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The key difference between old money and new money is how a person obtained their wealth. Old money represents what may be called generational wealth — money that has been passed on from generation to generation in the form of cash, investments, and property. New money refers to self-made millionaires and billionaires, those who earned their money (or lucked into it, such as in the lottery).

Learn more about this construct and why this distinction is made.

What Is Old Money?

Old money refers to people who have inherited significant generational wealth — their families have been wealthy for several generations.

In the past, old money would have referred to an elite class: the aristocracy or landed gentry. In the U.S., families such as the Vanderbilts and Rockefellers represented early examples of old money. Today, families often associated with old money include the Waltons (Walmart), the Disneys (The Walt Disney Company), and the Kochs (Koch Industries). Should families such as the Kardashians continue to generate and pass down the great wealth they have in their bank accounts or other assets, they could one day be considered old money as well.

Recommended: How to Build Wealth at Any Age

What Is New Money?

New money then refers to people who have recently come into wealth, typically by their own labor or ingenuity.

Common examples of new money include tech moguls and self-made billionaires, such as Jeff Bezos, Mark Zuckerberg, and Bill Gates. Someone who wins millions of dollars in the lottery or becomes famous from a reality TV series (including many of the Jersey Shore cast members) would also qualify as new money.

You may sometimes hear the French term “nouveau riche,” which means “newly rich.” This tends to describe people who recently became wealthy and spend lots of money from their checking account in a flashy, ostentatious manner.

Recommended: Building Wealth in Your 30s

Differences Between Old and New Money

So what is the difference between old money and new money? There are quite a few distinctions, but remember that these are all generalizations. Each person who obtains wealth is unique.

Source of Wealth

The primary difference between new money and old money is the source of wealth. Old money has been passed down from generation to generation. Each member of old money typically feels a fierce responsibility to protect — and increase — that wealth.

Members of new money have earned that money in their lifetime, whether for building a tech empire, becoming a famous actor, making it to the big leagues as a sports player, or even making money on social media as an influencer. Some new money members might come into money through a financial windfall, such as winning the lottery or a major lawsuit.

Long-Standing Traditions

Inheriting generational wealth comes with a responsibility: Old money recipients usually must protect the family’s wealth to pass on to future generations. For that reason, those who come from old money may stick to their traditional investments and ways of life. Many inherit their parents’ business and then pass it on to their own children.

Those who are self-made or come into money quickly do not have long-standing traditions to fall back on. They are often the first in their community to make multimillion-dollar spending decisions. This can mean a steep learning curve and the need for guidance, which could make them vulnerable to poor advice and unscrupulous hangers-on.

Spending and Investing

How old and new money generally approach wealth management is one of their starkest contrasts.

Though they do live lavishly, members of old money can be more frugal (or calculated) with purchases than you might expect. For members of old money, spending is often more about investing than shopping for pleasure.

People who are a part of new money may feel more entitled to and excited by their funds. They may spend it more lavishly (and publicly). Some might feel that they worked hard to earn their money — and they’d like to enjoy it. They might want to show off their newly achieved status with designer watches or mega mansions.

That’s not to say that members of new money don’t invest. Famous celebrities, athletes, and businesspeople often invest in real estate or buy companies to increase their wealth. Generally speaking, new money might make riskier investment decisions for faster yields. They’re not thinking about generational wealth to protect with tried-and-true investment methods.

Taken to its extreme, this can have disastrous results. It’s not uncommon to hear stories of people who make a lot of money for the first time and spend it all, leading to bankruptcy and even mental health issues.

Recommended: How to Deposit a Check

Leisure

The stereotypes might be a little tired, but in general, people associate old money with traditional activities such as golf, skiing, horseback riding, and polo. On the flip side, members of new money might buy courtside seats to a basketball game, a garage full of shiny new luxury cars, or even a rocketship for a joyride into outer space.

Recommended: Knowing the Difference Between “Rich” and “Wealthy”

Social Perception

Interestingly, some of the richest people in the world come from new money. They’re today’s self-made tech giants. Yet some members of old money may consider themselves to be a higher class than the likes of Gates and Bezos.

To generalize, old money often perceive themselves — and are perceived by outsiders — as more educated and refined.

On the other hand, the public may view members of new money as harder workers and more innovative — clear examples of the American dream.

Old and New Money Lessons

What can one learn from comparing old and new money? Even if you are not wealthy, you can learn some valuable life and financial lessons from considering the difference.

•   It’s hard to protect generational wealth. Old money is very privileged. There’s no denying it. But many families lose their wealth in just a few generations. Old money families do work hard to maintain and grow their wealth for their future generations. They are able to avoid seeing their fortune dwindle.

•   It’s important to analyze your spending. Many people who come into wealth quickly don’t take adequate steps to protect their funds and invest them wisely. Horror stories of lottery winners losing everything should be enough to serve as a reminder that if a person comes into a large amount of money suddenly, they should take the time with a finance professional to build out their money management goals. Doing so may ensure your wealth grows, rather than runs out.

•   Stereotypes aren’t everything. Reflecting on the differences between old and new money, it’s important to note that these are merely stereotypes, and not everyone fits the bill. Just as people hope that others don’t judge them before they know them, the discussion of old vs. new money is a reminder not to form assumptions about someone until you get to know them.

Recommended: How to Achieve Financial Discipline

The Takeaway

Old money refers to families who have maintained wealth across several generations. New money, on the other hand, refers to someone who earned their wealth in their lifetime. Key traits typically differentiate old vs. new money, but at the end of the day, both refer to members of an ultra-wealthy class.

No matter how much wealth you have — and whether you inherited or earned it — it’s a good idea to protect it in a Federal Deposit Insurance Corporation (FDIC)-insured bank account that actively earns interest.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, named the #1 Bank in the U.S. for the fourth year in a row by Forbes (2026).* Enjoy up to 3.30% APY on SoFi Checking and Savings.

FAQ

Is it preferable to be from new or old money?

It depends on whom you ask. Old money members often regard themselves as a higher class, but they also have less agency to spend their money on “fun” things, as they have to guard their wealth for future generations. While members of new money might feel freer to spend on things they want, they can be more likely to run out of money if they don’t follow good financial planning.

Does new vs. old money matter?

If you are a member of the wealthy class, the distinction might matter to you. Those with old money might feel it’s superior to new, but those with newly minted wealth may well be proud of their success in building their fortune. However, people are not generally considered to be new or old money, and so this shouldn’t affect their daily lives.

How has old vs. new money changed since the terms were first coined?

Old money once referred to the landed gentry in Europe, but in today’s world, it might refer to a few families who struck it big a century or more ago in the United States. New money is more common nowadays, with the advent of television, sports, and social media as the source of riches.

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Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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The average FICO® Score for a 22-year-old is currently 678, which is in the good range and can qualify you for various types of credit. Your credit score depends on a variety of factors, including your history of paying your bills on time and your length of credit history. The average 22-year-old may not have had much time to build a credit history yet, but on average, people this age are managing credit responsibly.

Understanding what a credit score is and what this number means is an important part of accessing credit and taking control of your personal finances. Read on to learn more.

Average Credit Score for a 22-Year-Old

The average credit score for individuals aged 18-28 is 678 as of September 2025. In general, this is considered to be a good score, one that you’ll need to access credit such as a home loan, for example. As a point of comparison, the average credit score for all Americans is currently 713 as of September 2025. As you see, the typical score for a young adult is somewhat lower, which may reflect the fact that they likely haven’t been using credit products as long as older people have.

It’s worth noting that credit scores, which usually run from 300-850, don’t usually start at 300. A starting credit score is often between 500 and 700.

Recommended: What Is the Average Salary in the U.S.?

What Is a Credit Score?

Your credit score is a three-digit number ranging from 300-850, as noted above, that represents your credit history. It basically provides a snapshot of how well you manage credit. Lenders and others may use it to determine your credit risk. In general, the lower your score, the more lenders will worry you’ll have trouble paying back your debt. The higher your score, the less risk you represent.

What Is the Average Credit Score?

The average credit score in the U.S. is 713 according to FICO® Score, the most commonly used credit scoring system.

There are different credit scoring models, such as VantageScore vs. FICO, that use their own scoring system. The average VantageScore® 4.0 credit score in the U.S. is 702 as of June 2026.

The average VantageScore for 22-year-olds isn’t broken out by specific age, but Gen Z consumers were recently found to have an average VantageScore 3.0 credit score of 668, which is lower than the average FICO Score for that generation of 678.

Average Credit Score by Age

The average credit score varies and rises steadily by age. Compare average scores across generations to see how you stack up against other age cohorts.

Age	Average Score
18-28	678
29-44	689
45-60	709
61-79	747
80+	760

What’s a Good Credit Score for Your Age?

Credit scores are categorized in a range from poor to exceptional. For FICO Scores, the most widely used score in the U.S., here is how the scores shape up:

•   300-579: Poor

•   580-669: Fair

•   670-739: Good

•   740-799: Very good

•   800-850: Exceptional or excellent

As mentioned above, the average score of 22-year-olds is 678, which is considered good. On average, those aged 61 and older crack into the very good range.

How to Build Your Credit Score

Building your credit score can potentially give you greater access to borrowing and at more favorable rates and terms. Follow these tips:

•   Pay your bills on time, as this is the biggest step you can typically take to maintain or build your score.

•   Avoid using too much of your available credit — this is the next most important step you can take. A common rule of thumb suggests using no more than 30% of available credit at any given moment.

•   Build a mix of different types of credit (such as credit cards, home loans, and personal loans) because it may also build your score. For this reason, you may want to avoid closing old lines of credit, even if they are something you don’t use regularly or at all.

•   Build a longer credit history, as this can positively impact your credit score. So if you are thinking of closing an account (such as a credit card you rarely use), keep in mind that doing so could lower your score. You might therefore decide to keep it open and use it occasionally.

•   Avoid applying for too much credit in a short period of time. Otherwise, it could contribute to a lower score. If you are, say, looking for a single home loan from multiple lenders, that kind of rate shopping should not be an issue. But if you apply for a mortgage, car loan, and two new credit cards within a couple of months, that may well lower your score.

How Does My Age Affect My Credit Score?

Your age is not a factor that is included in your credit score. It may have an indirect impact on your score, however. It can take time to build credit. If you’re younger, you may not have had much time to build a credit history, which may mean your score is lower than average. But as you age and build your credit through on-time payments, a longer history, and a broader mix of debt, your score may be positively impacted.

At What Age Does Credit Score Improve the Most?

It is perhaps unsurprising that the oldest Americans who have spent years building a credit history tend to have the highest scores, as noted above. This doesn’t mean, however, that you cannot achieve a high score when you are younger if you are responsible with your debt.

How to Build Credit

If you’ve never had credit before, there are several ways you can begin to build credit. Beyond the tips above about managing credit responsibly once you have it, you could open a secured credit card, which requires that you put up an amount of money as collateral for your debt. (Another way to think about this: Your deposit acts as your credit limit. As you pay your bill monthly, your activity is reported to the credit bureaus.) It is often easier to qualify for than other credit cards.

You could also become an authorized user on another person’s credit card account. This is typically something you might request of an older family member. Provided the account is used responsibly, it could help build your score.

If you’re looking to take out a loan, you could have a friend or family member with good credit cosign the loan. By doing so, they agree to make payments if you fail to do so. But be aware that loan activity will show up on both of your credit scores. Failure to make payments could bring your cosigner’s score down.

Credit Score Tips

In addition to keeping an eye on the factors that go into calculating your three digits (noted above), it’s also wise to monitor your credit score carefully to be sure that your credit history is accurate, as incorrect data could be dragging down your score.

You can check your credit score without paying by requesting a free credit report every week from each of the three major credit reporting bureaus: Equifax®, Experian®, and TransUnion®.

In general, the reporting bureaus will make credit score updates whenever any action has taken place related to your credit.

Check your credit report for errors. If you spot any, be sure to dispute the information with the credit reporting bureau immediately.

Developing healthy financial habits can help you manage your debts. Consider using spending apps and money tracker apps to help you understand where you are spending, where you may be taking on unnecessary debt, and where you could be saving toward financial goals, including debt repayment.

The Takeaway

The average FICO credit score for a 22-year-old is currently 678, which falls in the good range. Credit scores tend to rise with age, and responsible usage over time can help build a score into the very good or excellent range. To positively impact your score, be sure to pay bills on time and make sure not to take on more debt than you can manage. It’s good practice to monitor your credit score regularly for errors and to see if there are any steps you need to take to build your score and qualify for more favorable rates and terms when accessing credit.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

What is a good credit score for a 22-year-old?

The average FICO credit score for a 22-year-old is 678. This is in the good range.

Is a 750 credit score at 22 good?

A score of 750 is considered to be very good. It is between the good and excellent ranges on the FICO credit-scoring scale.

How rare is an 800 credit score?

Around 23% of Americans had FICO credit scores of 800 or higher in 2025. This makes it relatively common.

What is the average credit limit for a 22-year-old?

The average credit card limit for Generation Z, including 22-year-olds, is about $14,000. In general, older cardholders have higher credit limits.

Can a 22-year-old have a 700 credit score?

While someone who is 22 years old probably has a relatively short credit history, it is possible to have a score of 700. The average credit score for people aged 18-28 is 678, which is fairly close to that number.

How much debt is normal for a 22-year-old?

The amount of debt you carry will depend on your own financial circumstances. On average, Americans in their 20s carry nearly $20,000 in total debt.

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SoFi Coach offers users the ability to connect SoFi and external accounts using the Plaid service. When you use the service to connect an account, you authorize SoFi to obtain account information from external companies as set forth in SoFi’s Terms of Use. Based on your consent, SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without your needing to connect additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, nondelivery or failure to store any user data, the loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. Your credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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When investing a specific sum of money, such as $10,000, there are a number of ways to think about maximizing your potential return.

One of the first steps to take would be identifying your priorities, starting with immediate goals (such as paying off high-interest debt or setting up an emergency fund) and longer-term goals (such as retirement). Depending on your circumstances, you may want to divide the money among different priorities, or focus on just one way to invest $10,000.

Next, decide which types of investments would make the most sense, give your risk tolerance, and the time horizon for your goal.

Although the standard advice suggests that short-term goals should be in very low-risk investments, and long-term goals may benefit from higher-risk strategies to start (and potentially dialing back over time), the best way to invest $10,000 now will come down to your personal circumstances and comfort level.

What to Know Before You Invest $10,000

Before you review some of the different ways you can invest $10,000 now, or any sum of money, identify what your goals are. After all, you don’t have to put the entire amount into a single option; you can split your money in various ways, when you’re engaged in self-directed investing.

It may help to ask yourself some questions about what is important to you:

•   Do you want to invest for a specific purchase or life event, such as buying a home or welcoming a child?

•   Do you want to invest toward a more secure retirement and old age, perhaps by funding a retirement account?

•   Are you interested in using the money you have to help you learn more about investing basics?

•   Would it be prudent to pay off credit card debt, since eliminating debt is effectively an investment, as it increases your net worth?

Understanding Growth vs. Risk

In addition to thinking about your goals, it’s important to consider what your risk tolerance is. While there are many ways to invest, some may involve more risk (or reward) than others. Some investors may want to swing for the fences with a high-risk venture, while others prefer to keep their cash as safe as possible.

As you weigh your investing choices, from stocks and bonds to alternative investments, keep in mind that higher-risk investments tend to offer more growth — but with the downside that there’s a higher risk of losing money.

Lower-risk investments, like buying bonds, generally offer lower returns (but also less risk of losing money). This is true whether you’re investing online or through a traditional brokerage.

15 Ways to Invest $10,000

Whether you want to be a hands-off type of investor or more of an active investor, there are numerous choices to consider. We summarize 15 possibilities here.

While some of these may count as conventional options (e.g., investing via a retirement or college savings account), some are less so (e.g., investing in a business).

1. Start With an IRA

Opening an IRA provides you with the opportunity to save for your retirement, supplement existing retirement plans, and potentially benefit from tax advantages. A traditional or Roth IRA can be a great vehicle for tax-advantaged, long-term investments.

•   The annual IRA contribution limit for tax year 2025 is $7,000; $8,000 for those 50 and older.

•   For 2026, the annual contribution limit is $7,500; $8,600 for those 50 and older.

Other types of IRAs include SEP and SIMPLE IRAs. SEP IRAs are for small business owners and self-employed individuals, while SIMPLE IRAs are for employees and employers of small businesses. These have different contribution limits and rules than ordinary traditional or Roth IRAs.

In all cases, though, an IRA is just a tax-advantaged type of account. You must select investments for the IRA you choose. The institution where you open your IRA will offer a wide range of investment choices.

Recommended: Roth vs. Traditional IRAs

2. Increase Your 401(k) Contributions

Another way to invest $10,000 is to increase your 401(k) contributions at work. Like IRAs, these are tax-advantaged accounts. Generally, you establish your 401(k) contributions through your workplace plan, and the money is deducted from your paycheck.

You could, however, increase your withholdings so that you’re adding $10,000 more to your accounts (or a percentage of that), as long as you don’t exceed the annual 401(k) contribution limit.

Unlike IRAs, which have a fairly low annual contribution limit, 401(k) annual contribution limits are much higher. You can contribute as much as $23,500 in your 401(k) for tax year 2025. If you’re 50 or older, you can contribute an additional $7,500, for a total of $31,000 in 2025.

For tax year 2026, you can contribute as much as $24,500 in your 401(k), and if you’re 50 or older, you can contribute an additional $8,000, for a total of $32,500.

For both 2025 and 2026, individuals aged 60 to 63 can contribute up to an additional $11,250 instead of $7,500 in 2025 and $8,000 in 2026 — known as the super-catch-up contribution — thanks to SECURE 2.0.

3. Be Debt Free

Knowing how to invest $10,000 today does not have to mean finding a high-performing company and investing in stock. Simply paying off high-interest-rate debt can be like earning a guaranteed rate of return.

Think about it: If you’re carrying a $5,000 balance on a credit card that charges a 15.99% annual percentage rate (APR), paying off your balance means you are “saving” all that interest, rather than paying it to your card.

Given that most credit card issuers compound interest daily, those charges can add up to hundreds or even thousands of dollars per year (depending on your actual balance, and APR). So, paying off that debt is effectively like keeping more money in your account, with less going toward loan payments.

4. Beef Up Your Emergency Fund

Putting some or all of your $10,000 into an emergency fund could also pay off down the road. Having cash on hand to cover life’s inevitable curveballs means that you wouldn’t have to put more expenses on a credit card in a crisis, or take out a home loan or line of credit, and end up paying interest on borrowed funds.

Keeping your emergency fund in a high-yield savings account, as noted above, could offer another potential upside in the form of interest gained.

5. Get Healthy with an HSA

Another way to invest is to max out your Health Savings Account (HSA) contributions. Individual contributions are limited to $4,300 for 2025; $8,550 for a family. In 2026, individual contributions are limited to $4,400; $8,750 for a family.

The money in the HSA account is yours, even if you switch jobs or health plans.

An HSA can be triple-tax advantaged. That means your contributions, which are typically made via withholdings from your paycheck, are tax-deductible, investment growth within the HSA builds tax-free, and you can withdraw funds for qualifying health-related expenses tax-free, too.

If you use HSA funds for non-qualified expenses before age 65, you could face a 20% penalty on the withdrawals.However, if you don’t use the account much over the years, then you can use the account like a traditional IRA once you reach age 65. That means: You’d owe tax on the withdrawals, but you wouldn’t face a penalty — and you could use the funds for any purpose (not only health-related expenses).

6. Consider U.S. Treasurys

Investing $10,000 in government bills, notes, and bonds is another way to help your money grow over time. U.S. Treasury bonds are often considered one of the safest investments, as they have the full faith and credit of the U.S. government backing them. Treasuries are available in short-, medium-, and long-term maturities.

Treasury bills are short-term debt securities that mature within one year or less. Treasury notes are longer-term and mature within 10 years.Treasury bonds mature in 30 years and pay bondholders interest every six months. Treasury Inflation-Protected Securities, or TIPS, are notes or bonds that adjust payments to match inflation. Investors can buy tips with maturities of five, 10 and 30 years; they pay interest every six months.

Recommended: How to Buy Treasury Bills, Bonds, and Notes

7. Open a High-Yield Savings Account

If you open a high-yield savings account with a competitive interest rate, this is a lower-risk way to save. Currently, high-yield savings accounts may offer an annual percentage yield (APY) of approximately 3.00%. Just remember that terms vary considerably from bank to bank, and there are no guarantees the rate will remain constant.

Still, that means a $10,000 deposit in a high-yield savings account with a 3.00% APY could yield roughly $304.16 in interest in one year, assuming interest is compounded monthly, and there are no further deposits that year, and that the APY doesn’t change.

Another benefit of putting your money in a bank account is that your funds are typically FDIC-insured, up to $250,000, per depositor, per insured bank, for each account ownership category.

8. Build a Business

Starting your own venture could be a compelling idea in today’s tech-driven world. Taking $10,000 to fulfill an entrepreneurial dream could lead to future profits. But as with any business, success isn’t guaranteed, and there is always the possibility of loss.

That said, it doesn’t have to take much capital to start a small business online or just offer your services to the market. Maybe you’re a professional with expertise in a certain area or perhaps you’ve honed a particular craft. You could consult with the Small Business Administration or other resources that might help you develop a solid business plan and put your $10,000 investment to good use.

9. College Savings

You could also invest $10,000 to help your kids or other family members via a college savings plan. The most common of these is a 529 college savings account.

These accounts, also known as qualified tuition plans, give individuals the option to save for college (or even elementary and secondary school and some training programs) on behalf of a beneficiary, while providing tax advantages. All states offer 529 plans; some offer a tax deduction for your contributions. Withdrawals for qualified educational expenses are tax free.

Be sure to understand the rules pertaining to the 529 plan you choose, because contribution limits vary from state to state, as do the investment options within the account.

10. Consider Low-Cost ETFs and Index Funds

If you’re looking for a low-cost investment option, you might want to considerlooking into index funds. Index funds are a type of mutual fund that utilize a passive investing strategy, i.e. they track an index like the S&P 500. They are not actively managed like some mutual funds, which have a live portfolio manager at the helm.

Most exchange-traded funds (ETFs) also rely on passive strategies, and as such typically have very low expense ratios. Lower investment fees can help investors keep more of their returns over time.

One of the advantages of investing in low-cost index funds and ETFs is that there are so many flavors of different funds these days. Stocks, bonds, REITs, small caps, large caps, sector funds, and dividend-paying stocks — these are just some of the fund types available.

11. Explore Municipal Bonds

If taxes are a concern, you may want to explore municipal bonds or bond funds, as these bonds are issued by state and local governments to pay for infrastructure and other amenities. Munis, as they’re called, feature interest income that is exempt from federal income tax, and sometimes state and local tax in the state where the bond was issued.

Investors might be helping to build a city park, better roads, or a new football stadium, for example. Those who like the idea of investing in a way that aligns with their personal values might find munis appealing.

12. Explore Alternative Assets

Experienced investors who have a sizable portfolio and a sophisticated understanding of various markets might want to explore the world of alternative assets.

Alternative investments — commonly known as alts — differ from conventional stock, bond, and cash categories. Alts include a variety of securities such as commodities, foreign currencies, real estate, art and collectibles, derivative contracts, and more.

Alts are considered high-risk, but they may offer the potential for portfolio diversification. It’s also important to know they typically aren’t as regulated or transparent as traditional assets.

13. Use a Robo Advisor

One way to go about building an investment portfolio is through a robo advisor service, also known as an automated portfolio. These computer-based platforms are not robots, but rather use sophisticated algorithms to select investments (typically low-cost ETFs), based on the risk tolerance and other objectives you indicate through a personal questionnaire.

The automated platform then suggests a portfolio, and provides services such as rebalancing and, in some cases, tax-loss harvesting for you.

You can invest in a robo advisor portfolio within an IRA or other type of account, as long as it’s offered by your broker or plan sponsor.

14. Get Real Estate Exposure with REITs

A real estate investment trust, or REIT, offers a way to invest in income-producing real estate without owning the properties directly. REITs can be advantageous because they must distribute at least 90% of taxable income to shareholders as dividends.

You can invest in REITs through buying REIT shares, mutual funds, or ETFs. While the benefits of REITs include passive income and portfolio diversification, REITs can be illiquid and sensitive to interest rate changes.

15. Pick Individual Stocks

Learning how to pick stocks is a lifelong endeavor. A committed stock investor typically does research on company fundamentals and other factors — such as its leadership team, reputation, and comparison to industry averages — before buying actual company shares.

For many investors, investing in individual stocks can be more rewarding than buying shares of a mutual fund, which may contain hundreds of stocks. Investing in individual shares allows you to put your money directly into organizations or products you believe in. Depending on the company, you may be able to choose between common or preferred stock (preferred shares qualify for dividend payouts).

And while equity markets can be volatile, over the last 20 years, the average return of the stock market as represented by the S&P 500 Index has been about 7.03%, adjusted for inflation.

The Takeaway

Deciding how to invest $10,000 is an exciting proposition. You can begin by recognizing your ideal level of risk, and identifying what your short- and long-term goals are. Once you set those key parameters, it’s easier to choose among the many investment options to find one that suits your aims and your comfort level.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest®. You can trade stocks, ETFs, or options through self-directed investing with SoFi Securities, or simply automate your investments with a robo advisor from SoFi Wealth. You'll gain access to alternative investments and upcoming IPOs, and can plan for retirement with a tax-advantaged IRA. With SoFi, you can manage all your investments, all in one place.

Take a step toward reaching your financial goals with SoFi Invest.

FAQ

What is the best way to invest $10,000?

The best way to invest any sum of money is a personal choice, but one consideration is to shore up the basics first: pay off any outstanding debt, particularly high-interest loans or credit cards, and then set up an emergency fund, to prevent a crisis. With the money left over, consider investing for a longer-term goal such as retirement.

How can I double a $10,000 investment

It’s tempting to believe that you could double your money using a speculative investment that promises a high return, but these vehicles come with a high risk of loss. In reality, the only way to double your money with lower risk is time in the market, potentially seven to 10 years (although there are no guarantees).

How much will $10,000 grow in 10 years?

The potential growth rate of $10,000 depends on many factors, including your choice of investments and market conditions. Lower-risk investments, like bonds, offer a more predictable yield. Higher-risk investments like stocks are far less predictable.

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Photo credit: iStock/Ridofranz

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services available to eligible residents of the 50 U.S. states and Puerto Rico. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Before investing, carefully consider the investment objectives, risks, charges, and expenses detailed in a Fund’s prospectus. This document contains important information and must be read carefully prior to investing; you can find the current prospectus by clicking the link on the Fund’s respective page.
Alternative investments are highly risky and may not be suitable for all investors. These investments often involve leveraging, speculative practices, and the potential for complete loss of investment. They typically charge high fees, lack diversification, and can be highly illiquid and volatile. Be aware that both registered and unregistered alternative investments, including Interval Funds, are not subject to the same regulatory requirements as mutual funds, and their illiquid nature may restrict your ability to trade on your timeline. Always review the specific fee schedule for Interval Funds within their prospectus.

Options involve substantial risk of loss and the possibility an investor may lose the entire amount invested. Before starting options trading, investors should be familiar with the Characteristics and Risks of Standardized Options . TTax implications with options should be considered. Consult your tax advisor to understand any impacts to your taxes.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

S&P 500 Index: The S&P 500 Index is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. It is not an investment product, but a measure of U.S. equity performance. Historical performance of the S&P 500 Index does not guarantee similar results in the future. The historical return of the S&P 500 Index shown does not include the reinvestment of dividends or account for investment fees, expenses, or taxes, which would reduce actual returns.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

Exchange Traded Funds (ETFs): Before investing in Exchange Traded Funds (ETF), always read the fund's prospectus. It contains important information about the fund’s objectives, risks, and fees. You can get a prospectus from the fund company’s website or by emailing our customer service at [email protected].

Fund Fees
If you purchase investment funds, including Exchange Traded Funds (ETFs), through SoFi Invest, either on your own or with automated investing, the funds have their own management fees. These fees are paid by the fund itself, not directly by you and can reduce the fund's returns. More detailed information about a fund's fees can be found in its prospectus.
SoFi Invest and its affiliates do not receive sales commissions or other fees from the ETFs it invests in on your behalf, but may earn management fees if SoFi Invest creates its own fund(s). SoFi may waive or change its fees at any time. The most current fee schedule is available in your Account Documents within the SoFi app or online account.

Mutual Funds (MFs): Investors should read and carefully consider the information contained in the prospectus, which contains the Mutual Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or SoFi's customer service at: 1.855.456.7634. Mutual Funds must be bought and sold at NAV (Net Asset Value); unless otherwise noted in the prospectus, trades are only done once per day after the markets close. Investment returns are subject to risks. Shares may be worth more or less their original value when redeemed. The diversification of a mutual fund will not protect against loss. A mutual fund may not achieve its stated investment objective. Rebalancing and other activities within the fund may have tax implications.

Investment Risk: Diversification can help reduce some investment risk, but cannot guarantee profit nor fully protect in a down market.

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