If you’re looking to invest 50,000 Euro, you’ve come to the right place! In this article, we’ll share seven ideas for making the most out of your monetary wealth and putting it to good use. Some options are more conventional than others, so have fun reading them!
Diversification with an Extensive Portfolio
The bigger a portfolio gets, the more investors must pay attention to diversification (spreading their money over different assets). This is to limit the potential of a single investment bringing the whole portfolio’s value to zero.
While some people claim to “put all their eggs in one basket and watch that basket well”, for most people, that’s not a suitable option. Factors beyond your control can cause the whole basket to fall and crack all the ‘eggs’ in there – even if you’ve been watching it like a hawk!
No one wants to see this happen – especially if we’re talking about sums of 50,000 Euro and up!
With a diversified portfolio that has 50 different positions for example, you won’t be so exposed to the risk of a single asset failing and tearing your whole net worth down with it.
7 Ideas on How to Invest 50,000 Euro
When looking to put your 50,000 Euro to work, there are many ways to go about it. In the following section, we will present seven ideas on how to invest your money – some more suited to traditional “investing” than others.
Pay back debt and fill your emergency fund for guaranteed returns
“Guaranteed returns”? You’ve likely never read that phrase on any financial site before because it’s a big red flag for all regulatory bodies. However, paying back your debt and filling your emergency fund will provide these returns for you.
In the majority of cases, debt is also accompanied with interest payments. Be it a loan you took up to study, or the overdraft fees on your bank account because the car broke down, debt tends not to be free but comes with interest rates of 3% to more than 10%.
If you decide to pay the debt back as soon as possible, you’re making a guaranteed return equal to the interest rate of your loan – because you won’t have to pay the interest fees. The same goes for your emergency fund; having it full saves you from needing to take out high-interest credit to pay any large bills.
Start a business
Many businesses nowadays can be bootstrapped with minimal capital – but not all. If you’re looking to start a small business that needs machinery, space and maybe even employees, there will also be extensive capital needs.
An excellent way to go about this is to create a business plan. Here you can collect details about your business, potential customers, and ongoing costs. After going through this, you will know if your business could be profitable and how much money you will need to get started. With a lean setup, 50,000 Euro might be enough for a good start.
Use 50,000 Euro to invest in yourself
One of the factors in every person’s life that considerably impacts their expected net worth is the amount of money they can make in the first place. Parents want their kids to be doctors, lawyers, and engineers because they assume they will earn a lot of money. To reach that point, education is needed.
While 50,000 Euro can help you book courses and go to study, it doesn’t necessarily mean that you have to spend the money directly on education. Perhaps there is a gap year you always wanted to take, or that skill you wanted to learn but didn’t have the time.
Now, spending money to take a year off and do something you’re interested in doesn’t sound like it will grow your net worth at first glance. But think about it – if you’re happy and pursuing something you’re passionate about, you will likely become good at it. You can either monetize these skills, or they may give you the power to recharge your batteries in your everyday life.
Invest in the stock market
When investing in the stock market, you will find yourself with many avenues to explore. One could be to go the passive route, pick a broad World Index ETF, and put the money in there. Then just let it ride until you’re retirement or goal age.
If you’re more into actively picking stocks, investing 50,000 EUR allows you to put together a well-diversified portfolio with numerous positions. By diversified, we mean that equity investments are spread among different industries and countries.
P2P Lending is an exciting investment option for a portfolio because it offers a steady interest rate that is being distributed back to you. This is opposed to the rising and falling prices that we see on the stock market. For some investors, this is a way to work on their passive income.
If you consider an investment in peer-to-peer lending, then the first step to doing your due diligence is researching the underlying loan originators that issue the loans on the platform. Another valuable feature to look out for is a buyback guarantee.
Home sweet home – Airbnb
Real estate investments are very prominent among all age groups. Instead of just having something on paper, you have a tangible asset you can see and touch. While buying a house or apartment for 50,000 Euro might not be feasible, you could use that money to furnish an apartment for renting out on Airbnb.
Airbnb is a platform where property owners can provide their apartments as accommodation to other people. Initially intended for everyone to offer their living space if they go on a trip or have an extra room, Airbnb soon developed into a business for people who have flats they wish to rent out. Thus, if you want to become a host, that could be a great way to start.
The Options are Many – Align Them With Your Goals
As the saying goes – “All roads lead to Rome”. When you’re looking to invest 50,000 Euro, there are many ways you could go. However, it’s up to you to see what suits your investment goals and risk tolerance.
A sabbatical year away from work might benefit you and your net worth more than putting your money into stocks or P2P loans. Wealth isn’t just the number on your bank account, but also your health, relationships and overall wellbeing.
So make sure to keep these factors in mind when choosing your investment.