How to invest 10,000 USD?
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.
Oil and gold
As a rule, gold prices grow in financial crises. In 2020, the price for this precious metal reached over the high of 2.070 USD. On the whole, the bullish trade started developing in 2018, and the price kept growing steadily for two years.
Today, we are witnessing a descending correction yet it is not that the potential for growth is over. Investors and traders switch to riskier assets, but as soon as it starts looking as another financial collapse, market players will start investing in gold as actively as ever
On the chart, you can see a quality support area between 1,645-1,580 USD. Here lies the lower border of the ascending channel, from which we van expect a bounce upwards in an attempt of another increase.
As for Brent oil as an investment option, growth started here at tge beginning of 2020. Oil prices kept demonstrating highs and lows. Anyway, these days many major banks expect the growth to continue, aiming above 100 USD per barrel. It was hard to imagine such levels when oil traded below 20 USD per barrel but, as they say, buy when blood is flowing, i.e. at the times of market panic.
Many traders who are used to trading currency pairs, avoid gold and oil, but these instruments are also very technical, and trends last for years.
We have discussed several ways of investing 10,000 USD. They include investments in stocks, the S&P 500 stock index, Forex, oil, and gold. Stocks and the index are a more conservative method of investing but they feature trends, and the best moments for buying are declines, however, not all stocks drop noticeably. For example, in Warren Buffett’s portfolio, Apple and Moody's shares have not dropped as noticeably as other stocks or the S&P 500.
To trade a sum of 10,000 USD correctly in Forex, choose a trading strategy and trade a minimal lot in line with your money management rules. Such a sum provides for comfortable trading, without the fear of a possible drawdown. You will need experience and the ability to brace yourself. Anyway, this is a riskier investment option than stocks or stock indices.
Investments in oil and gold are somewhat in between Forex and stocks. Many traders avoid these markets but they feature good trend movements, so that the price can go in one direction for long. And while right now, buying in Forex on resistance might not be the best decision, take a look at gold, which is in a downward correction.