more about your options.
Set up a brokerage account
Online brokerages are like retail centers for investments and other wealth-building products. These platforms offer a wide range of options, including investment accounts, retirement savings accounts, cash management accounts, education plans, and more.
Some of the best brokerages give you access to commission-free trading, investment tools and research, copious investment choices, and human advisors. In addition, you’ll want to pay attention to your brokerage’s minimum account size requirements and management fees.
Passively invest with a robo-advisor
Another option for investing $20,000 is to set up an account with a robo-advisor. This option is great for passive investors who prefer to sit back and watch their money work. Unlike a brokerage account, where you’d be responsible for placing your own trades and managing your investments, robo-advisors do everything for you.
You’ll mainly be responsible for paying the
‘s fees and deciding when to invest more money. Not all robo-advisors have account minimum requirements, but you’ll typically have to pay an annual asset-based fee, flat fee, or monthly subscription fee, depending on the advisor.
For instance, Betterment and Ellevest both have $0 minimum balance requirements. But their advisory fee structures differ. Betterment charges 0.25% to 0.45% (the 0.45% annual fee applies to investors enrolled in the premium plan) for its investment accounts, while Ellevest charges monthly subscription fees ranging from $1 to $9.
You don’t have to choose one over the other, though. Some brokerages like Vanguard also provide a robo-advisor option, so that gives you two new possibilities: (a) open a brokerage account and robo-advisor account under the same company, or (b) set up an account with a robo-advisor at one company and open a brokerage account at another investment company.
Work with a financial advisor
A traditional financial advisor could also help you grow your $20,000. These advisors usually cost more than the brokerage or robo-advisor route, but they present a unique feature: face-to-face consultations with a human professional who can talk you through the wealth-building process.
Not all advisors require minimum account balances, but some may ask for an account size of up to $2 million in order to get started. Account minimums vary per financial advisor, so it’s best to ask a prospective advisor about their fees before you begin.
Another thing to consider is that a financial advisor’s fees might include asset-based fees, hourly fees, or fixed fees. Asset-based fees represent a percentage of your assets under the advisor’s management; these typically range from 1% to 2% of your portfolio.
When it comes to fixed fees, you could pay between $1,000 and $3,000…