DR 147: 10 Ways to Invest $10,000

A few weeks ago in the Dough Roller weekly newsletter I asked the following question:

“What would you do if you came into $10,000?”

I received a lot of answers.  What surprised me about the responses were how similar they were.  The varied in the specific details of how people would spend $10,000, but they shared one thing in common–most would use the money to improve their finances.

Most people would pay off debt, put the money into an emergency fund, or invest the money. Some invested for short-term goals, some for long-term goals.In almost every response there was at least one purpose that would improve the person’s overall financial situation.

The responses got me to thinking about another question that I didn’t ask: What would you do with $10? How would the answers be different?

Why do we treat large lump sums of money different than small monthly amounts? We tend to treat larger amounts in a more thoughtful way. Perhaps that’s why it’s easier for some to save a tax refund even when they struggle to save money month to month.

Maybe we need to treat small amounts of money more thoughtfully, too. After all, how we handle small amounts of money has an impact on the bigger picture.

Here are some reasons why we don’t take smaller sums of money more seriously:

  1. It’s hard to internalize compounding – we just can’t imagine $10 growing in any meaningful way.
  2. Spending small amounts doesn’t feel like it’s “bad” like blowing $10,000 would.
  3. Delayed gratification is required when saving small amounts of money.

Consider how you handle small amounts of money, and how small decisions we make every day could improve your finances over the long-term – you may be surprised.

Listen to the Podcast of this Article

Top 10 Ways to Invest $10,000

  1. Max out an IRA:  This won’t take up all of $10,000 (the IRA contribution limits are lower), but it’s an excellent start.
  2. Invest it in a 401k:  You can increase your plan contributions and use the $10,000 to offset the lower take home pay.
  3. Invest in a taxable account:  Once you’ve maxed out your retirement plan contributions, of course . (My favorite options are: Vanguard (See Podcast 73), Betterment and Wealthfront.
  4. Pay off high interest credit card debt:  Alternatively take advantage of a zero interest rate transfer first, if possible.
  5. Increase your emergency fund:  Look for a high yield savings account.
  6. Pay off a car loan
  7. Fund an HSA account – This option is for those with a high deductible health plan (See Podcast 67)
  8. Fund a 529 account for your child’s education (See Podcast 113)
  9. Start a CD ladder
  10. Buy I Bonds:  This adds inflation protection to your savings.

So those are my ten choices, but here are the responses from readers:

Larry: That’s a no brainer. Buy stock in a quality dividend paying company. (A great way to invest, but he didn’t say which quality dividend paying stock – Larry, please email me and let us know!)

Karen: I would pay off any outstanding debt that I had and put the rest in savings.


  • $2,500 in the checking account for cash flow
  • $2,000 split between two children’s UTMA accounts
  • $2,500 to Vanguard Global Minimum Volatility
  • $2,000 to Fidelity investment account for future investments NOS
  • $1,000 to I bonds

Paolo: If I were given $10,000, I would…

  • Use $5,500 of it to contribute to my Roth IRA contribution for 2015,
  • $3,350 of it to max out my HSA contribution for 2015,
  • $1,000 to pay down my mortgage principal,
  • And the remaining $150 will go towards a trip down to Legoland San Diego for my wife and three kids!

William: Invest.

Jeff: If I came into $10k right now I’d probably put it into one of my Vanguard Index funds. I’m debt free, have my needs covered, and anything else would be just wasting the money.

Christina: I would drop it right into my daughter’s 529 plan!

Sachin Shenoy (Right way to pronounce my first name is Such-in): With $10K there are couple of investment options…

1. The conservative investment option – Put it all in Vanguard 500 Index Fund Admiral. At 0.05% expense ratio its a no-brainer (May be able to convert non-Admiral shares to Admiral if you were already invested in investor shares)
2. Crazy investment option – Invest in USO ETF… Crude should be hitting the bottom sometime soon.

Other options include… Pay off the car loan and redirect the monthly payments to option 😉

Patrick: $7,500 minus expenses at the craps tables in Vegas. $2,500 in baby furniture since the wife is having twins….unplanned btw.

One other note – as a former USAF Capt, Navy Federal (Credit Union) doesn’t hold a candle to USAA. Besides the great insurance, banking and customer service, USAA gives out distributions to their members. Mine was 50 bucks, and I don’t have insurance through them presently because I’m living outside the USA.

Donna: I would apply it on my son’s private school loan after I take out taxes to lower his debt.

Stephanie: If I received $10,000 I would give $1,000 to charity, put $2,000 into my dream vacation fund (actually into my savings until I actually am ready to take that dream vacation) and use the rest to max out my ROTH 403b (instead of my tradition 403b).

Prime: Spend it on an engagement ring.

Larry: I would buy $10,000 in mutual fund shares in energy/oil companies, such as VGENX.

Jeff: I try to live by the 10-20-70 rule …So I would give $1000, save $2,000, and spend the rest 😉 But in reality, I would probably save most of the $8,000 too … I bet a lot of your answers for this will be based on personality type (nerds versus free spirits, etc).

Guadalupe: Use $7,000 to consolidate debt and the other $3,000 to invest in my network marketing business. Thank You!

Earl: Pick 5 charities that I think need the help and give $2,000 to each.

Joe: Invest part in blue chip oil company stocks, and the rest in short term high quality bonds.

Kyle: Buy back the years of service in my pension. The first 6 months of employment, nothing went onto my pension, but I can now buy those months back to add to my service.

Max: I would pay off my credit cards.

Erin: If I were given $10,000, I would put it away for my emergency fund – still working on reaching that goal. I’d put it in a credit union checking account that accumulates exceptional interest.

ACE: Put it towards the mortgage.

Ok- easy :

  • $3k savings – I need a lot more!!!
  • 3k on my c/c that would put a small dent in my debt and lower payments
  • 3k to my mom (unfortunately insulin is not covered with her Medicare, that would hold her for a while)
  • $250 – Go Red For Women (American Heart Association)
  • $250- Step Out for Diabetes (I walk in honor of my Mom)
  • $500 – Fun Money/Day spa

That’s my personal breakdown. I’ve been hoping for that kinda windfall! Would be nice.

No name given: Spend half on a vacation and half to retirement fund. That what I do with my bonuses.

Mary: If we were given $10,000, I would use $7,000 to pay off my husband’s car loan, and put the remaining $3,000 into our emergency fund.

Logan: I would max out my ROTH ($5,500), put $2,000 in my son’s 529 plan (in GA you can deduct up to 2k off your taxes), and put the rest in cash reserves. Well, I would also buy a nice bottle of bourbon.

No name given: If I was given $10,000, I would use half of it to pay down debt, and the other 1/2 to start saving for a down payment for a house.


  • Express gratitude to whomever provided the 10k,
  • Pay off. or pay down debts,
  • Put 20% into an emergency account,
  • Reserve a small amount to make a special meal with my family,
  • Re-organize/plan/implement a new long and short term budget.

(Rhea was the only one who mentioned thanking the provider of the $10,000! I didn’t say what the source of the money was, but it certainly could have been a gift. Good catch, Rhea!)

Jessica: Pay down my debt.

Bill: Reduce credit card debt.

AJ: I would use around 5k to invest and build positions and the other 5k to pay down debt.

Ben: If I were given $10,000 in a lump sum, I’d throw it at my fiancée’s student loans. They are at 6.625% through SOFI. Historically would stocks outperform that by half a percent or so? Yes, but gaining freedom by lowering debt is worth half a percent to me. That being said, I don’t know what the breaking point would be. Off the top of my head maybe two percent, but it’s definitely something I’m going to put some serious thought into.

(The best financial decisions aren’t always the ones that make the most mathematical sense, and Ben has provided an example of where this can happen.)

No name given: Ah. $10,000? Tithe, savings, and maybe something towards a long hoped for visit to friends and family in Italy.

Sandra: What I would do with 10,000? If I wasn’t in financial restraints I would start a IRA (and) emergency fund.

Claus: I would take $6,500 and put it in to the Roth for next year, the rest will go in to the savings, adding to the reserve fund.

Kelly: Invest it – wherever my allocation needs it!

Jacki: What would I do with 10k? Pay down some credit card debt. Or maybe redo my driveway.

Erik: If I had $10,000, straight to a 25K balance HELOC (Home Equity Line of Credit) at 4.25%.

So there are your responses to my $10,000 question – thanks to everybody who responded.

What would you do with $10,000?  Leave a comment below.

Topics: InvestingPersonal FinancePodcast

7 Responses to “DR 147: 10 Ways to Invest $10,000”

  1. Hi Rob: thanks for your excellent site; always food for thought here.

    Check out Barclay’s new “Dream” savings account: 1.00% APY, no minimums to open, and bonus interest paid if 6 months consecutive deposits with no withdrawals made. Looks like a good deal!

    • Rob Berger

      Doug, you are absolutely right that you have to have earned income to contribute to an IRA. But assuming that you do have earned income, it doesn’t matter whether the money you contribute literally came from your job, a gift, or money from your savings account.

  2. I would give at least $1k to charity, put away $1,000-1,500 in a mutual fund for my daughter, and put the rest into real estate (either part of a down payment for a rental, or towards improving my home in a way that will improve my quality of life somehow). But charity and my kiddo are absolute certainties!

  3. Invest 1000 on a regulated Peer to Peer lending organisation. Investing in 100 different enterprisesw, that offer to pay back with an added compounding interest, for a period of 6 months. 1000 will clear all my debts. 8000 invest on Bonds.

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