Sooner or later in your life, you are going to have an unexpected windfall. Whether through a bonus, an inheritance, or some other fortunate turn of events, you could suddenly end up with $10,000 that you must figure out what to do with. Yes, it CAN happen. It might be tempting to splurge on a vehicle or some consumer item or other luxury good, but what about making the money continue working for you instead? If you want to make that $10,000 windfall continue earning for you well into the future, here are five great places to invest it today.
Get Your 401(k) Match
If you have a 401 (k) retirement savings plan where your employer provides a certain amount of matching funds, then you should use your $10k windfall to ensure you get the maximum amount that your employer is willing to match. This action provides a near certain substantial return on your investment and likely provides you some shielding when April 15 comes around through the tax-deferred nature of most retirement plans.
Max Out Your IRA
If you have a standard Individual retirement account, you won’t get the matching benefits you get from a typical employer-based 401(k), but you nonetheless can fund your retirement plan. This will either provide you an immediate tax-deferred benefit, or shield you from tax penalties later (depending on whether or not you have a standard or Roth-style plan). You can currently contribute $5,500 annually to your IRA ($6,500 if you are 50 or older), and, depending on the time of the year, you may have an opportunity to contribute funds for a previous year, and amend your previous income tax filings as well.
Buy High Yield Blue Chip Dividend Stocks
Stocks that pay a high dividend each quarter can provide you a steady source of income. While $10k may not necessarily provide a substantial amount income via dividends, you can continue to invest the dividend each month into buying more stocks and gradually build both the value of your portfolio and the amount of dividend income it produces. Many great dividend-yielding stocks allow you to reinvest the dividends without any penalty, making them especially lucrative for many investors interested in these sorts of stocks.
Pay Off Credit Card Debt
Americans are depressingly over their heads in credit card debt, carrying an average balance of over $15,000 and paying out nearly $800 annually in interest on all of their credit cards. Paying off your cards with the $10k windfall is as effective an investment as anything else on this list. A credit card payoff will free up a significant amount of income that otherwise would be allocated for monthly card payments, allowing you to invest your money in things that provide real returns on investment. It can also help you improve your overall credit rating, allowing you to invest more, or purchase the asset that often serves as our greatest personal investment of all – a home.
Fix Your Roof
While many people, upon receipt of a $10k windfall, would immediately think of upgrading their kitchen, they should instead set their sights higher: repairing your roof is an investment that can save you real money in the long run. Repairing your roof can protect your home from costly damage during hurricanes, or bad winter storms. Moreover, roof improvements can often save you money on homeowner’s insurance as well. Bringing your outdated roof up to code with improvements, adding hurricane straps to secure the roof during bad storms, and increasing your shingle wind rating can all help to lower your insurance premium from 5 to 20 percent.