Whether you’ve suddenly received a $10,000 windfall or finally saved this amount after months or years of hard work, you’re in a good place to let that money start working for you.
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Financial YouTuber Humphrey Yang believes that having five figures in savings is a key milestone that will have a major impact on your financial future. From there, you’ll want to determine how to best maximize your money’s growth while minimizing the risk of losing it.
In a YouTube video, Yang gave his recommendations for the five best ways to invest your $10,000 in 2025 and discussed the risk level associated with each option.
Your Financial Foundation
Yang described setting your financial foundation as the lowest-risk, highest-priority option.
The first step is getting rid of your high-interest debt, which Yang defined as anything with a rate higher than 10%. He explained that wiping out this debt would provide a guaranteed return that is likely much higher than the 8% historical average annual return of the S&P 500.
Next, you’d establish an emergency fund with a minimum of three months’ worth of your expenses, which would put you ahead of 52% of Americans, according to an April 2025 Pew Research Center survey. Yang added that you could also aim higher, with enough to cover you for six months to a year.
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Long-Term Holdings
Yang discussed investing in ETFs and index funds, which he said involve conservative to moderate risk and are useful for easy diversification. The return can also be competitive, with Yang citing a nearly 100% cumulative return for the Vanguard S&P 500 ETF over the past five years.
Plus, these investments offer other benefits, such as getting to choose from diverse options and having the fund’s portfolio managers handle the hard work for you. However, research your chosen fund’s performance beforehand and consider any commissions charged.
Individual Stocks
While you might turn to individual stocks for potentially high returns, Yang explained that they come with moderate to high risk. Volatility is an important consideration, as U.S. Bank noted that the stock market can quickly change due to factors like the economy, world events, company news and investor behavior. This makes careful planning essential.
“If you are investing in individual stocks and you’re a beginner, it’s recommended that not only you do tons of research on why you think that company will go up in value over a long-term time horizon, but that you’re also like diversified enough that even if that one stock goes to zero, it’s not going to risk ruining your entire portfolio,” Yang said.
He also suggested splitting money across different stocks, getting familiar with the company’s industry, checking company reports and investor calls and learning about intrinsic value.
High-Yield Savings Accounts, Certificates of Deposits and Treasury Bills
If you’re nervous about investing everything in the stock market, consider high-yield savings accounts, certificates of deposits (CDs) and Treasury bills (T-bills). Yang explained that these very low-risk cash investments are a nice “safety net” where he occasionally puts some of his cash.
The returns are also currently more competitive than usual. Yang said you might earn 3.50% to 4% with an online high-yield savings account, 4.10% to 4.20% with a one-year CD or about 4.50% with a T-bill. However, research current rates and keep in mind they can vary.
Before deciding on these investments, consider how easily you can get your money out. You’ll likely find it easier to transfer your cash out of a high-yield savings account quickly than to sell a T-bill or redeem your CD early, which would likely require paying a penalty.
Speculative Investments
According to Yang, speculative investments are the riskiest option and include things like high-growth stocks, angel investments, real estate and crypto. Younger investors and other risk-takers may find them appealing for their potentially high returns, but it’s important to proceed cautiously.
“If all you have is $10,000, you may not want to allocate your entire [$10,000] into a speculative or high-growth stock, but perhaps you can take 10% to 20% of that amount and allocate it in there if you’re comfortable with losing that money,” Yang explained.
For real estate, you may also need a loan, as your $10,000 would likely serve as the down payment. While borrowing money can work out in your favor if that property’s value rises significantly, there’s still the risk that it won’t pay off.
Due to the potential for loss that comes with speculative investments, Yang suggested that beginners focus on lower-risk options.
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This article originally appeared on GOBankingRates.com: Humphrey Yang: 5 Best Ways To Invest $10,000 in 2025
