6 ideas: how to invest $50,000 in 2024

Do you have around $50,000 and you don't quite know how to invest in the best possible way? Then this article can be of great help.

There are many ways to use your money - you can invest in shares and mutual funds, or pay off debt to improve your financial situation.

But which is the best way for you and your situation?

Read on to get 6 good suggestions on how to invest $50,000 in 2024.

Important information: I do not give investment advice, but only want to make available information about different ways one can invest one's money. You must make up your own mind about the risks involved in investing your money.

A few words before you invest $50,000

Before you jump into it and invest $50,000, you should do a thorough review of your financial situation. Do you have any current challenges that urgently need to be resolved?

Let's run some control questions before you start investing.

Do you have a buffer?

You can decide how much money you need in a buffer, but it is recommended that you have a buffer of between 3-6 months of your living expenses for unforeseen expenses and life events (such as losing your job, for example). 

Although having your money in an account will be eaten up by inflation over time, this is safe and liquid, meaning you will get the money immediately should you need it.

Here you can take a closer look at:

1. Money market funds (just watch out for management fees) 
2. High interest account

This is money that you should take little to zero risk with. 

Have you paid off expensive debt?

If you have a lot of expensive debt, you should use some of the money to pay this off.

By expensive debt, I mean debt with a high interest rate, such as consumer loans and credit cards. For example, if you have $20,000 in credit card debt with an interest rate of 20 per cent, the interest on the loan is more than double the expected return on an index fund, for example.

This means that it pays to pay off the loan as soon as possible.

You can see it this way: if you get rid of the loan, this would be equivalent to you getting a 20 percent return on your money. By paying off the loan, you free up your money for future investment, as a much larger proportion of your money can be invested in shares, property, funds and so on.

What are your goals and how much risk are you comfortable with?

We are all individuals and in different situations. So if you want to invest $50,000, you should take an honest check on what your goals and risk tolerance are first.

Include your age, how much has already been invested, and whether you have a buffer in the calculation.

• If you are in your 20s or 30s, you have longer until retirement and can afford to take slightly higher risks with your money. 
• But it depends on your goals. If you save for housing within a year or two, for example, the risk you take should be significantly lower than if you could have your money invested for 10-20-30 years. 

What type of investor are you?

Before you decide how to invest $50,000, it is important that you understand what type of investor you are. Do you prefer individual shares or mutual funds? Or perhaps ETFs?

You can either invest actively or passively. If you invest actively, it is important that you actually do a lot of research on your own. You can check out my recommended page to see tools I use when researching and analyzing stocks.

Many of the tools are free to get.

If, on the other hand, you invest passively, you leave the details to a fund manager. Then the only thing you need to do is create a small strategy for how you invest, and stick to it. You can read more about my favorite passive investment strategy in this articlen.

6 ways to invest $50,000

So - with those questions out of the way: let's get down to looking at 6 great ways to invest your money!

1. Individual stocks

If you buy a stock, you buy a stake in a company. How your investment does depends on how the company and share price perform.

The biggest money often lies in being in a company before the biggest and most explosive growth comes, but here there is often a greater risk as well - especially if the company has taken on a lot of debt, and is not making a lot of money the bottom line.

The advantage of investing in stocks over, for example, index funds, is the potential for very high returns. But that requires you to do the necessary research, because an extremely large number of investors underperform index funds. 

Therefore, I recommend these two tools for you who want to invest in individual shares:

I myself prefer to invest according to the principles of Terry Smith, which you can read about in detail in this article. There you will also see how we use the respective tools mentioned above.

Smith's strategy, in short: he invests in companies that are already winners and that are making and retaining huge amounts of cash for further growth.

If you invest in stocks that pay dividends, you can build yourself a passive income machine, where you can receive payments every month.

The best place to start with such a strategy is Nordnet, which has a wide selection of stocks and funds that pay dividends, and the tools you need to keep track of all the payments you receive.

It's free to create a user, and you also get access to the share forum Shareville, where you can meet other dividend investors.

Get started with Nordnet via the box below!

Read also: shares for beginners: a great guide to investing in shares and fund

2. Funds

If individual stocks are not quite your style, you can consider investing in mutual funds instead.

In a fund, you do not own a share in the companies themselves, but are instead a shareholder in the fund itself – a basket made up of potentially hundreds of different companies.

The advantage of this is that the fund is more stable and fluctuates less than a more concentrated portfolio of individual stocks.

You also don't have to do research yourself, as a manager takes over this responsibility. 

The downside is, on the other hand, that some funds (especially active funds) can have high management fees. This can eat up a lot more of your returns than you might think.

I myself would therefore choose an index fund over an actively managed fund. With index funds, you get a historically good return (around 10% annually) with lower fees and risk.

You can read more about index funds vs active funds in this article.

If you want to invest in shares and funds, you can create an account with Nordnet, which is therefore the online broker I recommend most.

3. Real estate

Buying a rental unit to receive passive income in the form of rental income is not a bad idea!

But how much property you get for $50,000 depends on where you look, or whether you are going to buy alone or together with others.

A good alternative if you see that you do not have enough equity capital can therefore be REITs:

REITs

A REIT (Real Estate Investment Trust) is a special type of company that invests in both private real estate and commercial real estate such as shopping malls, movie theaters, office space, etc. .

You can compare a REIT to a kind of real estate investment trust, as your and other investors' money is pooled together in the company's portfolio of properties.

Many REITs are traded on the stock exchange, and the American stock exchange in particular has a large selection of good REITs to choose from.

With REITs, you earn money in the form of dividends that are paid directly into your share account. REITs are obliged by law to distribute 90 per cent of their profits as dividends.

This often yields very high and attractive dividends, which you could compare with if you were receiving rental income from a rental apartment. And the value of a REIT can both go up and down – just like property and stocks. 

Check out the selection of REITs at Nordnet:

You can read more about different ways to invest in property in this article.

4. Crowdlending

If you want to make your money work for you like a bank does, you can consider investing a proportion of the money in property loans.

This is called Crowdlending. You and a bunch of other investors make it possible for small businesses that can't get loans elsewhere to get loans.

Crowdfunding is not without risks, and the media has recently highlighted some episodes that emphasize the risk. If you are going to invest in such loans, it is important to do sufficient research first.

Since such companies struggle to get loans elsewhere, the risk in this may therefore be higher, but it is the interest payments you receive back as well. 

Because with higher risk, you as an investor should also have a higher reward.

Here you can build yourself a passive income machine, where you receive interest payments every month.

Crowdlending platforms:

• Kameo
• Monio

You don't actually have to jump in with a lot of funds to get started. You can invest as little as $50 to test whether this is something for you or not.

5. ETF

ETFs (Exchange Traded Funds) are very similar to ordinary mutual funds, but they can be traded directly on the stock exchange, just like stocks. 

Many such ETFs can have fairly low management fees and pay dividends directly into your account, making ETFs an increasingly popular solution.

And it's not so strange. Many 'income investors' probably appreciate that. Although we have dividend funds, few (if any) actually pay out the dividends so you can decide for yourself what you want to do with the money. Rather, they choose to invest the further registrations on your behalf.

So, if you want to be a relatively passive investor who receives passive income monthly, quarterly, semi-annually or annually, you can check out ETFs as a possible investment.

Nordnet has the largest selection of ETFs in the Nordics, and you can trade popular ETFs such as:

• SDPR
• JPIN
• JEPI
• WPS

An example: you invest NOK $50,000 in JEPI, with its 11.73% in direct return, you get an annual passive income from dividends of $5,865. That's around $488 in passive income a month, without lifting a finger.

(PS: this is not a recommendation to buy JEPI - only an example!)

6. BSU

And then we must not forget BSU, if you are young enough and do not already own a home. Then you can take advantage of Norway's best way to save money.

If you have $50,000, but have not intended to use it all on equity for housing, or do not intend to buy immediately, you can fill up the BSU quota for the year ($2,750 in 2023). 

It is a relatively small share of the $50,000, but thanks to a high and good interest rate combined with a tax deduction, BSU is a risk-free investment that gives you more than 20 per cent on what you deposit each year. 

Taste the word risk-free. Instead of putting all your money into shares and mutual funds, there is little reason not to fill up the BSU as well.

So top up your BSU account as long as you can!

Many ways to invest $50,000

If you are lucky and can invest $50,000, there are, as you can see, a number of possible ways to invest your money. 

But don't forget that what suits you best is your own decision, as your situation may be very different from another.

Disclaimer

The contents of this article are NOT intended to be taken as investment advice or recommendations, but only to provide information on various forms of various assets and sources of income. Always do your own research before investing time and money.