Whether you’ve saved it or come into a windfall, knowing how to invest $20k can be a bit daunting. It’s a lot of money, and you certainly don’t want to squander it. So in this article, I’m going to show you some ways you can invest that $20,000 to give yourself the best chance at a positive ROI.

What to Do Before You Begin Investing

Before you begin to invest your newfound money, there are a few things you need to do before you jump into the deep end. Investing won’t help if you are swimming in debt. Here’s what you should do first.

Pay Off Debt

Before you jump into investing, I strongly recommend you pay off your debts. Or at least begin to make significant progress in doing so. There’s a healthy debate in the finance community on which method is better. (Don’t believe me? Just search whether you should pay off debt or invest first).

My stance is similar to Dave Ramsey in that paying off your debt has to be priority No. 1. Theoretically (and statistically, based on history), you can make a pretty solid return on investment by putting your money into investments like stocks.

But there’s a psychological element to paying off debt. Once it’s gone, you have the freedom to focus on growing your money, instead of feeling bogged down with debt. Check out this article to get some ideas on how to knock out your debt faster.

Establish an Emergency Fund

It’s also smart to set up an emergency fund before you jump into investing. While I strongly recommend investing your money, you should ideally have 3 to 6 months of expenses saved in a liquid emergency fund.

But where do you put it?

Check out Chime® . Chime is an award-winning financial app and debit card that offers a no-monthly-fee checking account that gives you a savings account with it. You can set up a direct deposit and get paid up to 2 days early, and you’ll get some extra savings perks to boost your emergency fund, too.

Chime has round-ups, so you can round up all your debit card purchases to the next nearest dollar and deposit the difference into the savings account — all automatically. So if you spend $4.50 on a coffee, your purchase will be rounded up to $5.00 and $0.50 will be moved into your savings account.

Check out our review on Chime for more information.

Max Out Your Retirement Savings

Another really smart move is to max out your retirement savings – starting with your 401(k). This will help build your investment portfolio in a diversified way. To do this, though, you need to ensure you’re picking the right funds so you stay diversified and you’re getting the most out of your retirement savings.

Determine Your Investor Profile

The final thing you should do before diving into investing your $20k is to determine your investor profile. Your investor profile is important because it acts as sort of a north star to your investment strategy. It guides you through the ups and downs of the market. It determines your level of risk tolerance and what you’re ultimately after.

To start, I found this handy sheet from Vantage Financial to help you score yourself on your level of risk tolerance (and some other factors). This will be a great starting point to figuring out your investor profile, as well as give you some other things to think about.

Once you have a good idea of how much risk you’re willing to accept, you’ll choose the right investments that match that risk tolerance and be ready to start investing. Just remember not to sway from your profile. Meaning, if you’re someone who has a low tolerance to risk, don’t invest heavily in things like cryptocurrency, which is known for its high-risk, high-reward profile.

What You Need to Consider Before Investing

Once you are all clear of the above hurdles, your next step helps you get organized for your upcoming investments. Consider the following:


The first thing you need to figure out is your intentions with this money. Investing is a significant first step, but you must have a goal.

A goal provides you with a structure on which you can build an investment plan. You can change up your goals as time goes on, but you need a rough outline. This goal can be as simple as a numerical value by which you want to increase your investment. It could also relate to something more concrete, such as a new home or car.

Different investment techniques yield different results. So by having clear intentions, you can make a more informed decision on what to do with your money.

Turnaround Period

Besides intentionality, another critical factor in how you invest this money is your expectation for the turnaround on your investment. What is your timeframe? If you want a quick turnaround on your money, you need to consider a less aggressive investment strategy.

Investing in bonds, for instance, is generally more favorable to those who want quick returns, as their worth doesn’t fluctuate as aggressively. If you aren’t sure what you want to do yet, don’t worry. It should all make more sense once you finish reading this guide. Investing in stocks, on the other hand, can provide you with excellent returns over several years, making them favorable for those willing to play the long game.

Now you are ready for the real nitty-gritty. It’s time to invest. Do you want to go it alone or do you want help? Let’s review your options.

Try a Robo-Advisor

The first tactic I’ll get into is the use of a robo-advisor. Robo-advisors are digital platforms that use specific algorithms to provide you with the best investment opportunities. They do this with almost no human supervision.

I’m talking about robo-advisors first because they are often exceptionally user-friendly, which makes them great for beginners. They consider numerous factors relating to an investor’s unique circumstances, too.

Robo-advisors curate an investment plan using factors such as your goals, budget, and how long you intend to invest. The information collected from this initial survey generates continuous investment advice. You can update your information whenever to curate better the advice you receive.

How Do Robo-Advisors Work?

One of the most effective processes a robo-advisor completes is the automatic indexing of potential investment opportunities. Crafting a diversified portfolio has never been easier.

You can see all the opportunities most relevant to your goals in a straightforward breakdown. This report makes it a lot easier to know which investments to pursue and how high the risk may be.

The newer robos come with an array of features, including retirement planning and tax-loss-harvesting. The latter means that even if one of your investments falls through, you don’t have to sit in defeat. You can immediately re-purpose those funds to another venture.

Best robo-advisors to try


The first robo advisor to hit the scene was Betterment back in 2008. Betterment has low fees, allows you to invest in Roth and Traditional IRA accounts and foreign investments. There’s no account minimum, so you could invest your entire $20k or just a small portion of it.

Since Betterment came onto the market, there’s been an uptick in the number of robo advisors investors can choose from.

Open an account with Betterment or read our full Betterment review.

M1 Finance

Another one I like is M1. Unlike most robo advisors, M1 allows a level of customization rarely seen. If you wanted to add just one stock or ETF to your portfolio, M1Finance allows you to do it. This means you can better customize your portfolio. There’s a minimum account balance of $100.

Open an account with M1 or read our full M1 review.


And if you are a Millennial, consider checking out Wealthfront. This app offers everything you expect from a robo advisor plus features like cash accounts, free financial planning, and lines of credits. The account minimum is $500.

One thing all these robo advisors share is their intuitive function and increased modernization.

The AI associated with robo advisors has only gotten better, with some even considering social responsibility. There’s a variety of factors considered by modern robo advisors, allowing you to customize your opportunities from top to bottom.

Open an account with Wealthfront or read our full Wealthfront review.

Open an Online Brokerage

Another great option is to sign up with an online brokerage. The trick is finding a broker worth your time. There are many on the market, all vying for your attention. Don’t feel drawn toward the first one you find because they make bold claims.

The first thing you should establish is where you want to invest. Are you interested solely in the domestic market, or are you willing to invest abroad? The U.S. has a huge stock market, but the U.K. and Hong Kong can also boost your investment prospects. Consider wisely.

Next comes the consideration of cost. Broker fees will be the biggest drawback for younger investors without a huge budget. Many brokers exist behind a paywall and require a minimum account balance to begin.

Not all are like this, however. There are online brokerages that are low-cost so you can get on the ladder straight away. However, some transactions require a withdrawal fee if you back out, so know the terms before signing up.


E*TRADE is the original online brokerage company and offers $0 fees on trading stocks. The mobile app is robust and the company has brick-and-mortar stores and tons of online resources if you have questions. There is no minimum amount required to start your brokerage account with E*TRADE.

Read our full E*TRADE review.


Webull is rooted in technology, so if you want to use that $20k to trade more than stocks and ETFs, such as cryptocurrency, you can do it here. The app is targeted at more sophisticated investors who want in-depth analysis tools. If you’re more of a newbie, you can use their test portfolio before committing any of your cash. There’s no minimum deposit required.

Open an account with Webull or read our full Webull review.

You Invest

You Invest is the trading account offered by J.P. Morgan Chase. This online brokerage is great because they help you create an asset allocation that is based on your investment goals, timeline, and risk tolerance. Trading stocks, ETFs, and mutual funds are fee-free (unless you need phone assistance). With just $500 needed to open an account, you can use your $20k here and still have plenty leftover.

Read our full You Invest review.

Boost Your 401(k)

401(k)s get their name from the relevant section of the U.S. Internal Revenue Code. They are primarily available through employers, for their employees, as a benefit and can be great assets for investors. Contributions go into the accounts through automatic paycheck reductions, which the employer will then contribute to or match entirely.

One of the best aspects of a 401(k) account is that the money is entirely tax-free until you withdraw it. It is a popular (and lucrative) option for retirement planning.

There are two types of 401(k) accounts available. One is the traditional kind; the other is a Roth account. The only difference between them is taxation. The traditional 401(k) account has only its total amount taxed once you withdraw it.

A Roth 401(k) account operates similarly, except the employer contributions are subject to taxes before being deposited. In recent years, 401(k) accounts have become a preferred option for retirement planning over traditional methods.

So, how do you invest your $20,000 in a 401(k)? For 2023, the most you and your employer can contribute to your 401(k) is $66,000. By investing a portion of your $20k into your 401(k) account and taking advantage of any employer matching you qualify for, you can receive the maximum benefit with no tax repercussions you would incur from alternative investment options.

A 401(k) is a fantastic way to increase your standing total while also preparing for the future. If appropriately maintained, 401(k) accounts can generate wealth through employer contributions.

Considerations to Make with 401(k)s

Likely, you won’t be in the same job your entire life. So, what happens to your 401(k) account if you leave your current workplace? Well, there are a variety of possible outcomes.

Individual employers will allow you to move your old 401(k) balance to another account. This route is often the preferred circumstance as it carries over the deferred tax benefits and allows continued contribution.

Additionally, you can move your current balance over into an IRA. This option is often the most popular option for investors. With an IRA, you still receive the tax deferral benefits and can continue to make contributions.

If you don’t have one, I strongly encourage you to open a 401(k) as soon as possible. If you anticipate being with the same employer for some time, this investment strategy works for your long-term benefit.

401(k) accounts are only advisable for investors with long-term goals in mind, though. The tax deferral benefits reach their optimum if you save a significant amount. This form of investing is ideal for those looking to create a healthy retirement fund.

Also, one (probably obvious) thing to note is that you can’t directly deposit your $20,000 into your 401(k). It has to come from your paycheck. So the best thing to do is increase your contributions and use the $20,000 you have to spread out over whatever period of time you’ll be ramping up your contributions to invest.

Invest in Real Estate

You might assume that renovating houses is a quick way to make money. You purchase a property with your accrued funds and sell it for profit. Easy, right? Not necessarily. If you aren’t careful with your funds, you can lose out big time. Flipping houses is an especially dangerous trap for beginners.

However, smart investments in the property market can boost your returns. Many online real estate brokers connect investors with prime opportunities to aid in this pursuit. The only drawback is that you may need a significant investment fund before you can begin. Many real estate investment firms require that you’re accredited–meaning you need to make (typically) at least $250,000 per year or have over $1 million in net worth. Note that not all brokers have this prerequisite.


If you only want to use a small chunk of your $20k to invest in real estate, then Fundrise is a great option. The company allows investments as low as $500 into eREITs (think of a mutual fund for commercial real estate) and eFunds (investments in residential-only real estate assets). And you don’t even have to be an accredited investor to join.

Visit Fundrise or read the full Fundrise Review

This is a testimonial in partnership with Fundrise. We earn a commission from partner links on DoughRoller. All opinions are our own.


RealtyMogul offers a way to invest in commercial real estate without having to do any of the actual work of finding a property and renting it out. Their core offerings are for accredited investors only, but they have newer products targeted at a wider range of investors. With a minimum investment of just $1,000, RealtyMogul makes it easy to get into the commercial real estate game.

Visit RealtyMogul or read the full RealtyMogul Review


Streitwise is another way to invest in commercial real estate without needing to be an accredited investor. With Streitwise, you can invest in REITs with a minimum of $5,000. With Streitwise, you’ll be paid quarterly dividends on the commercial properties in the portfolio.

Visit Streitwise or read our full Streitwise review

Real estate investment can yield high rewards, but that also entails a lot of risks. Rather than aiming big and possibly failing big, try to make smaller informed decisions until you feel confident.

You can also consider investing in REITs–this allows you to invest money in a property without physically owning it. You can secure high profits without taking risks associated with property ownership or flipping.

Put the Money in a High-Yield Savings Account

While this method may not seem like the most exciting thing to do with a large sum of money, it can be highly lucrative.

High-yield savings accounts differ from standard checking accounts due to their higher interest rates. The longer you hold your money in them, the higher your returns will be.

It isn’t quite as exciting as a high-risk investment, but it isn’t without its merits. The motivation behind savings is to grow your money slowly over an extended period. Its main appeal is the lack of risk associated. Your savings account will not eat up your funds. It’s only going to help them grow.

Compare savings accounts offered by various banks and go where the money is. You can keep healthy interest returns coming in. Your gains will be substantial if you are smart about investing this lump sum.

Make Use of Peer-to-Peer Lending

Peer-to-peer lending sites, or P2P websites, connect lenders with borrowers. They aren’t a traditional loan service, however. What makes them unique is the accumulation of interest the lender will receive. As a lender, you receive your original total back once the borrower has repaid the loan and the subsequent interest total.

This investment strategy can be risky, as is always the case when lending money, but the returns can be substantial.

Substantial returns come with higher-end interest rates. However, remember that the higher the interest rate, the higher the risk. If a borrower offers a high-interest rate, it’s likely because they need the loan amount. This need can indicate financial instability. Make your choices wisely.

To get started with peer-to-peer lending, you will need to sign up with a P2P site. Sites like Prosper or LendingClub are excellent places to start. Simply open an account, deposit money, and decide on an interest rate you would be open to receiving–that will narrow down your options for investing.


Prosper offers personal loans to people who need them for a variety of reasons. As an investor, you invest in “notes,” or small slivers of the loans made through Prosper. You can choose what you want to invest in or use auto-invest. You’ll need to use a whopping $25 of your $20,000 to start investing with Prosper.

Lending Club

LendingClub is a similar platform that connects borrowers and lenders for things like auto and medical loans. As a lender, your minimum initial investment can be as low as $1,000. The platform offers higher rates of return than what you’d typically get for the traditional fixed-income investment.

P2P sites usually offer advice for beginners on how best to set up their lending amounts. Prosper’s homepage has a letter system that moves from AA up to HR, denoting the increasing risks of lending. A word of advice: If you’re new to P2P lending, start at the lower interest rates and work your way up.

You don’t want to stake your entire fund on a risky borrower. The higher interest rates can be enticing, but investing is about playing the long game. Consider your future goals before making any rash decisions.

You can predict which risks are worthwhile by paying attention to a site’s default rate, too. This figure refers to the rate at which borrowers fail to meet their repayments. The higher the default rate of a P2P site, the higher the number of failed repayments.

This number isn’t always the end of the world. Some sites do offer contingency payments to account for failed loan repayments. Still, you must do your due diligence before investing in any P2P site.

Invest in Cryptocurrency

Cryptocurrency investing is more popular today than ever before. You don’t have to look any further than Coinbase to realize that this is true.

Not only is Coinbase a publicly traded company, but it also has more than 73+ million verified users. It’s a simple, yet powerful system for buying, selling, and managing cryptocurrencies such as Bitcoin and Ethereum.

The top features of Coinbase include:

  • Secure storage
  • Recurring buys
  • Protected by insurance

There’s nothing complicated about investing in cryptocurrency. So, do your homework, sign up for a platform such as Coinbase, and make your first investment. Just make sure that you’re confident in your approach, as cryptocurrency is a riskier investment when compared to more “traditional” options.

Invest in Art

Investors are always on the lookout for new ways to diversify their portfolios to further mitigate risk, or perhaps to beat the stock market. This often leads them to ‘alternative’ asset classes like precious metals, fine wine – and fine art.

With the value of art being so subjective, it can be a high-risk asset. However, blue-chip art – works by household names – tend to retain their value and appreciate over time, significantly outperforming stock indices. Historically, investing in a Van Gogh or a Warhol has been the preserve of multi-millionaires, but innovative platforms are now making it possible to include shares in blue-chip artworks as part of lower value portfolios too.


There are a few platforms for investing in artwork shares, but Masterworks is the only one focused specifically on blue-chip art. Ownership is tracked by blockchain, and the work can only be sold when all owners vote to do so. As such, it is a long-term investment – with artworks typically selling after 5-10 years – but a potentially lucrative one.


Visit Masterworks or read our full Masterworks review.

Diversify Your Investments (Why It’s Important)

Diversifying your investments is necessary, particularly when you’re investing this amount of money. To recap, diversification is looking at the full portfolio and making sure it’s not only well-balanced but aligns with your investment goals and objectives.

To illustrate, let me give you an example. The opposite of diversification would be to put all of your money into one stock, one asset class, or one sector of investments. So if you had $20,000 to invest and you put every dime into Apple stock, crypto, tech stocks, or bonds, you’d be under-diversified. Your portfolio isn’t diverse enough.

When you’re thinking about investing $20k, think broadly. If you’re putting all of it into stocks, then make sure you have a broad mix of stocks in the portfolio. With individual stocks, I don’t recommend more than a 10% stake in any one single stock, but you can adjust this to your individual needs.

But I’m encouraging you to think beyond just stocks. Think broad diversification. With $20,000, you have the ability to invest in multiple asset types. For example, stocks, high-yield savings, art, and crypto. That’s a general example, but you get the idea.

The reason this is so important is that you don’t want to put all your eggs in one basket. If one of your stocks, asset classes, sectors, etc. tanks, and you’re well-diversified, you lower your risk of losing everything. Diversification helps balance things out.

So when you go to invest your $20,000, make sure you’re spreading it across a wide variety of opportunities.

How I Came Up with This List

To come up with this list, I looked at a variety of factors:

  • Diversity. The first, and most important thing is that the list had to be diversified. With $20,000, you start to have a lot of different options as to how to invest your money. So I wanted to curate a list of ideas that was diversified enough to accommodate a variety of risk profiles.
  • Beginner to advanced. This list isn’t just for beginners, nor is it just for advanced investors. It was important to include options that could be for any skill level. And even within most of the options listed, there’s going to be a range of skill levels. For example, investing in stocks can be for beginners or more advanced types. Beginners might gravitate toward things like ETFs, while advanced investors might want to pick individual stocks.
  • Potential for good returns. I also wanted to include investment options that could provide a good return on your $20,000. That’s a lot of money to invest at once. While nothing is guaranteed in the world of investing, the options above should provide good returns if you’re making smart investments and monitoring them.
  • Ability to test the waters. Lastly, I included things like robo-advisors and crowdfunding for real estate because it allows you to tap into the stock market and real estate market, respectively, for a low cost (and generally lower risk). This way, you can begin to see how both markets work and increase your investment (or change it completely by picking stocks or buying real estate, for instance) in time.

Why You Should Trust Us

So why should you trust these recommendations? Dough Roller has been around for more than a decade, providing readers with advice on how to manage their investments, build wealth, and save more money. Collectively, our team of writers and editors have an absurd amount of experience in researching and writing about these topics.

And, personally, my background is in investments. I have two degrees in Finance with a focus on investing, and I spent the better half of my working career in the financial sector. Not to mention, I’ve researched these topics in-depth (as you can see by my content history here) so I feel comfortable saying I know what I’m talking about.

That being said, if you’re unsure or uncomfortable, take the time to do the proper research before investing this amount of money — it’s a lot. And before picking a specific company to invest with, like Betterment, for instance, check out their ratings on something like Trustpilot, so you can see how others feel about them, too.

The way I see it, the fact that you’re even considering investing $20,000 is a huge start to growing your wealth, and that’s the primary focus here.


Regardless of your decision on how to invest 20k, you’re in a good position. There isn’t any wrong way to invest this sum of money. Just be wary of the easy mistakes you can make by pursuing profit without due risk assessment.

While it is possible to make substantial amounts quickly through investments, it isn’t likely. Focus on your long-term goals. Invest wisely and reap the benefits for years to come.


  • Chris Muller

    Chris has an MBA with a focus in advanced investments and has been writing about all things personal finance since 2015. He's also built and run a digital marketing agency, focusing on content marketing, copywriting, and SEO, since 2016. You can connect with Chris on Twitter @moneymozartblog.