A not long time ago, we discussed the possibilities of investing $1,000. And if it was a rather small amount, then $10,000 is looking much more fascinating for investments.
To find the correct answer to this question, we should take several things into account. First of all, goals and periods of investments. If the period is rather short, then one may risk and consider aggressive methods of investing. If you need to use the money, which you want to invest, in a couple of weeks or months, then you can choose an option of investing it in stocks that may bring profit in years, that’s why investment horizons are a very important parameter.
Another factor is your attitude to risks, which can be assessed by answering some questions, for example, how much will your life change if you lose this money? If your appetite for risks is okay, then you can try the currency market and trade with the leverage according to a chosen strategy.
Emotions have a very significant influence on investments: a lot of beginner investors tend to close positions when the market starts falling, at the time of a slight drawdown, which may sometimes be considered as a good time for buying. If emotions can’t deal with such drawdowns, it might be better to switch to conservative ways of investing.
What is the best way to invest $10,000?
The modern world offers plenty of ways to invest your money and some of them don’t even require you to leave home. However, you should remember that many of the offered investment methods are of speculative nature, while more aggressive ways imply significant risks. Moreover, unfortunately, but the previous results shouldn’t be considered as a prediction of receiving profit in the future because financial markets are quickly changing, as well as global affairs and events. Let’s discuss the most popular investment methods.
There is an opinion that if there is $10,000, one can trade on the stock market with comfort. Still, this trading implies not only buying stocks: an investor must follow the news and behavior of stocks. The most part on investors seeks to buy during the market meltdown because later it will recover and the price will go up. However, the anticipation of a rebound may take much time.
For example, Warren Buffett dissuades from choosing any particular stocks but offers to invest money in some unexpensive companies. If you take a closer look at Buffett’s portfolio, you will find shares of such companies as Apple, Bank of America, Coca-Cola, American Express, JP Morgan Chase, Moody’s, Goldman Sachs.
These companies’ shares plunged early in the year but they are growing again and, probably, may reach their peaks in the nearest future. Such market movements confirm that the best possible moment for buying stocks might be the time when they fall to lower prices because such investments are not considered to be short-term
For example, in March 2020, shares of Bank of America were trading at $18 in comparison with today’s price of $30. Coca-Cola fell lower than $37 per share in the same month but now they are moving close to $53. Goldman Sachs shares plunged to $131 but today they are growing and trading at $257. An exception is Apple and Moody’s – these stocks didn’t plunge significantly as they have been moving within a stable uptrend for a long time. Moreover, some stocks are moving in wide sideways channels and after such declines, they usually start growing towards the upside border, while the others are moving to the upside without significant corrections.
There is also an alternative opinion that investing funds in the S&P 500 will eventually provide better results than any hedge fund manager on Wall Street. Also, there are researches, which show no matter what stocks from the index we choose for our investment portfolio, the profitability from buying the index itself will be higher.
Sure, the stock index may plunge pretty much but it usually recovers quite quickly even despite crises. This year, the S&P 500 plummeted to $2,200 and many analysts were sure that it was only the beginning of a serious descending movement. However, the index recovered rally fast and then updated its high. At the moment, it is moving close to $3,690.
If you want to get more information about stock trading, please check this post.👇
This market both offers the opportunity to get huge profits and implies high risks for beginner investors. Most likely, such a market shouldn’t be considered as a place for a simple investment, for example in the Euro or British Pound. Forex requires constant trading and improvement of one’s strategies. On the other hand, such factors as the opportunity to quickly leave the market and use ever-changing tendencies may be considered as an advantage. However, for proper trading on Forex, one should be experienced enough and follow the rules of capital management. Unfortunately, the high leverage causes a lot of beginners to open hasty positions and, as a result, they lose money.
In our case, with $10,000 for investments, one can choose a simple trading strategy and trade the minimum lot in a small number of instruments. In the long run, any trend strategy here will eventually bring more profit in comparison with permanent assessment of charts and search of price patterns. Just follow the strategy rules and manage risks, and let your profit increase.
Check out our post about how to trade on forex to get more info about this theme. 👇
Experience has proven that Bitcoin grows faster than the others but traders recommend to invest in cryptocurrencies that make the Top-5 in capitalization. And this top, as we can see, includes same old digital assets: Bitcoin, Ethereum, XRP, and Litecoin.
Here, just like in the stock market, it’s better to buy after a strong decline. Such declines in different assets took place in March 2020 and since then, digital currencies have been steadily growing with slight corrections. And if Bitcoin has already updated its all-time high, then Ethereum, XRP, and Litecoin are moving pretty far from theirs.
Moreover, XRP plummeted to its lows after the United States Securities and Exchange Commission announced its intentions to accuse Ripple of issuing unregistered securities, that’s how the regulator calls XRP tokens. As a result, there are risks of further decline of this cryptoasset until the Commission makes a final decision.
If one considers investing in cryptocurrencies, Bitcoin is the one that grows more aggressively: even Elon Musk got interested in buying this digital asset. Also, just a little while ago, Michael Saylor, the head of MicroStrategy, asked Elon to convert some part of Tesla in Bitcoins. Such a move may motivate other companies from the S&P 500 index to do the same, thus pushing the digital currency to higher levels.
BTC has already broken all records. Ethereum is in its mid-journey towards the high, while Litecoin has covered only 30%. That’s why, one shouldn’t exclude the possibility that in the nearest future Ethereum may test $1,400, while Litecoin may reach $375.
Many people believe cryptocurrencies are an extremely aggressive sphere for investments and Warren Buffett is one of them. However, as much as conservative investors would like it to be, profitability from buying cryptocurrencies posts record gains>
Make sure to read our post about how to earn on crypto trading. 👇
So, we’ve considered several ways to invest $10,000. They may be investments in stocks, the S&P 500 index, Forex, or the cryptocurrency market. Stocks and the index are a more conservative approach to investing money. However, here there are tendencies and the best possible moments for buying, declines, but not all stocks fall significantly. For example, stocks from Warren Buffett’s portfolio, of Apple and Moody’s didn’t fall significantly in comparison with other companies from the S&P 500 index.
To trade with $10,000 on Forex in the right way, one should choose a trend strategy and trade with the minimum lot to avoid breaking the rules of capital management. This amount of money will allow us to trade with comfort and not to worry much about possible drawdowns. On Forex, one will need experience and self-control. Yet this way of investing money is riskier than stocks or stock indices.
Cryptocurrencies are probably somewhere in between Forex and stocks. Many people are still pretty negative about the cryptocurrency market but digital assets continue developing and entering all spheres of our lives. It will just suffice to mention statements from global Central Banks about the creation of national currencies, such as a digital Euro or Ruble. And if Buying Bitcoin while it is on the top is not a good idea, then one can always take a closer look at altcoins and choose from, for example, Ethereum or Litecoin, which are still moving quite far away from their all-time highs.