How To Invest 20k In Australia
There is no one best investment. Every investor has to decide for himself which type of investment fits him most.
1. Buy Shares or ETFs
Buying shares online is very easy. It is one of the major ways people invest. If you want to get started with share trading, just follow these steps:
- Pick a broker that accepts Australian traders. Take a look at this list.
- Make a deposit (the minimum deposit is usually $100-$200)
- Pick a company and buy some shares
Before you purchase stocks, you need to be well aware of the stock market.
Knowing how the stock market works will help you follow trends, and purchase shares that will increase in value. As you can imagine, when it increases, a huge return for the cash spent is allocated.
It’s vital that you know as much about the stock market as possible, so you can go through the internet to pick tips or read financial magazines. There are countless tutorials and guides available as well. If this is not enough, you can take the leap and hire a tutor as experts in the field offer guidance.
You can get hold of a stockbroker as well. They work with clients and purchase shares for them. They will also advise you on what stocks are worth your time. You need to be careful when choosing a stockbroker as they need to be reliable. If not, you’ll be in the wrong hands.
You can ensure this by doing some research. From the options available, remember to work with major names like Plus500, as they’re the most reputable in the industry, compared to names like Robinhood.
2. Invest in Bitcoin (and other cryptocurrencies)
Cryptocurrency is a great way to invest your cash, especially if you have 20k. There are countless cryptocurrencies available, and from this list the most popular would be Bitcoin. As of now, the price of 1 bitcoin is over $10,000 USD.
If you have 20k, you can easily buy a bitcoin. As time goes by, its value will increase so you can cash the coin in when it peaks. If you’re not a fan of spending so much on 1 coin, you can buy half or even a quarter of it.
However, you need to analyze the market as sometimes, Bitcoin can drop heavily. This happened in 2017 when the coins fell from 20k to 5k USD.
Similar to investing in stocks, there are many resources online that could help you. Of course, Bitcoins aren’t the only cryptocurrencies available, they’re just the most stable. So, do your research and find the best one for you to work with.
3. Start A Business (online or offline)
A business is a huge investment. If you devote the right amount of capital and care, a business can prosper and bring a huge return. Hence, you can think about putting the 20k to good use and pursuing your passion of starting a business of your own.
Of course, you need to know what you’re doing because if you go about it blindly, it’s going to fail.
There are many ways you can start a business with 20k in Australia. One option is to start an online business, which can be relatively low cost and offer a lot of flexibility. With an online business, you can sell products or services, offer consulting, or even create and sell digital products like ebooks or courses.
Another option is to start an offline business, which can offer more stability and security. This could be anything from a small brick-and-mortar shop to a service-based business like a cleaning or landscaping company. Whatever you choose, it’s important to do your research and choose a business that aligns with your skills and interests.
If you’re unsure about starting a business from scratch, you can also consider buying an existing business. This can be a great option if you’re looking for a business that already has a proven track record and customer base. However, it’s important to do your due diligence and thoroughly research any potential purchase before making a decision.
Keep in mind that starting a business requires a lot of hard work and dedication, and there is always risk involved. It’s important to have a solid business plan in place, as well as a clear understanding of your target market and competition. With the right approach, however, starting a business can be a great way to invest your 20k and potentially achieve long-term financial success.
4. Put Your Money in the Bank
A fixed-term deposit is similar to a savings account. A savings account is run by a bank and it allows customers to deposit any amount of cash. The cash would have interested added to it, which will accumulate over time.
A fixed deposit offers more interest for the cash added. Most of the time, the amount of interest added will be more than that of a savings account, so this is perfect if you have large amounts of cash. Thus, you can consider depositing your 20k in one.
However, they are fixed, as the name suggests. This means the cash would be locked into the account for a certain period. If you like, you can withdraw it but this would be a tough procedure that requires a lot of paperwork. What’s more, you’ll be penalized and will have to pay a fee.
There are countless establishments that offer fixed deposits, apart from banks. These include credit unions and finance houses. In fact, banks are known to offer the least amount of interest compared to finance houses and credit unions for such accounts.
If you’re interested in opening a fixed deposit, know that not everyone can deposit cash in one. Only large sums are accepted, which makes 20k perfect as a deposit.
If you’re planning on opening one at a finance house you need to be careful. They’re not banks so they have less credibility. This means they can easily go bankrupt, flushing the money you’ve deposited down the drain.
5. Start an Emergency Fund ASAP
A great investment can secure your safety. This can be done through an emergency fund that you can tap into on a rainy day. Of course, you can keep the 20k in your home for such an emergency too. However, it needs to be locked away in a safe.
If you don’t like the idea of storing an emergency fund at home, you can always deposit the cash in a savings account. Savings accounts add interest to the money deposited. However, the interest is not as great as a fixed deposit. What’s more, you won’t be penalized if you were to withdraw the cash whenever you want, such as during an emergency.
6. Get Rid of Debt
If you want to make an investment with 20k, one of the best things you can do is to get rid of any debt you have. If you have any debt, you won’t be able to save for your future. Your bills and daily needs won’t be met either, as the majority of the cash you get will have to be used to pay back the debt.
Thus, it’s vital that you put it to good use and pay off any outstanding bills or sums you have. This is especially true for bank loans or credit cards as failure to pay them could lead to a court case, which means possible jail time.
If you have a mortgage for your home, the property won’t be yours until the loan is paid off. So, if you ever sell it, you’ll have to use the cash you get to pay the loan back. This is a shame as a property is a major investment that increases in value over time. So, it’ll triple in value as the years go by.
Because of this, paying off a mortgage is vital if you’re thinking about selling it in the future. You can get a huge return from the sale.
If you’re not a fan of paying the entirety of your debts off, you can use the 20k to pay off the capital. With the remainder at your disposal, you can invest it.
7. Contribute To Your Super Fund
In Australia, companies offer employees a super fund. Cash will be deposited into an account so when employees retire, they’ll have enough cash to live off of. Unfortunately, the cash deposited may not be that much as it’s a tax that is cut from your salary.
So, you can increase the sum in your super fund by depositing cash. With your 20k, it would be combined with the cash your employers have added, and grow with interest.
At the end of the day, you’ll be making a great investment and you can live comfortably once you’ve retired.
Conclusion
As you can see, there are many ways for you to invest your 20k. These are:
- Contributing to your superannuation fund
- Investing in cryptocurrencies
- Buying stocks
- Paying off debts
- Having an emergency fund
- Starting a business
- Putting the cash in a fixed deposit
If you have more money than 20k, check out or invest 100k article.
Starting with a small investment is key for long term success. I tried the broker you mentioned and I like it so far.