What To Do With 20k in 2023 - Flip It, Invest It, or Save It?

Have you come across $20,000 extra dollars? If so, congrats! But, now you have to figure out what to do with it.

If you're not sure how to spend or save it, the below articles is all about what to do with 20k.

In other words...almost everything.

If you’re looking for saving, checking, or investment options, check out our helpful posts below:

• Best Savings Accounts
• Best High-Yield Savings Accounts
• Best Checking Accounts
• Best Stock Apps
• Best Investment Apps
• Best Crypto Apps

And be sure to give these other related posts a look too:

• What To Do With $1,000
• What To Do With $10,000
• What To Do With $50,000

And finally, if you’re just looking to get more comfortable with money management, be sure to download this free monthly budget template.

Now, let's get into it. These are some of the smartest ways you can invest $20,000—

1) Pay Off Debt

If you have debt with over 6% interest, pay that off.

It can be risky to earn 6% or more by investing in the market or through real estate, but if you have interest on your debts that you can eliminate simply by paying off the principle, then that makes a ton of sense. 

2) High-Yield Savings

If you don't have a true emergency fund (ie. a savings account that you can access easily if sh*t hits the fan), then now is the time to start. 

This doesn't mean you need to earn nothing on your money. Find a top high-yield savings account and earn 4% APY or better.

3) Invest in Dividend Stocks

Want to make passive income on that 20k? There are quite a few ways to do this, but it depends on how much money you want to earn month to month.

With dividend stocks, you invest in a company stock that pays you money each quarter. You can either reinvest these dividends or in some cases, live off of them. The choice is yours.

Here are a few of the top dividend-paying stocks:

• Aflac Inc: 2.74%
• AllianceBernstein Holding LP: 7.9%
• Camping World: 5.4%
• Exxon Mobil: 5.9%
• Prospect Capital: 8.8%

As an example, if you invest your 20k in Camping World, you'd earn over $1,000 a year.

Of course, don't put all of your money in one basket. But, investing in dividend stocks as a whole can give you quite a bit back in passive income.

4) Invest in a Certificate of Deposit (CD)

CD interest rates are over 5% right now. Invest $20k for a year and you'll earn yourself $1,000. Not too shabby for an incredibly safe investment.

How do you buy a CD? You can do a quick search online or walk into your local bank and invest in one there.

5) Invest in Real Estate

Wondering what to do with $20,000 in real estate?

You could choose to put a down payment on a physical rental property, a rental space (like an RV, a garage, a glamping tent, etc), or even invest in REITs that pay dividends too.

6) Earn Interest on Short-term Corporate Bond Funds

You want to keep your 20k safe, but you want it to earn a little money at the same time. So, what is the best way to invest 20k short-term?

Corporate bonds are bonds issued by major corporations. This investment would earn you interest at regular intervals too, usually twice a year. And, with a bond fund, you'd have access to investments across different companies, industries, and more, so your investment is safer than just a single stock.

7) Invest in Money Market Accounts

Another short-term investing solution is money market accounts. Money market accounts are can pay a higher interest rate than regular savings accounts.

But keep in mind that they usually require a higher minimum investment, too. But, if you're willing to invest your 20k short-term, this should be doable.

8) Invest in Short-term U.S. Government Bond Funds

Government bonds are similar to corporate bonds. But, instead of being issued by a corporation, they are issued by the U.S. federal government and its agencies.

It's important to note that these bond funds aren't backed by the FDIC. But, at least you know that the government promises to pay you back.

These accounts and funds will vary in how much they earn you. But, they're highly liquid accounts, so you can earn some interest while your money sits short-term.

What is the Smartest Thing to Do With 20k?

The smartest thing you can do is pay off debt.

If you have debts with interest payments, you could pay those off and save on that interest, which is just like earning it by investing, but paying off debt yields a guaranteed return.

If you don't have any debt, then build up a well-balanced portfolio.

A financial planner can help you decide what could work best for you, but most people should likely focus on index funds and perhaps bonds and keep them balanced. 

How to Flip 20k

If you want to double your money with your 20k, flipping is definitely an option. The best way to flip $20,000 is to start a business or invest in something that will earn you money right away.

1) Invest in real estate 

The first way to make money flipping is to invest in real estate If you live in a low-cost-of-living area, use the 20k as a down payment on a home, and rent it out to start earning passive income right away.

Read more: What Is The BRRRR Method?

2) Try house hacking 

By investing in real estate, You can also try house hacking. This involves getting a roommate or renting out a room/basement or even an RV on your property to start earning money.

3) Invest in REITs

Invest in a Real Estate Investment Trust (REIT). That way, you don't have to manage people or be a landlord, but still earn money from residential and commercial real estate.

Read more: Invest in Real Estate With CrowdStreet

4) Start a business 

However, I only recommend this if you know you can manage it and make it profitable. There are lots of side hustles and businesses that you can start for less than 20k too. So, you can start there and see if they work out before investing more money into them.

5) Flip cars 

One other way Derek has made money flipping is by flipping cars.

• Buy them cheap
• Fix them up
• And, resell them for a 20%+ profit

With 20k, you could flip multiple cars at once and earn quite a lot if you know what you're doing! Heck, if you're wondering "how can I double 20k?", flipping cars might just be the option for you!

What to Do With an Inheritance

The first thing to do is to take the time to grieve if it came from a loved one. Don't make any sudden moves with the money — when you're in an emotional state, you may not think clearly when it comes to spending.

While you're doing that, stick the money in a savings account. You could choose a high-yield savings option so it's also earning some interest while you wait.

Once you've taken the time to start the healing and grieving process, then you can start making plans with the money.

What to Do With a 20k Bonus

First, make sure you won't owe any taxes on it! If you got a bonus from your W-2 job, they should have already done this. But if not, you don't want to owe more to the taxman. Better to be safe than sorry! 

After you've checked that, it's important to look at your short and long-term goals. Do you:

• Have debt to pay off?
• Want to start investing?
• Want to buy a home?
• Need to save for something important (like college, a new car, etc)?
• Want to take a vacation?

Whatever your goals and needs, this will help you determine how best to spend your 20k. Focus on needs first, then work into wants. P.S. It's okay to have wants! You just want to balance both needs and wants with your windfall.

What to do With $20,000 in your 20s?

Getting an extra $20,000 in your 20s can be life-changing for most people. But, how you spend your 20k will depend on your individual needs and wants. I'll go into more detail about how to flip and invest 20k below too.

Is 20k in savings good?

Is it a good thing to have 20k in savings?

Yes!

Especially if you're in your 20s. That could be...

• an emergency fund,
• a down-payment on a house,
• and so much more.

Of course, you'll want to come up with a plan for that money. You don't want to just have 20k saved and not get any benefits out of it. At the very least, put it in a checking or savings account with a high-earning interest rate.

What should I do with my savings?

So, if you stash $20k into your savings, what should you ultimately do with it? You should do whatever you need to do! Here are just a few things you can do with your $20,000 in savings:

1. Pay off high-interest debt
2. Get a reliable car (if yours is on its last leg)
3. Start investing
4. Start working on earning passive income
5. Go on vacation
6. Take a mini-retirement
7. Donate some of it

Of course, you don't have to do all of these (or any of them). But, they can be used as inspiration and ideas for what you may want to spend your money on.

How NOT To Spend Your Money

There are plenty of things that you can do with your 20k to grow it or save it. But, there are also a few things that you shouldn't do.

Here is what you should avoid doing with your 20k:

• Gambling. Betting on winning big probably won't work. You may win big, but you're more likely to lose all of your money.
• Investing in a single source. Of course, we all think Apple will stick around for the long haul. But, that doesn't mean investing all of your money in Apple stock! Instead, keep your investments diversified.
• Blowing it. This can be easy to do if you don't have any plans with your money. Vacations, extra food, and "stuff" sound really good when you have extra money laying around. But you could sabotage your future self if you spend too much.

Of course, the choice is always yours. You can spend your money however you want. But, these may not be the wisest choices if you're looking to set up a financially secure future.

Key Takeaways

• If you have $20,000 of high interest debt, then you should probably pay off the debt!
• If you don't have any debt, but you're living paycheck to paycheck with no emergency fund, then you should probably just stash the cash in a savings account and keep it for emergencies!
• Or, maybe you're doing great financially and you just want a passive investment that's going to earn you decent money for the long term. You might be interested in a simple index fund that follows the overall stock market!

If you want to be smart with 20k, the best thing you can do with the money is park it in a simple savings account for 6 months and just think about what that money could do for you.

Once you take your time and decide, you'll probably do just fine with the use of that money! But, if you don't follow this advice and you just spend the money immediately...chances are that you're going to regret it.

Did you discover what to do with 20k? Where do you plan to put the money??